Running a small or medium-sized business means keeping a close eye on your finances. But if your accounts payable process still relies on spreadsheets, paper checks, and email chains for approvals, you’re not alone and likely spending more time (and money) than necessary.
Accounts payable automation solutions are designed to help SMBs streamline bill payments, reduce human error, and reclaim valuable time. But with so many options out there, how do you find the right one?
This guide will explain the basics of AP automation, why it matters, and what to look for when evaluating tools for your business.
What Is Accounts Payable Automation?
AP automation software simplifies the accounts payable process by leveraging technology at every step. It begins by automatically capturing invoice data, eliminating the need for manual data entry. Once captured, the software routes the invoice to the appropriate team members for timely approval. It also matches the invoice details with purchase orders and receipts to ensure accuracy and prevent errors.
After validation, payments are scheduled based on due dates and payment terms. Finally, all data is synced seamlessly with your accounting system, keeping your financial records up-to-date and audit-ready.
Why Should SMBs Automate AP?
You don’t need a large finance department to benefit from automation. Smaller teams often gain the most because they’re managing multiple vendors with limited staff. Here’s how AP automation can help SMBs like yours:
- Saves time: Manual processing can take hours each week. Automation speeds things up dramatically.
- Reduces errors: Automated data entry minimizes mistakes that lead to overpayments or delays.
- Improves cash flow: Real-time visibility helps you stay on top of due dates and manage spending.
- Scales with growth: As your vendor list grows, automation ensures you won’t need to grow your AP team just to keep up.
- Strengthens internal controls: Built-in approval flows and audit trails make it easy to track who approved what and when.
How to Choose an AP Automation Solution?
Not all platforms are created equal, so it’s worth evaluating tools based on what your team needs most. Look for these must-have features:
- Seamless integration with your existing accounting software (like QuickBooks, Xero, or NetSuite).
- Automated invoice capture from email, PDFs, or scanned documents.
- Flexible approval workflows that follow your internal processes.
- Real-time dashboards showing invoice status, cash flow, and pending approvals.
- Multiple payment methods—ACH, checks, credit cards, or virtual cards—from one interface.
- Security and compliance features like user permissions, audit trails, and data encryption.
Cloud-Based or On-Premise?
Cloud-based tools are hosted online and typically offer remote access from any device, making it easy for teams to manage accounts payable from anywhere. They come with the added benefits of automatic updates, minimal IT maintenance, and subscription-based pricing, which helps businesses manage costs more predictably. These solutions are ideal for most SMBs that prioritize flexibility, scalability, and a quick setup.
On-premise tools, on the other hand, are installed directly on your company’s internal servers. This setup gives you greater control over your data and can be a preferred option for businesses with strict data security requirements. Instead of ongoing subscriptions, on-premise software usually involves a one-time licensing fee, although there may be additional costs for updates and ongoing maintenance. Companies with existing IT infrastructure or industry-specific compliance needs may find this option more suitable.
Questions to Ask Before You Choose: Cloud-based on On-Premise?
To avoid surprises, here are a few questions to ask potential vendors:
- Does the platform work with your current accounting software?
- How long does the setup take?
- Is the interface intuitive for non-tech users?
- What kind of support and onboarding do they provide?
- Can the system handle your current and projected invoice volume?
- How does pricing scale as your usage grows?
Don’t forget to ask for a product demo or a free trial. Seeing the software in action can tell you more than any feature list.
Conclusion
Automating accounts payable isn’t just a time-saver—it’s a strategic move for SMBs aiming to boost efficiency, accuracy, and scalability. By choosing the right AP automation solution, you streamline payments, reduce errors, and gain financial visibility, all while preparing your business for sustainable growth.
