Why Small Businesses Should Consider Accounts Payable Software.

“We’re too small to need accounts payable software!” – it’s a phrase we hear all too often from small business owners. It’s understandable. If you’re a one-person operation or a small team with minimal invoices, the cost of Accounts Payable (AP) software may not seem worth it at first glance. However, as your business grows, the time and resources required to manage payments, invoices, and vendor relationships can quickly become overwhelming.

Ignoring the need for AP software may be tempting when you’re just starting out. However, too many small businesses end up “growing into” the need for automated systems, and by the time they realize it, they’re already struggling with missed payments, late fees, or overwhelmed employees. In this article, we’ll discuss the key reasons why small businesses, even those that are just starting out, should seriously consider adopting accounts payable software.

When Should You Invest in Accounts Payable Software for Your Small Business?

Before you dismiss AP software as unnecessary, consider the following factors to determine if it’s the right time for you. While some businesses will see no immediate benefit from automation, others will quickly realize the advantages of streamlining their accounts payable process.

1. Time and Resource Saving: The Benefits of Automation

The biggest advantage of adopting AP software is the time savings it provides. As your business grows, so will the volume of invoices, payments, and purchase orders you need to manage. What may have started as a handful of invoices every month can quickly turn into a mountain of paperwork that takes up valuable time. For small business owners, time is often the most precious resource, and every minute spent managing invoices could be better used elsewhere – whether that’s building your product, serving customers, or growing your marketing efforts.

If you’re a sole trader or a small team with only a few invoices each month, it might seem like manual processing is sufficient. However, even small businesses can benefit from basic receipt capture software, which can automate the tedious task of entering invoice data and eliminate the risk of human error. For small business owners who don’t have a background in finance, AP software provides a user-friendly way to ensure accurate financial records without the need for hours of manual entry.

2. Strengthening Vendor Relationships

Do you rely on strong relationships with key suppliers or vendors? If so, AP software is an invaluable tool for maintaining healthy partnerships. In the world of business, overdue payments or billing disputes can damage relationships with suppliers, which may lead to late deliveries, penalties, or even the loss of valuable vendors.

By implementing accounts payable software, you gain greater visibility into your accounts, enabling you to track purchase orders and invoices at a glance. This ensures that you’re never caught off guard by a missed payment or overdue invoice. Many AP solutions also include automated reminders, so you’ll always be notified of upcoming due dates. The result? Stronger, more reliable relationships with your suppliers, which can ultimately lead to better terms, discounts, or priority service.

3. Remote Work and Distributed Teams

Are your employees spread across different locations or working remotely? Is your business built around travel, whether for conferences, meetings, or sales trips? In today’s world, many small businesses operate with distributed teams, and the old-school way of managing accounts payable via paper invoices or spreadsheets simply doesn’t cut it anymore.

Cloud-based AP software is designed to work for remote teams, giving you and your employees the flexibility to access important financial data anytime, anywhere. With secure access to the system, your team can approve invoices, process payments, and stay on top of financial tasks, no matter where they are. And when someone goes on vacation or is unavailable, cloud-based software allows for easy delegation, ensuring that the business keeps running smoothly.

4. Better Control, Reporting, and Future Planning

One of the biggest reasons to invest in accounts payable software is the increased visibility and control it provides over your business’s finances. As your business grows and you hire more employees, you’ll want to ensure that all financial processes are transparent and that your team is following the correct procedures.

Accounts payable software allows you to monitor cash flow, track spending, and even generate financial reports with just a few clicks. With easy access to real-time data, you’ll know exactly where your money is going, helping you make informed decisions about future investments and cost-cutting measures. Having full visibility into your AP process can also help prevent fraud, reduce errors, and improve overall financial accuracy.

Additionally, AP software can generate reports that offer deeper insights into your business’s financial health, helping you better plan for the future. Whether you need to track expenses, manage vendor payments, or simply get an overview of cash flow, accounts payable software makes it easier to stay on top of your finances and plan ahead.

5. Cost Savings in the Long Run

While it’s true that accounts payable software comes with an upfront cost, many small businesses discover that it ultimately saves them money. One of the key benefits of AP automation is that it helps eliminate costly mistakes, such as paying duplicate invoices, missing early payment discounts, or failing to pay on time and incurring late fees.

Many AP solutions come with built-in OCR (Optical Character Recognition) technology, which automatically extracts relevant data from invoices and ensures that only valid, accurate payments are processed. This reduces the need for manual data entry and dramatically decreases the chance of human error.

Moreover, AP software often comes with features that allow for approval workflows, meaning that invoices are verified and authorized by multiple team members before payments are made. This added layer of scrutiny not only prevents mistakes but also ensures that funds are being allocated correctly, protecting your business from wasteful or unnecessary expenditures.

6. The Future of Your Business: Scalability and Growth

As your business expands, your financial processes will need to evolve. If you’re still relying on manual methods for accounts payable, it may be time to reconsider your approach. AP software scales with your business, meaning you can start with the basics and gradually add more advanced features as needed.

Implementing AP software from the outset positions your business for future growth, reducing the likelihood of becoming overwhelmed by accounting tasks as your team expands. Moreover, by adopting AP automation early, you ensure that your accounting processes are aligned with best practices, saving time and money as you scale.

Is Accounts Payable Software Right for Your Small Business?

The decision to implement accounts payable software is not one to take lightly, especially for small businesses operating on a tight budget. If you’re managing a small team or running a solo operation, you may be able to manage your AP tasks manually. But the moment your business starts to grow – whether that’s quickly or more gradually – you’ll start to see the limitations of your current system.

If any of the above scenarios resonate with your business, it’s time to explore AP solutions that will help you stay organized, maintain strong vendor relationships, and ensure smooth, error-free financial management.

Not sure where to start? Book a free consultation with one of our accounts payable experts to determine if it’s the right time for you to adopt AP software. We’ll provide you with an honest assessment of your needs and help you find a solution that fits your budget and business model.

If we had a pound every time someone told us their business is too small to need Accounts Payable software, we wouldn’t need to sell it in the first place. We get it. You’re a small team, maybe even just one or two of you, not too many invoices, not too many outgoings. The truth is, and take it from people who’ve been in this game for a while now, small businesses need AP software just as much as the big ones.  

Advantages like good supplier relations and minimized human error are beneficial no matter your business’s size, but it’s dodged pitfalls that make early AP automation a wise move. As your business grows, it’s easy to get overwhelmed by the time and resources you need to manage your AP department. The outcome can be missed payments, late fees, and employees unable to cope.  

In this article we’ll take a look at the benefits AP automation can bring to your small business. We’ll also be looking at why, even if you’re just starting out, you should seriously consider adopting AP software, and the industry data that shows you won’t be the only small business doing so.  

The Data  

We’re in the business of accounts payable automation, so you might be on the lookout for our angle here. Sure, we’d like you to choose Zahara, but we’re also in the business of making this hard-to-navigate part of the business/tech world a little clearer. Numbers don’t lie, they say. So how about some hard data?  

Small businesses are increasingly adopting automated AP. In a 2024 report, Market Research Future predicts that the accounts payable industry will double in size by 2032. Much of that growth is coming from adoption by SMEs, and much of that adoption is because of the increasingly easy-to-use software, and the benefits it affords you.  

Not to drive the point home too hard, but here’s another bit of data that backs that right up. This report into the trends driving the industry’s growth by Grand View Research forecasted that adoption rates of AP software will see ‘significant growth’ from 2024 to 2030 – that growth driven by ‘reduced cost and increased competitiveness’… their words, not ours.  

Want to see what they’re talking about? Ardent Partners’ State of ePayables 2023 report showed that adopting this kind of tech allows businesses to reduce processing costs by between 60 – 80%. Just under a quarter of the people they surveyed came from small businesses, the rest from larger firms. These numbers go a long way to pointing out the savings that can be made no matter your size. We’ve already mentioned how this kind of tech is scalable, so we won’t go back into that.  

And that’s not the only benefit. Have a dig through any of the reports we’ve been looking at and you’ll see a clear trend towards efficiency and financial control too. Ardent’s report has a whole section on how the best-in-class businesses are adopting AP automation at rates ahead of the curve, and how those same businesses view the benefits: 51% less time responding to supplier inquiries here, 81% faster single invoice processing there.  

If you’re thinking of adopting AP automation, now is the time to do it. You’ll be putting the future of your business in great stead, and keeping competitive. We’d love to chat to you about why Zahara’s AP automation offerings are better than the rest. If that interests you, give us a call or schedule a demo. We’ve got plenty to discuss.