Updated: September 2025 (Originally published April 2024)
Small and medium businesses (SMBs) face mounting pressure managing accounts payable (AP) and accounts receivable (AR), with 87% of businesses reporting late payments and 54% of SMEs regularly paying bills late. These inefficiencies directly impact cash flow, supplier relationships, and growth potential—yet traditional solutions haven't solved the problem.
TL;DR: Manual AP/AR processes cost SMBs an average of $15 per invoice and 4+ hours weekly chasing payments. While enterprise solutions exist, they're often too complex and expensive for small teams. Embedded financial automation within existing SaaS platforms offers the most promising path forward.
The Real Cost of Manual AP/AR Management
"Accounts payable encompasses all money a business owes to suppliers, while accounts receivable represents money owed to the business by customers. Together, they form the backbone of working capital management."
The numbers paint a stark picture of inefficiency. According to Ascend Software research, the average cost to process a single invoice manually is $15. When multiplied across hundreds of monthly invoices, this represents a significant drain on resources that could be invested in growth.
Accounts Payable: Where Money and Time Disappear
The accounts payable process reveals multiple failure points that compound costs:
Invoice Processing Inefficiencies Research from Bottomline shows that 47% of invoice approvals run late, creating a cascade of problems. Inconsistent invoice formats mean staff spend hours standardizing data for entry. The approval chase becomes a full-time job, with managers buried in email threads and spreadsheets.
Missed Financial Opportunities Perhaps most damaging, 82% of SMEs miss out on early payment discounts according to PayStream Advisors research. A typical 2% early payment discount on a $10,000 invoice represents $200 in lost savings—multiply this across all payables, and SMBs leave thousands on the table annually.
Visibility Vacuum Yokoy research found that 34% of businesses lack visibility into outstanding liabilities. Without a clear picture of what's owed and when, businesses can't optimize payment timing, leading to either premature payments that hurt cash flow or late payments that damage relationships.
Accounts Receivable: The Cash Flow Killer
If AP represents money flowing out inefficiently, AR represents money not flowing in at all:
The Late Payment Epidemic Chaser's 2022 Late Payments Report reveals that 87% of businesses are paid after their invoice due date. For sectors like marketing, advertising, and construction, payments can arrive 30+ days late. This isn't just an inconvenience—it's an existential threat to businesses operating on thin margins.
The Hidden Cost of Collections The same research shows over half of businesses dedicate 4 hours or more each week to payment follow-ups. At an average rate of $50/hour for skilled staff, that's $800+ monthly in collection costs alone—before accounting for the opportunity cost of time not spent on revenue-generating activities.
Why Current Solutions Miss the Mark for SMBs
"The paradox of SMB financial management: solutions exist, but they're built for enterprises, priced for enterprises, and require enterprise-level expertise to implement."
Traditional AP/AR automation platforms like Bill.com and Tipalti promise efficiency but deliver complexity. These systems assume dedicated finance teams, substantial budgets, and willingness to overhaul existing processes. For a 10-person company where the founder handles invoicing between sales calls, these solutions are as practical as using a sledgehammer to crack a nut.
The result? SMBs default to the tools they know: Excel for tracking, email for approvals, and manual bank transfers for payments. It's inefficient, error-prone, and doesn't scale—but it's familiar and "free" (ignoring the hidden costs).
The Embedded Finance Solution: Meeting SMBs Where They Are
The breakthrough insight: SMBs don't want another financial platform—they want financial capabilities within the platforms they already use. This shift from standalone to embedded represents a fundamental reimagining of how financial services are delivered.
Traditional Approach | Embedded Approach |
|---|---|
Separate AP/AR platform | Financial features within existing tools |
New logins and training | Familiar interface |
Data silos | Integrated workflows |
Additional monthly cost | Value-add to current spend |
Generic features | Industry-specific functionality |
From Challenge to Opportunity: The Automated B2B Payments Path
As noted in MTB's analysis of B2B payment workflows, the real value in B2B transactions isn't just moving money—it's streamlining the entire process leading to payment. When AP/AR workflows are automated within familiar platforms, several transformations occur:
Invoice processing becomes instant: OCR and AI extract data automatically
Approvals route intelligently: Based on amount, vendor, and business rules
Payments optimize automatically: Choosing the best method and timing
Reconciliation happens in real-time: No more monthly spreadsheet marathons
This automation doesn't just save time - it fundamentally changes how SMBs manage cash flow.
Success Stories: Vertical SaaS Leaders Show the Way
The potential of embedded financial automation is proven by vertical SaaS success stories:
ServiceTitan: Serving trades businesses, ServiceTitan reported $577M in revenue in 2023 by embedding comprehensive financial tools within their field service management platform. Contractors can invoice, collect payment, and manage cash flow without leaving the system they use to schedule jobs.
Jobber: Taking a similar approach with more affordable pricing, Jobber achieved $150M in revenue by integrating payment processing and basic financial management into their CRM for home service businesses.
These platforms succeed because they understand a fundamental truth: SMBs will pay more for tools that do more, but they won't adopt new tools just for financial features.
The Platform Opportunity: Building Where SMBs Already Live
"The future of SMB financial management isn't standalone platforms competing with Excel—it's Excel alternatives with built-in financial superpowers."
For B2B platforms serving SMBs, the opportunity is clear:
Immediate Value Adds:
Automated invoice generation from existing data
One-click payment collection with multiple options
Real-time cash flow visibility
Automated payment reminders
Integrated reconciliation
Strategic Advantages:
Increased platform stickiness (financial data creates switching costs)
New revenue streams (payment processing, premium features)
Deeper customer relationships
Competitive differentiation
Implementation: The API-First Approach
Modern embedded finance infrastructure makes adding financial features faster than ever. Platforms like Monite provide:
Core Components:
Accounts Payable automation for bill management
Accounts Receivable infrastructure for invoicing
Multi-rail payment processing
Accounting integrations
Compliance and security
The API-first approach means platforms can add financial features incrementally, testing what resonates with users before full implementation.
The Bottom Line: Solving Real Problems at Scale
The AP/AR challenges facing SMBs represent both a massive problem and an enormous opportunity. With businesses losing thousands annually to inefficiencies and platforms seeking differentiation, embedded financial automation emerges as the rare win-win solution.
SMBs get the financial tools they need within the platforms they already use. Platforms gain new revenue streams and stronger customer relationships. The manual processes that cost $15 per invoice and 4 hours per week? They become automated workflows that happen in seconds.
The question for B2B platforms isn't whether to add financial features—it's how quickly they can deliver the automation their SMB customers desperately need.
