AP automation for Indian SMEs

Accounts payable in India, by the numbers

The case for automating accounts payable in India rests on three measurable things: money owed to small suppliers and not paid, a statutory clock that makes late payment expensive, and a category of fraud that runs on invoices and takes a year to notice. Each figure below links to the document it came from, and each says whether it is about India or not.

Onsumm publishes no performance figures of its own here. Accuracy and time-saved numbers are worth stating only once they are measured against a labelled corpus, and anything else is a slogan wearing a percentage sign.

What ties them together is timing. Section 15 of the MSMED Act caps payment to a micro or small enterprise at 45 days, Section 16 charges compound interest at three times the RBI bank rate when you miss it, and since assessment year 2024-25 Section 43B(h) of the Income Tax Act has made the expense deductible only in the year the payment is actually made — so a bill sitting unapproved in somebody’s inbox is a tax position as well as a supplier relationship. The ACFE’s fraud data points the same way: billing schemes are not caught by a clever control, they are caught early or they run for over a year.

8 questions to ask before choosing AP automation software in India

Most accounts payable tools sold in India claim the same feature list, and the list is not where they differ. They differ in what happens at the edges — a vendor who crosses a TDS threshold in November, a bank account that changes between two payments, the same bill arriving twice by two routes. These are the eight questions worth asking in a demo, and what a good answer to each sounds like.

Last updated 20 September 2026

1. 1. Ask how the invoice is read, not whether it uses AIEvery product in this category says AI invoice OCR. The question that separates them is what happens to a PDF that already contains a text layer. Reading that text directly returns the GSTIN and the invoice number exactly as typed; running a vision model over a rendered image returns a confident guess, and a single transposed character in a GSTIN is a failed match against the vendor master and a blocked input tax credit. Ask which path the product takes by default, and what it does when confidence is low — holding the field for review is the correct answer, quietly posting it is not.
2. 2. Check that the approval matrix matches the one you already useIndian finance teams rarely approve on amount alone. Sign-off usually depends on the department, the cost centre, the vendor category and whether the bill has a purchase order behind it, and it often needs two people above a threshold. A tool with a single approval level, or one that can only branch on amount, will be worked around within a month — the bills will be approved over email and entered afterwards, which is the process you were trying to replace. Map your real matrix on paper first, then ask the vendor to configure it in front of you.
3. 3. Ask what happens when a vendor crosses a TDS threshold mid-yearThis is the question that separates TDS automation from a TDS field. Deducting at the right rate on one bill is a lookup. Knowing that a vendor you have been paying since April crossed an annual aggregate in November, and that tax is now owed on the seven bills already processed, requires the software to hold a running total per vendor per section per financial year — and then to raise and recover the arrears. A product that starts deducting from the crossing bill onward is under-deducting by exactly the tax on everything before it, and you will find the shortfall at filing time.
4. 4. Ask whether GST is excluded from the TDS base automaticallyTDS is deducted on the value before GST when the invoice shows GST as a separate line, and on the gross amount when it does not. Both figures have to come off the bill during extraction for that decision to be made per invoice rather than from a default someone set once. It is the most common source of a rupee-level mismatch between the books and the return, and the easiest to miss, because deducting on the gross amount produces a number that looks entirely reasonable until the vendor disputes it.
5. 5. Ask whether the vendor bank account is verified, and re-verifiedMost AP tools store bank details. Far fewer confirm the account actually belongs to the vendor before the first payment, and almost none flag it when those details change afterwards. The change is the moment that matters: invoice fraud in accounts payable is overwhelmingly a bank detail quietly edited on an otherwise genuine vendor, often through a convincing email. Verification at onboarding without change detection afterwards covers the wrong half of the risk.
6. 6. Ask where duplicate detection runs — before approval, or before paymentA duplicate has to be caught twice, because it arrives twice. The same bill emailed by a vendor and also handed to accounts on paper should be caught before approval. A bill already approved and then submitted again through a different route has to be caught before money moves. Ask how matching is actually done: invoice number and GSTIN together, amount and date proximity, and the partial-number patterns that amended invoices produce. A product that only compares exact invoice numbers will miss most of them.
7. 7. Ask what the posting into Tally Prime or Zoho Books actually looks likeAn integration can mean a CSV export you still import by hand. Ask to see an approved bill land in a test company: whether it maps to your existing ledgers, voucher types and GST classifications rather than creating new ones, whether the invoice image is attached to the voucher, and what happens when the vendor does not exist in the books yet. A posting your accountant has to correct afterwards has moved the data entry rather than removed it.
8. 8. Ask how the audit trail reads to somebody who was not thereThe test is not whether actions are logged — everything logs. It is whether a statutory auditor, or you in eighteen months, can reconstruct why a specific bill was approved at a specific amount: which fields the extraction changed, who overrode what, which rate was applied and on what authority, and whether a lower-deduction certificate was in force at the time. If answering that means opening three screens and a spreadsheet, the trail exists but does not work.

Manual AP vs a general AP tool vs India-built AP automation: a feature comparison

The comparison below is by capability rather than by brand. Most accounts payable software sold into India was built for US or EU payables, where GST, TDS and Tally do not exist as concepts — so the gap is rarely in the invoice capture and almost always in what happens after it.

None of this argues that a general AP tool is badly built. It argues that the Indian compliance layer is not a localisation of accounts payable — it is a different problem sitting on top of it, and a product that treats GST and TDS as extra fields will push that work back onto the person doing the filing. How TDS automation on vendor bills has to work goes through the third and fourth questions above in full.

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