Introduction
The AP and AR departments are the beating heart of a business, controlling the important cash flow that enters and exits. But they are frequently choked by paper and manual procedures: Invoices come in via envelopes and email, need physical signatures, are filed away and force teams to shuttle between accounting software and disparate clouds of document storage. Such detachment creates a slow, error-prone and expensive process.
Imagine this: Your AP clerk gets an invoice, keys that information into his or her accounting system (which is already printed right there on the paper), walks it down to the end of the hall for approval and then puts that paper in a file cabinet where next month it might take 20 minutes to find. And, in the meantime, your AR team is making collections calls to customers about a late payment—only to learn that they never received the invoice or worse yet, it’s sitting in an employee’s spam folder.
These aren’t just minor inconveniences. Manual processing in finance departments equates to the problems of late payments, missed early payment discounts, damaged vendor relationships and cash flow issues. Research proves that businesses are losing, on average, 5-7% of their annual revenue due to clunky AP/AR processes. That is real money walking out the door.”
Not the least of these is Document Management System (DMS), which when built into an ERP software system like Intersoft ERP,revolutionizes some business tasks. The instrument ceases to be distinct from the transaction, it is absorbed in it. This integration results in a smooth, paperless and automated process that can reduce cycle time by more than 70% and significantly enhance accuracy. We need to walk through the flow of a payable and receivable in this fairly-stripped down setting.
The Accounts Payable Criteria: Migrating from Mailroom to Mastercard
The Old School AP Cycle (15+ Days):
- Invoice received (mail/email)
- Printed, stamped, manually coded
- Walked approvals (that could be several)
- Filed after approval
- Data entered by hand in accounting software.
- Check printed and mailed
- Month-end scramble for filing
This old way not only wastes time, but it is insecure. Invoices get lost between desks. Approval bottlenecks occur when managers are traveling. The duplicate payments get through, because there’s no central visibility.” And every audit season your team spends days searching file cabinets instead of analyzing financial performance.
Integrated, Automated AP Workflow in Intersoft ERP (2-3 Days):
Step 1: Smart Capture & Generation of the Digital Twin
AP Email Invoices are delivered via a central AP email inbox, EDI or scanned in at one central location. The brilliance of this approach is that it’s flexible: Vendors can send invoices however they want, and the system processes them all.
OCR (Optical Character Recognition): The software does auto recognition and processing of main data – Vendors Name, Invoice Number & Date, Line Items, Total. The accuracy on the technology has proven to be very high, above 95 % for many documents even with different invoice layouts.
At the same time, a digital AP draft bill is immediately generated by the system in the ERP and more importantly, is linked to this bill with the original invoice image. This is the “digital twin”, the transaction and its source document born linked. Imagine a birth certificate that never gets detached from the person. There is only one location for all information about that invoice forever.
Step 2: Automated, rules-based routing & approval
A bill is drafted and the associated invoice which will then be electronically approved according to rules that can be predetermined. These rules can be complex: invoices under $500 may auto-approve, while ones over $10,000 need the signoff of the CFO. Some vendors might go to specific department heads. Purchase orders can also be the basis for three-way matching against receipt confirmations.
Approvers are notified and evaluate bill and invoice image next to one another on the ERP screen. At their desk, at home, while traveling, or in fact from anywhere around the world: They approve or deny with a click. Gone is the waiting for someone to return from vacation to sign a piece of paper.
The audit trail records each step in this approval chain. Who saw it? When? What did they do? And all this data is taken without a single person having to keep manual track.
Step 3: Touchless Posting & Payment
After final approval, when the bill is fully approved it is automatically posted to the General Ledger and liability balances are updated. There’s no having to re-key information, no errors made in transcribing the data, and no questioning whether the numbers on your general ledger really add up to what you owe.
The payment is scheduled by the system according to conditions. Dumb Scheduling: Means you’re paying too soon (losing float), or paying too late (destroying relationships and hurting credit). When payment goes through, whether ACH, virtual cards or check , it is posted and the invoice document’s status changes to “Paid.”
All documents, written confirmation; original invoice, approval log and payment documentation are permanently affixed to the vendor and GL transaction. Years down the line, if a question springs up, you have the entire history at your fingertips in seconds.
The Outcome: Faster vendor payments (grabbing those precious 2% early-pay discounts that can save you thousands a year), data-entry errors eradicated, no more lost invoices, complete insight into your liabilities on the dime and an audit-ready package for every transaction of consequence. Your AP team: paper-pushers turn strategic partners They negotiate, get you better terms and optimize cash flow.
The Transformation of Accounts Receivable: From Delivery to Cash
Old AR’s manual cycle (DSO 30+ days):
- Invoice created in Other system or application
- Email/mail to customer
- Payment arrives (check/ACH)
- manual application of payment to the open invoice in accounting software (Cash App)
- File remittance advice separately
The disconnect here is painful. Your sales team makes the sale, fulfillment ships the product, then … nothing until an invoice gets created. When the hour is up, the quote goes dark and customers say they can’t find it or dispute line items because they no longer have records of what was in the original. Payments are received with cryptic references that do not correspond to your invoice numbers, forcing your accounts-receivable team to play detective.
Intersoft ERP (Faster DSO) Streamlined, Automated AR Workflow:
Step 1: Context-Rich Invoice Generation
The ERP automatically creates invoices through sales orders, project milestones or time entries. When a trigger event occurs, you ship, you hit a milestone , the invoice is automatically generated. No human intervention needed.
For instance, integral supporting documents, contract copies, SOWs, delivery receipts, even photographs of delivered goods, are automatically linked to the invoice record from the DMS. This background renders the majority of disputes moot long before they begin. Customers are able to see exactly what they’re being charged for, and why.
Step 2: Expert Delivery & Simple Payment
You can email invoices from the app, with a secure link to your customer portal. The email is professional, branded and it can be complimented by tailored messages depending on the status of your relationship with the customer.
In the portal, customers are able to see the invoice along with all supporting documents providing transparency and minimising disagreements. They can view their entire payment history, download receipts and even set up recurring payments if that is an option.
Pay them straight from an embedded online payment gateway. Credit card, ACH, digital wallets or anything that works for the customer. The easier you make things to pay, the sooner you get paid.
Step 3: Automatically Apply Cash & Reconcile with Ease
Once electronic payments are received, with AI-driven matching, the system automatically applies cash to the right open invoice. Moreover, the system will be able to intelligently recommend matches even when a customer pays off multiple invoices in one bulk payment or takes unauthorized deductions.
Attached to the remittance advice is the digital payment record. Everything remains together, forming a coherent story of each transaction.
When payment is posted, the document status of the invoice becomes “Paid”, and the customer’s account reflects this in real time. Your sales people can tell right away when your customers pay, and that in turn helps them better manage relationships.
The Outcome: LOWER DSO with faster invoicing and easy to pay. Other firms leverage DSO reductions of 10-15 days, releasing enormous working capital. The fewer billing disputes there are, the less time Consumer A could spend arguing with consumers, and the more time they can spend serving them. manual cash application work, your team is now free to spend time on collecting collection strategy for accounts that need it most. You get a 360-degree view of the relationship between you and the customer, payment patterns, dispute history, all in one place.
The Intersoft ERP Advantage – The Single Financial Record
The power is in the here-and-now integration. In our offering, the DMS is not a standalone sync based application – it’s part of the core data model of the ERP. This is no mere matter of semantics, it goes to the heart of how well the system functions.
One-Click Audit: Easily view source invoice, approval trail and payment proof right from any GL entry. When it comes to audits, this is a game changer. What once took days to prepare now takes minutes to demonstrate.
Process-Automated Archiving: The system can automatically collate and archive all relevant POs, invoices and contracts by requisite retention rules upon project closure. Document retention policy adherence now is more of a byproduct than the result of frantic manual searches.
Complete Vendor/Customer Management: It’s not only a vendor name, address and balance; it’s the complete set of records including all contracts, correspondence and transaction history in a tabbed interface. When you negotiate terms or settle a dispute, having that complete context at your fingertips means everything in the conversation shifts.
Real-Time Reporting: Everything’s in one place – there’s no hidden or manual work to be done, so your reports are a complete reflection of reality. You can generate an AP aging report and then drill down into the actual invoice images. You can see if there are patterns in the payment and view the remittance documents. That kind of detail makes for great decision-making throughout the business.
Check out Intersoft ERP here. And check out our Document Manager features, benefits, and industry use cases.
Conclusion
Integrating document management directly to your ERP is the last word in touchless financials. It does away with the artificial wall between the document (the “proof”) and the transaction (the “record”).
From an AP standpoint, this translates to a reduction in turnaround time including fewer errors and lost invoices, while enabling access to early payment discounts that add money directly to your bottom line. For AR, it translates into faster cash conversion and better customer relationships based on transparency and ease of use. For the entire finance team, that means eliminating paper-chasing in favor of strategic analysis made possible with a well-organized, transparent and auditable digital financial record.
That is not just an efficiency gain, it represents a fundamental modernization of the finance function. It’s the difference between your finance team spending their days on manual tasks and instead focusing on analysis, planning and strategic contributions that contribute towards building your company. In today’s competitive landscape, that difference may be all the one separating successful companies from those looking to stay afloat.
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