Double the revenue with just a 50 percent increase in staff-that's just what M. Darren Root did by taking his firm paperless. And paperless means that Bloomington, Ind.-based Root & Associates has not printed a file copy since 2001. "Storage space has definitely declined-we used to use about 25 file cabinets, now we use about five," says Root. "This is because we keep only a permanent file on each client. We also used to purchase about 50 cases of paper a year, now we use about 10. This also extrapolates out to toner savings as well."
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That effort helped make Root the Indiana CPA Society Technology Person of the Year for 2004. The firm got there with an investment in the technology and in the processes needed to make document management work.
And, although Root may be an award winner for the effort, going paperless isn't all that easy, he says.
"More thought needs to be put into the upfront investment. Firms need to think about how they handle paper before they jump in. Some people will kick and scream, while others will easily adopt it, but it takes a good two to three years before it's running smoothly," says Root.
The firm uses Creative Solution's File Cabinet Solution. It scans all client documents, keeping all financial statements, payroll and property tax returns, and Excel and Word documents in FCS as well.
At first, it was tough to name files, decide which files went in which folders, and confirm data in FCS. "However, once we created processes, it worked. The processes don't have to be different than others in the firm, but the mindset has to be," adds Root.
Making the system work required process changes. Now, instead of filing every piece of mail, including email messages, each piece of relevant paper gets scanned and shredded or given back to the client. "This process affected how we received and processed payroll info, tax notices, bank reconciliations, tax return preparation, everything we do," says Root. In tax preparation, all returns are reviewed on screen. Supporting documentation is scanned and checked on screen as well.
Setting up the system involved buying about $15,000 worth of hardware, including monitors and scanners. Recently, Root decentralized scanning, putting Fujitsu scanners on all employees' desks at a cost of about $11,000. It was as much a people issue as a technology issue. "When the paper hits the desk it can be scanned right into FCS, not to mention, the staff is thrilled about not having to get up all the time," adds Root.
Installing dual monitors was also critical in making the system successful.
"I can't fathom not having them. We always have our file cabinet open and sitting on our desktop. Right now, 19-inch Dell monitors are going for about $499. It's almost at no cost," says Root.
Although he's not sure of the return on investment, Root looks at the increased volume his firm does. "Before going paperless, we had six full-time people and we did about $600,000 in annual revenue," he says. "Now, with nine full-time people we do $1.2 million." It wasn't just expanded volume. The firm moved into the financial service and technology areas because the document management system freed up time to enter new fields. The firm completes 900 tax returns, 80 payrolls, and 100 payroll tax returns, and supports 45 computer networks.
Root has been practicing in Bloomington for 20 years. He gets a number of clients from Indiana University, whose main campus is in Bloomington, and has lectured about technology at I.U.'s Kelley School of Business.
He currently holds a CITP Certificate, the series 6 and 63 securities licenses, and a life and health insurance license. Before forming Root & Associates, he worked at Deloitte & Touche.
In addition, Root partnered with Mike Ryan, a Microsoft Certified Consultant, to form RootRyan Technology Company. The company provides set-up and support of all versions of Microsoft Windows, including workstations and servers. It also resells everything in the Dell product line including desktops, servers, printers, and handhelds. The firm also supports other brands of hardware and software including Hewlett-Packard, Gateway, QuickBooks, and Symantec.
Carly Lombardo is Associate Editor of Accounting Technology and can be reached at carly.bohach@