Paperless Payoffs

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Karen Bodeving's CPA firm has gone to the dogs. The sole practitioner began breeding Saint Bernard dogs 11 years ago in hopes of spending more time with her family outside of her Oregon office. Today, she and her husband travel the world showing some of the dozen puppies they raise on 40 acres outside Grants Pass-even during tax season.

She's not Superwoman. She just made the choice to mimic what larger accounting firms were doing in terms of going paperless and proved that investing in document management systems could pay off for even a one-woman shop (with some help from her part-time secretary).

Bodeving, a Lacerte user for several years, decided in 2005 that Lacerte Document Management was a "natural step"for moving toward a more electronic system by dropping the roughly 400 returns she handles directly into online file cabinets. It cost her less than $2,000 to get started, but the initial results weren't exactly what she had hoped for.

Partner Insights

"The first year, I was a mess. I had no idea what I was doing," Bodeving confesses. "I was just using it as a filing system, making notes in pencil, then scanning it myself. It was so hard to let go of paper, and I wasn't smart enough to invest in a decent scanner."

The next year, she started doing the same routine, but found her workload snowballing so much by February that she practically needed someone in the office around the clock making photocopies. So she stopped mid-season and purchased a Canon scanner that included Adobe Acrobat 7.0. Within an hour, she made back her money.

Acrobat essentially lets her emulate all the things she was used to doing in a paper environment such as circling numbers, adding checkmarks, stamping items and signing documents, so she doesn't feel like she's letting go of her pencil.


She estimates her second-year savings at about $2,200, including costs for copy paper, files and colored tabs and eliminating a part-time copy person. And she only travels to the office a couple of times each week.

Her biggest challenge now, besides avoiding slobber on her computer, is monitoring her work in progress so things don't fall through the cracks.

"I had stacks and stacks of paper everywhere that looked like there was a huge backlog," she says. "Now I have to remember that the big piles are sitting in my filing system, just not sitting there looking at me."

Bodeving's experience is typical of many firms that take a simple approach to going paperless. But an increasing number of them are starting to realize the benefits of going "less paper"and vendors are responding by offering more affordable systems to businesses with 10 employees or less, starting as low as $399.99 for a five-user Docsvault Small Business pack by Easy Access Data or $365 per user per year by Acct1st, with some even offering free training and support.

Document management systems aren't new. FileCabinet CS from Thomson Tax & Accounting (formerly Creative Solutions) has been on the market since 1999, but people didn't understand the value back then, according to Teresa Mackintosh, vice president of marketing. Over the past three years, CSI has seen a 40 percent increase in customers and today about two-thirds of the roughly 10,000 firms that use FileCabinet have 10 or less users.

Shifting Downstream

While adoption is shifting downstream, a different mindset still exists between firms with 10 to 25 employees and those with less, according to John Higgins, cofounder of Rochester, Mich.-based CPA Crossings, which helps CPAs make the paperless transformation.

Partners at those slightly larger firms are attending more conferences or joining alliance groups in which they are hearing positive stories of paperless payoffs and are more active in their pursuit of document management as a result. Smaller companies, meanwhile, either still don't understand the value or misinterpret what a paperless office actually entails.

Two years ago, Higgins attended an event in which the American Institute of CPAs released results of a survey indicating that 25 percent of smaller firms believed they were paperless. Higgins knew that could not be accurate.

"Small firms are scanning documents and storing them as PDFs in e-folders, staying in Windows using a normal file save command, and to them that's paperless," Higgins says. "There's a little legitimacy to that. Because of the size, they're not going to see as much of the business (value). If you're a four-person firm, workflow automation (one of the features larger firms seek out in such systems and vendors are starting to push to smaller ones), is just yelling to the person down the hall."

But there are myriad benefits that firms of all sizes can reap if they just know how.

The key is easing them into the process and a giant first step is educating them about what a document management system can do in terms of having a more structured method for organizing their files. Firms are exponentially growing the amount of information they store. As that happens, they begin to see the weaknesses in the Windows-based filing structure, where the C drive essentially serves as a large cabinet consisting of potentially hundreds of manila folders that easily could become lost in the system.

"Demonstrating the benefits of having a structured indexing and filing system gets them interested,"he says. "Let me show you how you can get all the folders for company X for the last four years in one command."

Annotation capabilities like the checkmarks and stamps Bodeving appreciates are also favorites among her peers. "When you go paperless, you also go pencil-less. That's where people run into challenges," Higgins says. "They're accustomed to making notes on files. You've got to make those notes electronically."

Other important features include retention policies to automatically store certain document types for a predetermined number of years and discard them after that to comply with regulatory requirements, training and security features such as audit trails and client portals where firms can store each client's information separately for them to access instead of sending data via email.

Scott Vaden, principal of an eight-person outsourced accounting firm, agrees with Higgins claims and adds the importance of integrating with other systems and investing in the proper hardware when evaluating which vendor to select.

When The Bookkeeping Department, based in Richmond, Va., invested in Cabinet NG last year, the company had been using Paperpoint, an entry-level filing system, but needed to find an application to organize its filing structure.

"It's always a sickening feeling when you lose a document. Before, everything was there but because the system was so wide open, everyone filed a little bit differently. It was hard to get our hands around documents,"Vaden says. "If I could have back all the hours I or my staff spent looking for documents, I could probably be retired by now."

With Cabinet NG, filing automatically occurs as transactions take place, so it's "almost impossible"to misfile something. And he trained his clients to send everything via emails or faxes, which go directly to the electronic filing system using RightFax software so The Bookkeeping Department never touches paper.

Vaden also sought a product that integrated with the QuickBooks software his company uses to perform services for its clients, a feature for which Cabinet NG and other vendors are experiencing increased demand.

CNG-Books serves to unite document management with QuickBooks data by presenting the user with the same pull-down and data-entry fields used in QuickBooks to ensure that transactions and documents are filed uniformly.

He also ventured into the dual-monitor environment, a move which many say is crucial for paperless tax preparation because one screen serves as the "paper"an accountant would usually hold and frequently references, and studies show anywhere from a 15 to 75 percent gain in productivity when taking that route.

All of this saves The Bookkeeping Department an estimated $100 on paper, general supplies and storage per client per year in addition to $25 in overnight shipping fees and two hours of staff time to prepare documents for shipping per client every month.

Of course, the larger a firm is, the more savings potential it possesses. One larger customer of CCH's ProSystem fx Document, Mellott and Mellott, estimates it saves five tons of paper each year. The Cincinnati-based accounting firm, which has more than 30 employees, set its initial break-even investment goal at 36 months, but achieved it in 18.

Seeking Support

Mellott and Mellott attributes much of its success to the support CCH provided it, an observation CCH and other vendors are taking seriously by offering more intense training and handholding to companies willing to take the plunge.

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