When Alan Sandersen tried using Intuit's Source Doc Auto Entry product prior to the 2007 tax season, he was disappointed to learn it could not identify all the tax documents he needed it to. The process went so poorly for him that his Texas firm resorted to manually sorting client documents and preparing returns from paper. Sandersen Knox & Co. had made a decision to go paperless with their auditing process a few years ago using Thomson's Engagement CS product. The experience was a good one for the firm, and Sandersen was pleased with the product's integration with PPC, risk management and time and billing system.
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He chose the Intuit product because his firm had been a Lacerte client for years, but he was far from the only disappointed customer and Intuit yanked the product from the market, saying it "needed more time to create the best experience for customers."
The result was a new product released at the end of 2008: Intuit Document eSort, which identifies client source documents and organizes them into an electronic file which can be viewed directly from Lacerte or ProSeries tax software.
Intuit sought help from another vendor in developing eSort, however. And it is that vendor that Sandersen selected to do the "grunt work" for him - Copanion. Copanion's Gruntworx product identifies, organizes and bookmarks scanned documents, which Sandersen says allowed him to scan prior to preparation.
"The best part is the ability to hand off a set of unsorted source documents as they come in to an administrator and have them come back in a completely sorted, readable and useable file for preparation," he says. "We easily saved 15 minutes per return with sorting," which he says helped his firm file fewer extensions.
Many practitioners who are trying to reduce the amount of paper they shuffle around their offices have learned the hard way that failing to invest in the appropriate scanning hardware and methodologies related to how they get their clients' data into their system defeats the purpose of going paperless.
Scanners serve as the heart of any document management system. After all, firms can't work with their clients' documents electronically if they don't somehow convert them to digital format.
But the process doesn't always go as smoothly as firms had hoped, leaving them frustrated and sometimes returning to the manual process they had used previously. Complaints include time wasted fixing the order or orientation of documents, having to rescan unreadable items, missing pages that were not scanned and not being able to find certain files once they've been scanned.
A lot of these complaints boil down to user error, either from choosing the wrong product for their purposes or failing to adopt best practices to ensure they get the most out of their investment. (See Sidebar, "Scanner Specs.")
Crawl, Walk, Run
Although front-end scanning is cited as a best practice, the fact of the matter is that most firms are still scanning after preparation.
About 70 percent of Intuit's DMS customers fall into this category. Copanion conducted a survey in December 2008 that fond roughly 33 percent of firms are scanning after the fact and 33 percent are scanning at the beginning, that's compared to 27 percent that were scanning after and 18 before or during the process in December 2007. The remaining percentages were either considering scanning or had no plans to do so.
Ed Jennings, Copanion's senior vice president of sales and marketing, pointed to three customers that are at three different stages of the scanning journey.
Ewerth & Associates falls into that after-preparation phase. The midsize Lincoln, Neb., firm manually organizes source documents for thousands of simple 1040 returns. It still follows a traditional paper-based preparation process, but uses dual monitors, which accountants say is an essential part of the paperless process. Then the firm scans completed tax returns and source documents using Gruntworx to organize and bookmark them, and puts that file in its FileCabinet CS document management system.
"It's consistent and archivable," Jennings says. "There's not a lot of complexity and they can key in the data while the client is sitting there."
Another Gruntworx customer, Plaistow, N.H.-based Systematic Accounting, has no document management system, but has moved to scanning at the beginning of process. Once documents come in from clients, they are scanned by an administrator and saved to the appropriate place on the network. Then the preparer opens it up on dual monitors and manually enters the information.
"The key benefit they were excited about was the consistency of source docs," Jennings says. "No matter who helped scan them, whether they knew about taxes or not, the hierarchy was always the same so it made data entry much easier even though it's manual."
A final example is Patrick Accounting, headquartered in Cordova, Tenn., that uses FileCabinet CS in a remote access environment for its three separate offices. Scanning upfront helped the firm save 40 to 45 minutes per return.
"He's running," Jennings says. "We're saying if you want to sprint, that's automated data entry."
In September 2008, Copanion introduced a Pro version of its product to automatically fill in forms for GoSystem Tax RS, and plans to have versions for CCH, Intuit and other Thomson products by the end of this calendar year.
The cost for Pro is $30 per return versus $1 to $2 with Gruntworx, but Jennings attributes this to the additional value that comes from automatic input and time savings of 30 minutes to one hour reported by some large regional firms.
CCH also introduced a tool for automatic input to its Prosystem fx Scan and Tax products, AutoFlow Technology, which extracts data from about a dozen of the most common 1040 source documents and imports them directly into the tax software for roughly $15 per return.
In its 2007 software, CCH's Small Firm Services introduced Scan&Fill for its TaxWise and ATX products, which enable users to scan in such documents as W-2s and 1099s and export them to TaxWise or ATX. They sell for $715 plus $89 for required training.
SurePrep offers 1040Scan, which allows users to export source document data to GoSystem Tax RS, Lacerte and ProSystem fx Tax for $30 a return.
Jennings believes that most firms won't even consider automated entry tools for at least a year and practitioners like Sandersen are in wait-and-see mode, hoping that the technology will improve and the price will decrease.
"Gruntworx does a really good job of organizing the data for you; migration will create an even better benefit as technology evolves," Sandersen says. "We're trying to use the proven methodology at hand and avoid being on the bleeding edge. We could have used SurePrep to populate those returns [but] we weren't willing to pay SurePrep's prices. So we're waiting."
While certain vendors offer functionality that routes items into their document management systems, the reality is that many firms still haven't made that investment. A 2009 Association for Accounting Administration survey on paperless office best practices found 51 percent use a firmwide program to archive all final tax returns, financial reports and firm correspondence.
As a result, one of the biggest frustrations people voice is the inability to find items once they are scanned.
Searching becomes problematic when documents are saved as PDFs, which most people agree has become the industry standard but which cannot be searched in the same fashion as Word or Excel documents.
Vendors have emerged that are attempting to solve that problem.
One, Rebus Technology, offers a product called Recollect starting at around $100 that contains "fuzzy search" technology that helps search through documents that may contain misspelled or smudged words frequently created by Optical Character Recognition processes. Recollect keeps the original as-is, then converts it to a Word document and indexes every word.
When Caroline Vizcarra started working for Concord, Calif.-based Pacific Pension & Benefit Services about three years ago, administrators had to search through accordion files to find any information.
A new owner purchased the company, which helps businesses tailor tax-deferred retirement plans, and wanted his staff to be able to scan in pertinent information and send it to him on the road. Now, Vizcarra scans any document coming in and uploads it into a file which can be searched using tools from Rebus.
"I live by this program. It's made time management much better. Account executives can just click, click click and find everything recollected into a file on our desktop," Vizcarra says. "If you don't name each file, but are looking for Andrew Smith, it takes a picture of the page so anything that says Andrew or Smith it's like a bull's eye hits. This is pretty dead on and it even finds deleted items. There's a misspelling here or there, but the accuracy is about 90 percent and Recollect underlines it and lets you know."