For all of the talk about paperless offices, many practices continue to drown in a sea of paper. Fortunately, document management and related applications can offer even small firms a less paper-intensive office. Additionally, the right application can make storing, finding, handling and routing documents more efficient and reduce errors.
The first thing to keep in mind when considering how you might reduce your practice’s dependence on paper is to realize that the term “document management” is something of a misnomer. A more descriptive and accurate term would be “content management.” In many instances, what has to be managed includes actual documents, such as those created by miscellaneous applications and other sources. These can be tax returns of varying types, e-mails and digitized faxes, and paper correspondence from clients, the IRS and other agencies, and the output of office productivity applications such as Word, Excel and PowerPoint.
However, documents/content can also include almost any other thing that your practice wants to keep track of and retrieve on demand. Some examples of this include company logos, digitized signatures, and even photos that have been or may someday be used in a newsletter or client alert.
And the term is also used rather liberally to describe a process that is actually file management. In fact, both the Windows and Mac operating systems offer the ability to compartmentalize files into folders, which is an almost universal attribute of any file or document management system. And MS Word and many other applications offer version management, as well as allowing you to input at least a minimum of metadata. And it’s metadata that is probably the most important component of a file or document management application.
AT THE HEART OF THE APPLICATION
Many of us have been exposed to the term metadata by way of film or television. In the media, the original sender of an e-mail is often traced back by way of the metadata attached to an e-mail. With e-mail, metadata usually consists of the routing that has taken place and frequently contains the IP address from which the e-mail originated. All of this is contained in a header that is not usually visible to the recipient.
When it comes to file and document management, metadata can consist of the file’s author, the original creation date, and the version number. If you would like to see a quick example of metadata, open an Office 2010 Word document and click on the “File” label on the ribbon bar and look at the window that opens up. Along with operations you can perform on the file like “Print” and “Save As” that are displayed along the left side of the screen, the rest of the screen displays some of the metadata associated with the file, including the creation and last accessed dates, and even a “Permissions” button that will allow you to detail who is authorized to share access to the file and whether or not they have permission to edit it. All of these items are stored in the document file’s metadata.
Metadata is particularly important in document/file management because it often contains keywords that are either extracted automatically from the file being managed or entered by the user when the file is imported into the application. Along with other metadata such as version number and access privileges, this metadata is used to retrieve the file, be it a document or image, when required. And no matter how fancy the document or file management application is, if you can’t easily and accurately get the files you need, the entire process has just been a waste of time.
NOT JUST FOR YOU
A document management application is probably going to work well in your firm, but there are advantages to both you and the client in recommending at least an entry-level system to your clients. Good recordkeeping extends beyond automating bookkeeping. It also comprises the ability to track, and if necessary retrieve, all kinds of “documents,” regardless of content, that back up the actual financial transactions recorded by the client’s accounting system.
Another thing to consider in implementing a document management system at one or more of your clients is the application’s value as a component of internal control, something that’s of extreme value in pretty much any business, but exceptionally so if your client falls under the recordkeeping requirements of SOX or the transparency requirements of a nonprofit.
Tim Gavin, audit manager at Top 100 Firm Sikich, mentioned that different practice units of the firm tend to use different document management solutions, though the audit software that his practice area uses provides both document management, and the ability to synchronize with the firm’s overall document management application. He emphasized the importance of document management to the practice’s workflow: “For audit engagements, the paperless audit software is our central point of access to files. We work remotely quite a bit. The other component to the workflow is our client portal that we use for exchanging documents with our clients.”
Gavin explained that the document management component of the audit software that Sikich uses is critical to the process of conducting their audits. “As a replacement of the old days where documents were all filed in folders, organized by type, whether it was testing or the financials, or what have you, all carried around in trunks, the paperless software allows us to organize these documents in a folder according to document structure,” he said. “We can tag them and everything that relates to the audit is captured and maintained in these files.”
The Neat Company, which offers the NeatDesk scanner/software solution as well as Neat Cloud services and other document management products, got much of its initial success with kiosks in many large airports. While the company’s sales outlets have shifted over the years, its message of scanning receipts and other important documents hasn’t. Vice president of product management Chris Barbier pointed out that using document management to ease the burden of tax time benefits the end user and accountant alike. “Many people wait until just before tax time to get together all of their important documentation. In many cases, things may have been misplaced or things like receipts become unreadable. Where document management can assist is by providing the taxpayer with a way to quickly digitize and organize their data throughout the year. This prevents possible loss of items and allows them the opportunity to ensure all important documents are available come tax time. They can share this data electronically with their tax accountant instead of bringing a shoebox of paperwork to them.”
Dan Franks, CPA, a tax manager at Beaird Harris & Co. PC in Dallas, uses Neat Desktop to organize client documents for tax preparation. “Once I started figuring it out and learning its features, I realized it would be useful to use for some of my tax clients,” he recalled. “In this paperless era, we try our best to get our clients to scan everything and send us PDFs, but you’ve got the people that have been putting things in the shoebox for so long that’s all they know how to do.”
Neat’s Barbier also points out the value of using a document management system to capture receipts and other vital tax documentation in the event of an audit. “You or the taxpayer have an easy way of getting to all supporting documentation for their return with a document management system.”
FAR FROM STAND-ALONE
There are a number of things that an accountant should consider before venturing into document management territory. Perhaps the most important of these is that while document management is commonly sold as a stand-alone, independent application, implementing it as such is going to seriously constrain the application’s usefulness.
Unless document or file management is being installed to handle content associated with a single application, such as tax preparation, document management should be considered as a component of workflow management, and the documents should be imported into the application as soon as they enter the workflow.
Because of the close relationship between workflow and document management, many accountant-oriented suites incorporate document or file management modules as a component. Some of these include AccountantsWorld’s Cloud Cabinet, CCH’s ProSystem fx Document, and Thomson Reuter’s File Cabinet CS.
Michele Cyron, the owner of West Grove, Pa.-based Cyron and Co., has been using File Cabinet CS since 2007. “We were with another vendor, using their tax software, but I knew I wanted to go with a suite of products. I thought it would be efficient to have products that talked to each other,” she said. “And oh boy was I right!” Cyron added, “I think an important piece of any document management system is stepping back and plan, plan, plan.”
WHAT TO LOOK FOR
A number of vendors and users mentioned that the cloud plays an important part in their document management process, either as a place to collaborate with other users in the company or provide client access to their documents. Chandra Bhansali, CEO of accountant-oriented software provider AccountantsWorld, said, “The most important requirement [of a document management system] is that it must be cloud-based. It doesn’t make any sense for an accountant to use a premise-based system in this age.”
LedgerDocs CEO Wayne Zielke pointed out that ease of use is an important thing to look for in a document management system, and offered an example: “Users are able to upload documents directly within LedgerDocs, by e-mailing to the application using a custom company e-mail address, by taking a photo with their smartphone, or by syncing their LedgerDocs and Dropbox account. These tools allow for users such as business owners to upload on their time, whether it’s in the office or on the go.”
Ease of use is something that is important to Bhansali as well. “The system should make it extremely easy to save files. A desirable feature is that as soon as financials are created at the closing of a period, payroll forms are e-filed or tax returns are completed, and are automatically saved in the document management system.”
Document security is another area where document management application software comes into play. “One of the challenges in document management that’s really come up in the last 10 years or so as a lot of firms are moving to paperless solutions and exchanges of documents electronically, security is a huge issue and it’s becoming more so day by day,” Sikich’s Gaven pointed out. “So we’ve addressed that by moving away from e-mails — e-mails are inherently not secure. Implementing a client portal has been a huge measure in addressing security concerns.”
Finally, give some thought as to what other applications in your practice the document management system is going to work with. Many tax preparation and write-up applications interface with selected document management systems seamlessly.
MORE TO COME?
Document and file management systems aren’t just a passing trend, but rather represent a move toward a more efficient and effective workflow. According to LedgerDocs’ Zielke, “Document management applications will become an extremely important component in the accounting workflow. As more businesses move their books to the cloud, the demand for accounting-specific document management solutions will soar.”
Andy Smith, product manager of document management & workflow at Thomson Reuters, agreed, and provided some insights into what he observes as the future of document management: “Three of the issues most significantly impacting document management are mobility, collaboration and security. Firms and their staff are increasingly mobile, in some cases even geographically dispersed. These broader workforce trends impact the way accounting firms conduct business and necessitate solutions that enable staff to work remotely, from client offices, or across multiple firm offices.”
MAKING THE PICK
There are numerous document management and file management applications on the market. These solutions range in price from a few hundred to thousands of dollars. Making the right selection is a decision that can have a great impact, either positive or negative, on your practice.
But the first step in making your choice is the same one you’ve faced in the past selecting any hardware or software. It’s knowing your business and its workflow. If you have this knowledge, then you can anticipate where and how the document management solution will fit and enhance the way you do business, rather than just being a fancy application that you can show off to clients. AT
A selection of document and file management solutions:
Cloud Cabinet / AccountantsWorld
Cabinet SAFE, Cabinet SAFE Cloud / Cabinet Document Mgmt. Solutions
Doc.it Suite / Doc.it
PaperPort Professional 14 / Nuance
eFileCabinet / eFileCabinet Online
FileCenter Pro / Lucion Technologies
LaserFiche Avante, Laserfiche Rio / Laserfiche
LedgerDocs / LedgerOnline Inc.
Sharepoint / Microsoft Corp.
File Cabinet CS / Thomson Reuters
ProSystem fx Document / Wolters Kluwer, CCH