For Newport News, Va.-based CPA firm Carmines, Robbins and Co., installing a document management system took care of four problems at once: a significant reduction in the amount of room needed for client files; a secure loss-prevention system for files; a savings of roughly $6,000 in costs associated with paper products and accessories such as printer ink; and retaining one of their most prized accountants, even after she moved to Alaska."As long we can gain a secure connection, employees can be anywhere in the world and still work for me," said Rob Carmines, a partner at the firm. "Next we're moving to get a Net portal. For clients it can be a real godsend."
Document management systems providers saw a dramatic increase in adoption last year for their products. Not only was adoption up, but the education of consumers on document management systems rose as well. The type of calls that providers received shifted from asking what DMS were, to how to better utilize those systems.
As users become more sophisticated, one feature in particular that they are seeking is client portals. Net or client portals are Internet-based tools that allow accountants to put files, like a tax return or a newsletter, in a client's account. The client logs on with a username and password, and can then view and download the tax return or files, much the same way one would with an online bank statement.
"As clients become more comfortable doing their online banking and managing their investment portfolios online, the natural extension is to interact that way with their accountant," said Jack LaRue, senior vice president at Thomson's Creative Solutions, a Dexter, Mich.-based provider of tax and accounting software products and services.
Even the way in which client portals are being used is becoming more advanced. Having the accounting firm merely put a tax return up on the portal and then telling the client to pick up their copy online is not applying the full technology of the portal.
Clients too can share their information, such as scanned receipts or a QuickBooks file that is too large for many e-mail systems to handle, by uploading files into the portal for their accountant to view, download or enact changes.
Portals help drive out paper
The paperless office is becoming reality - albeit more slowly than was first anticipated - as the federal and state governments offer e-filing for tax returns, firms adopt document management systems for their internal needs, and portals become the means of communication with clients.
CCH, a Wolters Kluwer business and provider of tax and accounting software based in Riverwoods, Ill., has taken the portal idea a step further from collaboration between client and accountant, by adding a third-party portal.
If an outside accountant is hired by a bank to do some work for one of the bank's customers, the accountant can log on to an extension of the customer's portal, and make the necessary changes. The accountant can then upload the changes to the portal, and it looks as if the bank has published the information onto the customer's portal. The customer never has to know that a third party was involved.
Creative Solutions created two separate types of portals for accountants. One portal, the UltraTax CS portal, allows CPAs to upload 1040s for once-a-year clients into the portal for a fee of $5 per year per client. For those clients with a more ongoing relationship with their accountant, CS offers the NetClient CS portals. In NetClient, a client can view their financial documents, enter their bookkeeping online, key in their payroll data, check stock quotes, enter the UltraTax portal, exchange files with the accountant, and pool all their financial data from different Web sites into the NetClient page.
"If the client can see everything online, it makes the CPA look more savvy and up to date," said Joe Harpaz, vice president of business development for Thomson's GoFileRoom, a document management solutions provider.
WithumSmith+Brown, a New Jersey regional CPA firm, has been using the GoFileRoom document management system for six years, but Jim Bourke, CPA, CITP, said that they reached a level where the firm wanted to extend the DMS's capabilities even further. They started using GoFileRoom's client portal, ClientFlow, in June, and now Bourke believes that most firms will eventually offer a client portal as a necessary feature to their clients.
"This is the next big step for firms. The profession is going to be forced by government authorities to not e-mail important information," said Bourke. "Basically, what's happening is very strict privacy regulations are falling into place where you can't mail Social Security numbers and you certainly can't e-mail them."
Bourke was referring to a law passed in California in 2003 forbidding the e-mailing or snail-mailing of Social Security numbers. In January 2005, Arizona passed a similar law, while Georgia enacted legislation in which a firm can be fined up to $10,000 for not properly disposing of a Social Security number - including a scenario where the number was stored in an e-mail and subsequently found and taken by another person.
"There are many people out there, including maybe some members of my own staff, that do not want their information on the Internet," said Carmines. "But this information is not really on the Internet, it is behind a secure Web portal. What I am hoping to do is send out last year's tax returns and ask them if they want to view it next time over the portal, while stressing the security of it."
The security of a Web portal from a DMS provider is equal to that of a bank's Web site. Both offer high levels of encryption, firewalls and an account lock if a password is entered three times incorrectly.
But do they need it?
Yet Intuit's Neal Humphrey, product manager for the Lacerte Document Management System, said that they still do not see a big drive for adoption of client portals in smaller-sized firms. "There's been so much interest in Web portals that we actually probed into this area. But we're not seeing the pain points there with our customers. We don't build features they don't need," he said. "We might evolve there one day - it's a neat technology - but we don't see our customers asking for it yet."
However, Charles Tzinberg, managing partner of CPA firm Tzinberg & Goldenberg PC, in Glen Carbon, Ill., said that adopting a client portal has helped his 11-person firm "tremendously."
"Many of our clients see the advantages of a paperless environment, so if a client is in Taiwan and needs access to income tax returns, or any information, all he needs is an Internet connection, versus dealing with time differences and faxes," Tzinberg said. "It's totally under our control and easy. All the smart firms are using it."
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