Firms that have gone the paperless route offer directions

Going paperless: It's a term most firms have heard of, or might even claim to be doing. But there are many steps along the journey, and even firms that have found success admit that they are still fine-tuning their processes. There's no one right way to go paperless. A lot of it comes down to individual preferences. However, certain best practices and guidelines should be followed if firms want the system to work.

One of the most important things to consider is how the firm's files are organized in a paper world (physical filing cabinets). Mimicking that system in the electronic world - or getting it as close to that system as possible - eliminates staff confusion and reduces the likelihood of introducing inconsistencies in the way things are filed and named.

David J. Kupferman went through an exhaustive mapping process to ensure that the filing structure was right when his firm made the transition to Intuit's Lacerte Document Management System in 2004.

"I'm highly organized - we never lose anything," Kupferman said of his five-person firm in San Francisco, which arranges each client's folder into 20 or 30 subfolders that represent what would normally come in a tax organizer.

"Lacerte DMS is a simple arrangement, like a file cabinet, and there's a relatively nice interoperability to Lacerte Tax," he said. However, he added, the system falls way short of a full-fledged workflow tool to manage firm collaboration in a paperless environment.

Some firms don't need something that complex, he admitted, so taking the "baby step" to this product is OK. Whatever firms plan to use, he advises that they bring in a consultant or another firm to guide them through the process. "You can have the tools, but if you don't have the wherewithal, you can do it wrong," he cautioned. "I mapped this all out from the beginning, but once you implement, you need to go through a number of revisits."

Oftentimes the document management vendor can help, but the firm needs to ask for it. Many of them have very open, flexible systems that can be tailored to fit an individual firm's processes, therefore lessening the learning curve for the staff, explained Jim Bourke, a partner and director of firm technology at WithumSmith+Brown.

"A vendor that's going to work with you will make that bridge easier to cross and minimize the pain for end-users," said Bourke. "Educate the vendor - show them how you do things. Understand you need to change, but negotiate [something] middle-of-the-road to mimic your filing structure and minimize changes."

Clearwater, Fla.-based Bollenback & Forrett selected Doc.It's document management system because it didn't force the firm to change its structure too much and because the vendor provided suggestions for best practices, as well as staff training, said Rick Stuart, the firm's technology partner.

"We have a great firm manager; whenever we have something new she becomes a cheerleader and tries to make training fun. Having Doc.It send us someone who's worked with multiple firms and encountered a lot of questions helps all staff ask any question they wanted to and get an answer right then," Stuart said. "Some people take the approach of training a manager to train everyone else versus [being told by Doc.It] how other firms have dealt with that, and the manager on the spot can choose which way they may want to do it."

Training also helps reduce inconsistencies. "Make sure everyone is doing everything the same way. It helps with standardization," Bourke said. "Regardless of who the partner is, the person I'm doing the work for shouldn't drive how things are done. Let the DMS do its job, let it manage your documents. We have 11 offices - you pull up our DMS and the tax return is saved the same whether you're in Colorado, Florida or New Jersey."

Bringing more people in on the initial purchasing decision is a good start.

Get a team of decision-makers from every discipline within the firm - administrators, human resources, litigation support, and so on - so that every interested party becomes part of the process, he suggested.

"Small firms with three partners should go into a room and close the door. If two are in favor and one's on the fence, you make sure all the partners are 100 percent in favor. That's the message you give the staff. You can't have a partner talking it down," Bourke cautioned. "Now you sell it to your staff. It's not a matter of getting buy-in, but saying this is a mandated decision. We want to be competitive and take the firm into the future. This is the way we're going to do it."

Larger firms with multiple offices could test the system in one office and use that office as an example. Don't pick and choose parts of the practice, however. That sends a mixed message, especially to admin support people who might grow confused about what should go in the electronic system and what shouldn't, according to Bourke.


Systems like CCH's Prosystem fx Document were designed to handle more than just tax returns, including client correspondence, employee records and e-mail. To make sure everything stays in one place, the system integrates with other applications in the ProSystem fx Suite. In October, CCH plans to release a new Software-as-a-Service offering to replace Document ASP that will also integrate with Microsoft Outlook, Word and Excel, and provide asynchronous file-transfer capability. So, in essence, going all out like Bourke suggests could be conceivable.

Michele Hart, however, thinks it's OK to take things one step at a time.

Hart decided to invest in Lacerte DMS for the 2005 tax season because of the integration with her Weatherford, Okla.-based firm's tax software. "I did this as the easy way in because my tax program would drop all my clients in," Hart said. She arranged the electronic files the way her paper ones are arranged, with a separate folder for basic tax, electronic filing documents, engagement letters, source docs, tax planning, returns and correspondence for each client in each year. The system remembers the structure and replicates it for each client in following years.

The first year, her small four-person firm moved only the tax preparation process to paperless. That summer, she implemented it for all accounts, including payroll, write-up and sales tax, with no more printing allowed, except for client copies.

"Start slow. Pick tax returns first, then maybe pick payroll. But start January 1, not halfway through the year," she said. "Make the commitment and then do it."

Another improvement she's made was creating a second database for "dead" clients.

"Once a year, I make a list of inactive clients and have interns export them into the new one and delete from the current," she said. "They're taking up space, and the bigger the database is, the slower it gets."

When she first decided to make the paperless leap, Hart didn't want to scan tax returns from previous years, just those moving forward - an individual choice that each firm has to make for itself. Last summer, she had interns come in on slow days and start scanning in those old returns for her roughly 1,000 clients. As a result, the "dungeon" of a file room she once had now serves as a conference room.

Bourke and others prefer letting those old files die a slow death, as long as no other additional information is placed in that file room. With that process in place, the existing file room could be reduced in size, if not totally eliminated, within two to three years, Bourke argues.

That said, the first-year transition isn't always pretty. "Everyone has two monitors to see digital images of docs on one screen and import on another, with the prior-year's return on screen as a reference," he explained. "On first-year installations, those docs are manual. But once that first year is done, you're good."

Bourke's biggest argument against back-scanning returns is that he doesn't believe it's worth the time financially. But he does advocate for back-scanning lease agreements, shareholder agreements or anything else that impacts future operations and would normally be in a client's permanent file.


Improving client service is one of the biggest advantages of going paperless.

Marcum LLP processes about 4,000 returns a year. By using Copanion's GruntWorx Pro to organize and extract data from scanned tax documents and populate it into Thomson's GoSystem Tax RS, along with Thomson's GoFileRoom document management system, the firm is able to keep reasonable fees for clients and therefore stay competitive, according to tax partner Suzanne LoBiondo.

GoFileRoom lets her pull up GoSystem to see exactly what clients have in front of them the moment they call with questions. GruntWorx saves time manually putting documents in a specified order, and sometimes is arranged even better than had it been done internally, LoBiondo said.

It also lets her staff do more sophisticated work. "It enables us to use more seasoned preparers as reviewers at an earlier stage in their careers, versus just putting numbers in boxes, which is what GruntWorx is doing for you," she explained. "I look at it as a really great training tool for second-year people, someone who's worked on the same client one or two seasons and can look at it from a different angle. Managers take a more topside review, instead of a detailed review of every number on the return, and can spend more time looking for planning opportunities."

(c) 2009 Accounting Today and SourceMedia, Inc. All Rights Reserved.

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