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Document Management for Financial Services

Document Management for Accountants: An Overview

The most important aspect of document management isn’t the documents themselves—it’s what people need to do with the information in those documents that matters. This overview of document management for accountants explains what you need to consider when you're choosing a management system.

February 13, 2023

Woman is filing papers in a physical filing cabinet

The concept of document management for accountants is, itself, pretty simple. It includes the processes, policies, and technologies used to manage documents throughout their lifecycle. It’s all the work and systems behind accounting document management that make the subject a little more complex.

Whether your job title is actually “accountant” or you’re working in a financial services role, we’ll help you understand what kinds of problems document management can (and can’t) solve.

Why is document management important for accounting?

In a word: responsibility. It’s no accident that “accountability” and “accounting” have the same root. Accounting departments are responsible for producing and maintaining documents for everything related to financial records, contracts, budgets, and other areas. These include client, vendor, and internal documents. Proper management ensures no records are lost, stolen or destroyed.

It’s not just the docs!

Document management for accounting can also be defined as the act of organizing, processing, and securing paper and digital files throughout the accounting process. The most important aspect of document management in accounting isn’t the documents themselves, it’s the processes—the best accounting practices—around them. In other words, it’s what people need to do with the information in those documents that matters.

This might sound obvious, but one of the most common information management mistakes is focusing on the documents and not the people and processes around those documents. When you see all your documentation as a system, held together by repeated processes, it’s much easier to identify bottlenecks, outdated procedures, or other inefficiencies.  

When you see all your documentation as a system, held together by repeated processes, it’s much easier to identify bottlenecks, outdated procedures, or other inefficiencies.

How is accounting document management done?

Lots of different ways. And that’s one of the unique challenges for accounting departments. The documents themselves come from a number of different sources (vendors, staff members, clients) and in any number of different formats (from department-specific software, in emails or texts, on spreadsheets, on paper, in scribbled notes… probably even the odd carrier pigeon).

It’s a lot easier to set up systems and keep track of information when there are only a few inputs from a few sources. But that’s rarely the case for financial departments.

And while document management processes are part of a system, sometimes that system wasn’t designed thoughtfully. Maybe your drivers have always used paper forms and your CEO only wants to work with email (you’d be surprised…). Maybe your vendors were chosen for their expertise, but that expertise doesn’t extend to their accounts payable management, and you’re always having to chase them down.

Rather than provide a prescriptive (and, let’s face it, imaginary) one-size-fits-all approach, it makes a lot more sense to use guidelines that can be applied across different organizations. Because specific solutions won’t be as effective in every organization.

What are the important considerations for accountants?

While each company is different, here are a few specific considerations that everyone should think about to create a robust accounting document management system.

Security - whether you’re housing boxes full of files going back several years or you’ve got a state-of-the-art enterprise-level digitized ecosystem for your files, you’re vulnerable if they fall into the wrong hands.

Disaster - Here we mean floods, fires, and the like. It’s standard practice to have documents (paper or digital) in two places, one of them offsite.

Findability - How fast can you find the information you need? If it’s a current invoice, probably pretty quickly. If it’s a receipt from five years ago, maybe not so quickly. But when you need that receipt, you need it now.

Data integrity - Is the information you’re carefully filing accurate? Are there systems to check for human error? If the information changes over time, such as through periodic contract renewals, are you sure you’ve got the current version?

Compliance - Compliance for tax regulations is a given but you also need to comply with other relevant regulations like privacy laws. That means tracking retention schedules and properly destroying the right documents at the right time. It also means keeping track of changing regulations over time and adapting to comply.

Cost - It’s important here to look at actual cost and opportunity cost. Is it less expensive to store files in a back room? It might seem so at first, but you’ll need to add the cost of the time spent searching folders and, should the auditor come knocking, the space and time it will take to get set up for an audit. What else could your staff be doing? Time is money, and space is money, too. Are you renting a warehouse for off-site file storage? Do staff members have to travel between sites? Add all that to the cost of your system.

Scalability - Is your organization expected to grow in the next five to ten years? Even if you aren’t on track to build an empire, the amount of data you collect will almost certainly grow—if only because the kinds of information we collect increase at the speed of data technology. You’ll need to account for scalability in your storage capacity and, possibly, in the size of your organization.

Right about now is where most people start considering the benefits of using document and workflow accounting software.

What about accounting document management software?

The first caveat of any digital system is that, unless it’s well designed, it will only replicate the mess of the current paper system. Without thoughtful implementation, a mess remains a mess and the potential gains in efficiency are negated.

Cloud document management for accountants should offer you a lot more than just a digital copy of paper files and folders. Services like Google Drive or Box won’t allow you to automate workflows, for example. It’s hard to design a system when you don’t know what’s possible, so we recommend you work with a professional whose job is to think about file management options so they can tailor your system to your needs.

Once there’s a willingness and capacity to design a thoughtful digital system, you’ll need to consider how to migrate the information. This usually means a lot of scanning but, again, there are faster ways to make the move, if you’re using the right software.

The best document management software for accountants has these features:

  • Robust search - you shouldn’t have to click through folder structures to find your documents. Metadata, or tagging, is key for efficient search.
  • Security - we mean in the broadest sense here: encryption and protection from cyber attacks.
  • Permissions -  this is a more detailed level of security. You should be able to control who gets to see, edit, or share your information down to the document level.
  • Audit-friendly - if your system is set up for compliance, no one will break a sweat when the auditor comes knocking, saving time and money.
  • Accountability - When things go wrong, it’s useful to be able to look back and see who did what, and when, so you can backtrack and fix the error.
  • Data format control - this helps prevent data entry errors and keeps information searchable. If your numbers have to be in a specific currency, your system should flag any attempts to enter information in the wrong currency, for example.
  • Version control - Do you have the current version? Do you have access to the history of the document so you can go back to a specific date? Do you know who made those changes? With the right software, you do.
  • Automated workflows - These make complex processes faster and more reliable. For example, payment approvals often involve multiple supervisors. Workflows automatically move an invoice from person to person and send reminders for approvals or payment.
  • Integration - with existing accounting software like Quickbooks to reduce double data entry.

Proper document management for accountants won’t just eliminate paper waste or storage space. It will increase productivity and efficiency, automating common collaboration tasks and workflows like reviews and approvals. Perhaps most importantly, it will free up staff time to do more important work.

Read how the Accounts Payable team at Ochoco West transformed their invoice processing with DocuXplorer’s automation capabilities, saving time and streamlining their audit procedures.