By Roger Mongeon
It is a safe assumption that a majority of firms will be going paperless within the next three to five years. Right this minute managing partners are seeking out the most productive technologies to streamline workflow while also providing instant access to client files. There is a plethora of benefits to be received by an accounting firm when it converts to a paperless document management (DM) system. Gone are the laborious tasks of having someone organize, file, and retrieve client files; gone are the rows of file cabinets and physical storage costs; gone are the unbillable hours spent tracking down lost, misfiled, or damaged paper documents. The new world of paperless seems to make document storage, retrieval, collaboration, and security seamless, affordable, and the perfect solution for any firm. But user beware: there are risks, dangers, and pitfalls of going paperless.
First, there is the risk of putting client data into a proprietary environment that is not platform agnostic. Platform agnostic means that a DM system can work with any other platform; the files are still accessible and usable regardless of the type of platform used. Second, risk can include the fact that some paperless document management systems do not integrate with other software applications used by accountants. This makes it hard to use best-of-breed technology solutions across the firm. And finally, there is the risk of using a paperless DM system provider that only provides software. DM systems go far beyond technology. This article will dig into the risks of going paperless so that if and when a firm is ready, it can avoid many of the dangerous curves ahead!
Risk of Proprietary Storage of Client Data
Unfortunately, some DM technologies will store client data files in a proprietary database. These document management systems use an SQL database that makes the files proprietary to that vendor's application. As documents are put into the database, the software replaces the file's name with an index number. Only their software can interpret the number to cross-reference it with parameters that describe the document. Firms that went this route years ago find themselves in a client data hostage crisis when they attempt to move to a different document management system. This situation occurs when there is no easy way to extract large quantities of documents from the proprietary file storage system.
To avoid the risk of having client data held hostage, look for a DM technology that stores your client files securely on your servers in a manner that allows a firm to easily return to accessing the data through a familiar tool like Windows Explorer should they decide to move on from that DM technology in the future.
Risk of Using a Service Bureau DM System
Similar risks apply when using a service bureau to act as your document management system. Often firms find it difficult to move away from a service bureau where all client files are stored on their servers through an Internet connection. Repatriating the documents back to your own computer equipment or moving to another service provider can be very costly and difficult, and may result in losing some document search characteristics that were unique to one system.
Joseph P. Handy, CPA PLC Goes Paperless
Joseph P. Handy transitioned his Miami, Florida-based CPA firm to paperless DM with Doc.It, and believes the single largest important benefit his firm has enjoyed is the ability to provide clients with timely professional service. When clients call, they may need questions answered about a notice stating that they owe additional taxes, or perhaps the bank has requested they produce documents or information. Phone calls like this could make the accountant question whether the necessary files have been sent to the file room already. Because of Handy's shift to a DM technology with a non-proprietary file storage database, his firm can access client files and answer questions for clients in only a few mouse clicks.
When an engagement is complete, it becomes the firm's duty to store the files and know exactly where the files are. Clients have the right to expect timely or instant answers from their accountants. Accountants should choose DM technologies carefully to ensure their files are stored in a non-proprietary data storage archive that is secure or locked down to retain integrity. In doing so, firms like Joseph P. Handy, CPA PLC can rest assured knowing the information is there, readily accessible, unaltered since the original filing, and guaranteed to be in proper order for peer or government agency review.
Risk of Getting Trapped in One Vendor's Suite
When a firm takes action to move in a paperless direction, the most readily available solution may be to stick with a vendor that offers a suite of technology from start to finish. Purchasing a suite of technology from one vendor sounds logical, but sometimes by doing this a firm could be selling itself short of some other amazing technologies on the market today. Investigating and implementing best-of-breed DM technologies can improve productivity, increase ROI, and increase billable hours. This frees up time for consulting and advising clients.
Technical Integration is Key
Accountants are increasing their use of technology to speed processes and leverage firm productivity to gain the competitive advantage. How successful the introduction of a new technology will be hinges primarily on how well the technology integrates and affects practice workflow, productivity, and more often than not, morale. While it remains extremely important to assess how well a new technology will communicate and mesh with existing hardware and software, the technology must also be comfortable for users while positioning the firm to remain flexible enough to integrate or shift to new technology for years into the future.
Accountants' jobs become much easier when one technology can seamlessly communicate with another. However, when the topic of technology integration is addressed, how well a technology leverages staff and accountants' skill sets, existing staff/client relationships, and a firm's best practices workflow and processes, deserves significant consideration.
Practices should fully explore the full circle of integration (hardware, software, a practice's preferred workflow and processes, leveraging staff skill sets, existing staff/client relationships) to avoid added layers of work later. Failure to do so increases the risk of forced unplanned expenses with employee morale plummeting as job tasks shift or change in a way that is not intuitive or familiar.
Best-of-Breed Technology Deserves Best Practice Implementation
The AICPA works with the government to protect the accounting profession and consumers. As new legislation is proposed and laws are passed, it opens the door for technology companies to help accounting firms adapt not only their systems, but their methodology and best practices to prepare for change, lower their risk, and remain compliant.
When a firm is concerned with tax law and compliance, technology providers that remain educated on each unique environment are better suited to help individual firms implement a compliant paperless DM workflow solution.
In a World of Paperless
It is quite common for a technology provider to make it hard to migrate or transition to different platforms. Doing either one of these tasks often adds time and costs to a firm's budget. It is typical for some DM vendors to focus on developing software that will work optimally within their own bundle of applications or with a limited group of outside technology applications. This denies a firm the ability to implement best-of-breed applications. In thinking about compliance and best practices, remember that the technology is only as good as its developer, the user, and the workflow system that pulls it all together. Working with a DM technology provider is great; having a DM technology partner is even better.
The new paperless world seems to make DM effortless, affordable, and the perfect solution for any firm. Certainly there are risks of going paperless, but don't forget the rewards. Consider the entire realm of possibilities, and pick the people, processes, and technologies that get the firm there safe and fast.
About the author:
Roger Mongeon is the Vice President of Sales & Marketing at Doc.It. Doc.It provides complete paperless document management solutions including software, training and implementation methodology developed by accountants for accountants.