ROI and Efficiency: The advantages of using a document management system
By Howard Brown
When document management systems (DMS) and paperless accounting firms first became trendy, some accounting firms decided to become early adopters. Those firms have already managed to cross the chasm and reap the efficiencies of these new systems and approaches. But other accounting firms have been more cautious, choosing to wait before rushing into DMS and paperless offices. These firms want to be sure that there are true efficiencies involved. They want to know that their investments will pay off.
This more-cautious approach is understandable. After all, there are few metrics around DMS and paperless offices as they relate specifically to accounting firms. Fortunately, based on research we have done, those metrics now exist. Accountants can see the ROI that comes from smart paperless practices and a good DMS. When it comes to ROI, firms can weigh both the quantifiable savings and those less tangible – but no less important – advantages that a paperless DMS brings.
Efficiencies that Can Be Measured
Naturally, most accounting firms are extremely interested in the quantifiable, bottom-line numbers that can prove whether a paperless DMS will pay for itself. Considering how much accounting firms use paper, and how much effort is involved with traditional paper-based methods, there are several measurable advantages that a paperless DMS will bring.
- Paper, Printer and Copying Charges. Traditionally, accounting firms have used tremendous amounts of paper. The costs of managing and storing all of this can be very expensive for the average firm. But when everyone at the firm is using the same DMS, significant cost savings can be found through paperless efficiencies.
According to our research, the average staff member and accountant make 60 trips per week to the photocopier and spend 15 hours per month printing documents. With the use of a paperless DMS, a firm can reduce the number of photocopies by 75 percent and the amount of time spent printing documents could be entirely eliminated.
Consider an accounting firm where it costs $25 per hour for staff members’ time and $40 an hour for partners’ and managers’ time. The savings on printing and copying charges quickly add up.
By going paperless, firms will also nearly eliminate the costs of paper itself and copier expenses, which we estimate is about $200 per user per year.
- Recovering Office Space. By minimizing and even eliminating the use of paper, firms can also save a great deal of money by recovering and reclaiming their office space. Paper files take up a lot of room. Some firms that have been in business for decades may have entire rooms devoted to boxes and boxes of files. When these boxes start to take over filing cabinets and storage areas, accounting firms may need to consider expensive offsite storage or even moving to larger offices.
This is another area where firms can see significant efficiencies and ROI through paperless DMS. We estimate that accounting firms spend 50 cents per client for shredding and off-site storage fees. This amount can add up quickly, particularly when it come to maintaining archived files for inactive clients or businesses. With paperless DMS, these expenses can be virtually eliminated.
- Retrieval of Documents. For most staff and accountants, tracking down files is a hassle. But while searching for files that are stored in inconvenient boxes or have been stuffed in the wrong filing cabinet, many accountants may not consider the considerable expense of retrieving paper documents.
By instituting the right DMS and workflows, accounting firms can see significantly winnow down this expense. Consider the amount of time that firms spend on handling client files, such as engagement wrap ups, annual roll forward and movements to inactive storage. All this adds up to about 2 hours per year for each corporate client and about 15 minutes per year for personal clients. Those at accounting firms also spend about 2.5 hours every single month on annual archive file handling and file wrap-ups. By moving to a paperless DMS, staff and accountants can find files within seconds, not minutes and hours.
By multiplying all the costs involved, the number of clients and amount of staff and accountants, it’s easy for accounting firms to quickly calculate the measurable ROI on a paperless DMS.
Along with quantifiable savings, there are less measurable benefits to paperless DMS that can be just as valuable for accounting firms.
- Collaboration and Advanced Tools. Through DMS, accounting firms can greatly improve and enhance the ways in which they work together internally and with clients. With a paper-based system, only one person can work on a particular document or engagement at a time. When that accountant or staff member is finished, the engagement is then forwarded on to the next person. Files can get held up in bottlenecks or buried under the papers on someone’s desk.
With a paperless DMS, though, different people can simultaneously view and comment on a single engagement or file. This not only saves time, but it allows different people to share their institutional knowledge about a particular client or area. Collaboration can also lead to more creative and robust ideas.
- Standardization and Best Practices. While paperless DMS bring numerous advantages, accounting firms should also expect benefits that go beyond the software and tools themselves. Every accountant knows how to prepare a tax return, but most don’t know how to manage digital documents. This is not only an issue of training and education. In the accounting area, there is no standardization or universally accepted rules. By adopting standardized methods for creating, managing and storing digital documents, accounting firms can gain significant efficiencies.
This is particularly true when it comes to high-volume engagements, such as personal tax cases. The right technology and workflows can streamline these types of engagements, allowing for repeatability.
- Improved Client Service. When files and documents relating to engagements are digitized and easy to find, accounting firms not only increase efficiencies, they can also improve client service. If a client calls with a question or needs the last three years’ worth of annual tax filings, firms can respond within minutes, not days. Instead of having to dig through boxes of paper or filing cabinets, the information is just a few keystrokes away.
Moving from a paper-based system to a paperless document management system may seem daunting for many accounting firms. By taking a close look at the quantifiable and intangible ROI that can be gleaned, though, it becomes much easier to take the plunge. The right system should quickly pay for itself.
About the author:
Howard Brown, chief technology officer of Doc.It®, oversees Doc.It’s product design team, quality control and customer technical support. Brown founded Micro Business Systems Inc. in 1984 to develop and market accounting and office automation software systems for a variety of industries. During the 1990's, Brown and his programming team developed Doc.It Document Management and Archiving System, which was brought to market in 2001 after many years of development and research. Doc.It® provides complete digital document management and workflow solutions including software, training and implementation services, developed by accountants for accountants.