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5 Ways Document Management Helps Your Accounting Team Plan Ahead and Stay Compliant

The way you store your accounting documents has a huge impact on your ability to plan ahead. When documents are difficult to retrieve — or go missing — it can create serious problems during your next audit and limits your ability to produce detailed cost analyses and plan budgets. Effectively managing accounting documents to meet legal and regulatory requirements should be a core priority for every accounting department.

Safe archiving technology supports this effort by preserving documents and data that enable your organization to better track accounts payable, accounts receivable, operational and capital expenses, and cash flow. Accurately indexing these documents makes them easily searchable for speedy retrieval. Clearly defined access rights, stringent information organization and advanced security support compliance initiatives such as GDPR, HIPAA and Sarbanes-Oxley and simplify retention policy enforcement for confidential documents.

Using a document management system to store accounting documents enables an accounting department to develop better data controls in these five ways:

1. Preparing for audits

Automation helps prepare you for audits

If you have a paper-based system, an audit is often an ordeal for your accounting department as well as for the auditors. Is this scenario familiar? An auditor asks to see all your invoices from 2021, for instance, so you’d give them access to your physical file cabinets. Then the auditor sits in a room and wades through the paper documents. Through digitization, the auditors can be provided with permissioned, searchable access to the documents they need to review.

With a document management system, your accounting department is better prepared because documents can be retrieved instantly by search criteria that you define. This enables your team to respond quickly to auditor requests and maintain greater control over your business information. Every document capture, version and annotation is logged for complete traceability, and every workflow step is recorded for process transparency.

2. Creating an audit trail

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Creating an audit trail: Accounting documents, data and financial information are often highly confidential. It’s important to see who accessed accounting documents. That’s especially true for publicly traded companies. To comply with the Sarbanes-Oxley Act, companies need a highly detailed audit trail that’s only possible to create with document management. An electronic audit trail put safeguards in place that protect your company from making time-consuming corrections proposed by the auditor. It ensures that you have a reliable history of who is accessing, printing or editing your financial records, helping to determine responsibility in the event of fraud or other confidentiality issues.

3. Enabling automated retention schedulesLearn more about automated retention

Enabling automated retention schedules: Using a paper-based system for enforcing document retention schedules is a burdensome and time-consuming process. Your staff must manually keep track of the age of each document and sort it by date, then remember to discard the files on schedule according to industry, state and federal legislation.

With a document management system, it’s easy to capture information like the storage and invoice date and use that data to initiate an automated workflow. From there, the business rules you establish specify how long you’re required to keep different document types such as invoices and financial statements. The system automatically purges documents that your organization isn’t required to keep. A document management system provides the workflow tools to enable retention and destruction at predetermined times to keep your business compliant and protected against litigation.

4. Supporting detailed cost analysis

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When your organization is conducting a cost analysis, your staff often needs to access information that isn’t stored in your enterprise resource planning (ERP) or accounting systems. The details of your payments are usually located in invoices and other supporting documents.

Many companies still use spreadsheet software to keep track of the disconnected data pulled from ERPs and other business software which is not an ideal way to report on and analyze costs. When dealing with complex data, using a software solution with rigorous security standards, version control and robust integration capabilities goes a long way in terms of ensuring that recorded data is accurate. Accounting teams should be creating scenarios, and planning and analyzing the data of a project, not focusing on the mechanics of reconciling data and checking it for accuracy. A document management solution that is integrated with your technology infrastructure makes detailed cost analysis much easier and more reliable.

5. Delivering more fact-based budget planning

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More fact-based budget planning: When your company puts together a budget, you need to access to information that goes deeper than reviewing your financial statements to plan for future capital and operational costs. Financial statements show what you spent in a certain year. If you want to know what’s behind a number, you need to analyze related documents as well. This increased transparency will enable your department managers and executive team to assess whether spending patterns for the previous year will be similar for the coming year and to plan smarter about whether to retain or change services.

The processes you use when storing your accounting documents have a huge impact on your ability to stay in control of the information that affects your bottom line. By using a document management system like DocuWare, documentation is available for instant retrieval, improving the outcome of potential audits and increasing the accuracy of budget planning and cost analysis.

Editor's note: This post has been updated for accuracy.

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