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

Accounting team discussing office automation

How 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 creates serious problems in the event of a future 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.

Our 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 strict compliance initiatives such as GDPR, HIPAA and Sarbanes-Oxley simplify retention policy enforcement for sensitive documents. Using a document management system to store accounting documents enables an accounting department to develop better data controls in these five ways:

Automation helps prepare you for audits1. Preparing 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 2017, 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. With a document management system, your accounting department is better prepared for an audit 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 are logged for complete traceability, and every workflow step is recorded for process transparency.

2. 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 through document management. An electronic audit trail put safeguards in place that protect your company and employees. 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 a fraud allegation or other confidentiality issue.

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3. Enabling automated retention schedules: A paper-based system for enforcing document retention schedules is a burdensome and time-consuming process. Your staff must manually keep track of the Learn more about automated retentionage of each document and sort it by date, then remember to discard the files on schedule/according industry, state and federal legislation. With a document management system, it’s easy to capture information like the storage date and invoice date and use that data in an automated workflow. From there, business rules that 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: 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.

IMAGE_KINETIC SOLN HRAccording to Christin Bergerud at the Project Management Institute, many organizations still use spreadsheet software to keep track of the disparate data pulled from ERP and line-of business software. When dealing with complex data, she recommends using a software solution with rigorous security standards, version control and robust integration capabilities. “Reliance on many disconnected files is often not the ideal manner to report and analyze cost performance data. ... They [accounting departments] find that a great deal of their job entails reconciling and ensuring that recorded data is accurate. Capital planners or cost analysts of a project should be creating scenarios, and planning and analyzing the data of a project, not counting costs,” Bergerud says. A document management solution that is integrated with your technology infrastructure makes detailed cost analysis much easier and more accurate.

5. Delivering more accurate budget planning: When your company puts together a budget, you may need to access to information that goes deeper than reviewing your financial statements to accurately plan 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’d need to analyze related documents. This increased transparency enables department managers and your executive team to assess whether spending patterns for the previous year will be the similar for the coming year and 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 ours, 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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