Moving Closer to the Paperless Office
By John Reed, CPA, Reed, Blackwood & Company, LLC
September 2003 (SmartPros)— Is the "paperless office" possible? Perhaps not, but our firm has successfully managed to change our client files from paper to electronic.
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Before switching to electronic client files, first determine what -- if any -- software you want to use to organize your client files. Larger firms may prefer to purchase document management software, which organizes files by indexing them so they can be searched. A user types in a client name and all the files on the network indexed by that name come up, often with a thumbnail or preview window. Many programs also can be organized and tabbed to store documents in the same fashion as the firm's paper files.
Smaller firms, like ours, on the other hand, can simply use the file folders on their computer network to organize and store client documents -- without buying document management software. Here's how we store client files on our network:
By partner
Within partner by entity type by year (corporation, partnership, etc.)
Within entity type by year
Within year by type of work (financial statement, tax, payroll, etc.) and
Within type of work by client.
We find the files using Windows Explorer. There are no thumbnail previews, however, of the files under the current version of Windows.
Another consideration is what and how many types of file formats you want to save. We file copies of our documents in the PDF format, popularized by Adobe Acrobat. PDF files are documents that have been converted into an "image" that can be stored electronically. Many tax software programs generate PDF files, which can be read by a variety of free reader programs available on the Internet. The programs also are not operating system dependent; they can be used on Linux and Macintosh systems even if the PDF files were created on a Microsoft Windows operating system.
We provide our clients with both client and, usually, third-party PDF copies of their tax returns on a CD, along with a PDF reader. Third-party tax returns don't contain instruction letters or other unneeded pages. We send out paper income tax returns only if a client does not have a computer or specifically requests a paper copy. In the case of financial statements, we provide a CD with a PDF file of the signed financial statement, along with the normal bound copies.
Our clients like receiving their work papers in a PDF format, since the copies print clearer than those made a traditional copier. They also like the fact that the files can be emailed and received by third parties immediately. Since PDF files can be manipulated by the programs that create them, it is important to secure client and third-party copies with a password so they cannot be changed.
The data files from our computer applications -- such as word processing, spreadsheet and tax software programs -- are filed separately on our network so we can edit them if we need to. The client file copy, on the other hand, is always the final work product.
A critical consideration when moving to electronic client files is to be absolutely sure your backup system works. One of the benefits of electronic file is that they can be backed up, which is not easily done with paper files. But without adequate backup, a computer crash is the equivalent of a fire destroying your paper files.
Backups also should be immediately verified and compared with the source to confirm there are no differences. Instituting a backup rotation system, so multiple generations of backup copies exist in case one is destroyed, is a good practice. Backups also should be regularly rotated off site and periodically tested by restoring them onto another computer.
Our firm was motivated to move to electronic client files when file storage began to be a problem. Since the move, we've discovered other benefits we hadn't expected, such as being able to look up client information while on the phone with that client. A variety of options exist for making the move -- some expensive and some, like ours, inexpensive. Find the one that best fits your budget and that most closely mirrors your paper file system.
JOHN REED, CPA, is a member of Reed, Blackwood & Company, LLC in Fort Myers, FL, and a shareholder in Accounting Software Consultants, Inc., a value-added reseller of accounting software.
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