What is document management in accounting? 

Document management is the practice of digitally capturing and storing paperwork. From client tax records to internal financial reports, document management helps accountants and CPAs keep track of the material they need to do their jobs. 

With electronic document management, paperwork is scanned in and stored digitally alongside digital files. 

As such, these mission-critical documents are filed into a highly organized space where they can be properly protected, searched for, shared, accessed, and worked on.  

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Why is document management so important for accountants and CPAs? 

In a profession where a misfiled tax return can lead to serious trouble, top-notch document management is paramount.  

Without it, firms could face: 

  • Irreparable damage to client relationships and their reputation  
  • Possible regulatory repercussions if compliance is compromised 
  • Reduced efficiency as staff scramble to chase missing files 
  • Frustrated employees jumping ship for more tech-savvy competitors 
IRIS Ultimate DMS Guide 240 1

Featured Guide

The ultimate guide to document management for CPAs and accountants 

Download the ultimate guide to document management, covering everything from a back-to-basics review to a deep-dive into how to choose the perfect solution for your firm. 

This comprehensive free guide also covers: 

  • How document management helps your security 
  • Cloud vs on-premises vs hybrid solutions 
  • What to ask document management vendors 
  • The importance of a web portal

How is document management different from document storage? 

Document storage – such as the filing system available on your desktop – is great for storing and accessing a few dozen files. 

However, document management is like a storage system on steroids! It gives you efficient, secure, and intelligent control over your information.  

Not only does document management allow you to store, access, and share thousands of documents – it creates a single source of truth, where everyone works from one evolving document. 

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What are the benefits of document management when it’s done right? 

When executed well, document management makes life easier for CPAs and accountants and reduces stress considerably. 

Here are some of the benefits of great document management. 

  • Efficiency

    Document management can help reduce hours of work down to a few minutes by speeding up processes like: 

    • Assessing and filing incoming documents  
    • Searching for documents digitally
    • Making amends to a shared document 

    When managing potentially hundreds of documents for each client, efficiency becomes mission-critical.  

    With an efficient document management system, vital information is always easily accessible, right at your fingertips. 

  • Accuracy

    A good document management system should significantly improve the level of accuracy in the way CPAs and accountants file all-important client data. 

    To help improve accuracy, document management system benefits include: 

    • Reducing the need for manual data entry 
    • Automated file naming and renaming functionality 
    • Minimizing the risk of human error 

    Document management also helps with maintaining standardization, which is key to ensuring accuracy across the board.  

    When you or a colleague need a specific file, the system can retrieve it easily because it’s been labeled and indexed. 

  • Tracking

    Once a document has been filed on your system, you need to be able to track its life so you can see how it’s being accessed, amended, and shared. 

    For example, when you upload a time-sensitive document (like a report to the IRS that needs reviewing by the client), your electronic document management system allows you to share it with the client and monitor whether it’s been accessed or signed. 

  • Security

    Document management helps keep sensitive client information safe.  

    A great document management system will boast a range of technical security features, helping you protect client and employee data from being: 

    • Accidentally accessed by the wrong person 
    • Deleted or irreversibly altered 
    • Stolen or sabotaged in a cyber-attack 
  • Compliance

    Whether it’s fines or reputational damage, nobody wants to pay the price of non-compliance. 

    To ensure your firm is compliant with legislation and law, you need to protect, store, and remove documents in a certain way.  

    Electronic document management and an effective document management system help you achieve this. 

  • A single source of truth

    Document management means having your files in one secure place.  

    Different stakeholders – both within and outside the firm – can access and edit the document from their desktops or digital devices.  

    No one has to deal with sharing countless versions of documents back and forth. 

    This also means that everyone accesses and works on the same version of the document – one single source of truth.  

Frequently Asked Questions (FAQs)

Discover more about document management and the solutions available for accountants and CPAs. 

Electronic document management – or digital document management – refers to the strategies, systems, and tools CPAs and accountants can use to manage important client documentation. 

Critically, it involves filing, storing, and amending documents electronically (or digitally), as opposed to relying on a paper-based filing system. 

Electronic document management has many advantages – from improving efficiency to providing enhanced security and compliance measures – especially when you find the right software-based digital document management solution. 

A cloud document management system (or cloud-based document management system) is a solution that’s based on your vendor’s remote servers – this is what “cloud-based” refers to. 

For CPAs and accountants, a cloud document management system can be accessed from anywhere with an internet connection, often by going through a web browser and logging into a document management portal online. 

Unlike traditional office-based servers, cloud-based document management systems are updated and maintained by the vendor.  

Plus, you don’t need to use your office desktop to access and use the system. 

Some of the benefits of using a cloud document management solution include: 

  • Being accessible from anywhere if you have a digital device (e.g. cell phone) and an internet connection 
  • A cost-effective setup, typically involving a modest implementation fee and a scalable monthly or annual subscription plan going forward 
  • You don’t need to install system updates or pay for maintenance to the server, as the vendor handles it all 
  • Many vendors provide enhanced security measures, including backup services to assist in data recovery if something goes wrong (e.g. a file is accidentally deleted) 

An integrated document management system refers to how CPAs and accountants use their document management solution in harmony with the rest of their accounting systems. 

This might look like document management software that integrates with a firm’s chosen accounting system.  

In this scenario, you’d be able to open your system and access, amend, and share documents that are housed in your document management solutions; because the two systems are integrated, they function like one uninterrupted super system. 

A document management web portal is a secure channel that runs between your systems and your client. 

Think of a document management web portal like your system’s storefront.  

When you and your clients log into the web portal, it’s like entering a small store with a huge backroom of stock behind the counter – when you request a certain document, the system nips in the back to retrieve it in seconds. 

Document management web portals are designed to be easy to access and simple to use, and like any sensible storefront, document management web portals are protected by serious security measures.  

In document management, the term “single source of truth” refers to how systems ensure that everyone has access to and works from the same version of a document. 

Say you’ve got an important document that needs reviewing internally by 2 stakeholders. The first stakeholder logs in and makes some suggested amends. Later, the other stakeholder accesses the document and can see the changes their colleague has made.  

In fact, if they were logged on at the same time, the second stakeholder would be able to see the changes being made by the first stakeholder in real-time. 

In this scenario, everyone is working from the same, automatically updated version of the document, otherwise known as the single source of truth. 

Learn more about digital document management for CPAs and accountants

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