The importance of a document management system for accounting

The way you store your accounting documents has a huge impact on your ability to plan ahead. When documents are difficult to recover or are lost, this can create significant problems during next audit and limit your ability to conduct detailed cost analyzes and plan budgets. Effective management of accounting documents in accordance with legal and regulatory requirements should be a top priority for every accounting department.

Secure archiving technology supports these efforts by preserving documents and data, allowing your organization to better track accounts payable, receivables, operating and capital expenditures, and cash flows. Accurate indexing makes it easy to find and quickly retrieve documents. Well-defined access rights, strict organization of information, and advanced security support programs such as GDPR, HIPAA, and Sarbanes-Oxley make it easy to enforce confidential document retention policies.

Using a document management system to store accounting documents gives accounting more control over data in five ways:

1. Prepare for audit

If you have a paper system, auditing is often a torture for your accounting department and auditors. Does next scene sound familiar? Auditors require you to review all of your accounts for 2021, and you grant them access to your physical filing cabinet. The auditors are sitting in room, looking through paper documents. However, with digitization, auditors have searchable access to documents they need to review. With a document management system, your accounting department is better prepared because documents can be retrieved instantly based on search criteria you specify. This allows your team to respond quickly to auditor requests and better control of your business information. Every document capture, version, and comment is logged for full traceability, and every workflow step is logged for process transparency.

2. Create an audit trail

Create an audit trail. Accounting documents, data and financial information are often strictly confidential. Knowing who had access to accounting records is important, especially for public companies. To comply with Sarbanes-Oxley Act, companies need very detailed audit trails that can only be created using records management. An electronic audit trail provides security to ensure you have an accurate history of who accesses, prints, or edits your financial statements, helping you hold yourself accountable in event of fraud or other privacy issues.

3. Enable Automatic Storage Schedule

Enable automatic storage schedule. Maintaining a paper-based retention schedule is a tedious and time-consuming process. Your employees must manually track age of each document and sort by date, and then remember to dispose of documents in accordance with industry, state, and federal regulations.

With a document management system, information such as retention dates and billing dates can be easily retrieved and used to trigger automated workflows. In document system, you set business rules for when you need to store different types of documents (such as invoices and financial statements), and system automatically purges documents that business does not need to store. Document management systems provide workflow tools that allow you to store and destroy documents at scheduled times, keeping your business compliant and protected from lawsuits.

4. Support for detailed cost analysis

When your organization conducts cost analysis, your employees often need access to information that is not stored in enterprise resource planning (ERP) or accounting systems. Payment details are usually specified in invoice and other accompanying documents.

Many companies still use spreadsheet software to track data from ERP and other business software, which is not an ideal way to report and analyze costs. When dealing with complex data, using a software solution with strong security standards, version control, and robust integration features can go a long way in ensuring accuracy of recorded data. Accounting teams should be scripting, planning, and analyzing data for projects rather than focusing on data reconciliation and accuracy checks. A document management solution that integrates with your technology infrastructure makes detailed cost analysis easier and more reliable.

5. Provide more actual budget planning

Fact-based budget planning. When your company is budgeting, you need access to deeper information than financial statements to plan for future capital and operating costs. Financial reports show how much you spent in a given year. If you want to know what is behind number, you also need to parse related documentation. This increased transparency will allow your line managers and executive teams to assess whether previous year's spending patterns will be similar to next year's and plan more intelligently whether services should be retained or changed.

The process you use to store your accounting records has a huge impact on your ability to control profit-affecting information. Using something like

With a document management system such as DocuWare, documents are instantly searchable, improving results of potential audits and improving accuracy of budget planning and cost analysis.