Best practices for moving accounting/accounts payable files digital?
February 25, 2021 8:06 AM Subscribe
As many office are, we are working from home - and we may not go back into the office.
I have a LOT of paper. I pay the bills for the company, I do bank transfers, credit card payment entry, etc.
I know I need to keep this data, but I'd like to minimize the effect it's having on my workspace, since that is also my home.
Has anyone done this and have recommendations, or places to figure out best practices?
I am drowning in paper.
I pay all the bills for our corporate office, issue all the paper checks, receive all the mail and sort it, etc etc. We may not be going back into the office once this is all over - what's the best way to not only minimize the amount of file storage that I have (in my house!) but to digitize the stuff that we have in the office?
(We do have online file storage, through our IT guy, and it is secure, so we have a place for this, it's just a matter of exactly what I need to save and how to organize that.)
Thoughts so far
- scan any receipts/payment confirmations/bills that are backup for credit card charges and keep them on our 'server'
-we are already saving statements (bank account and credit card) and reconciliations instead of printing those
-for bank transfers and deposit confirmations, I am thinking I'll keep a current month and previous month folder, and then will scan them in a month at a time and save them in folders by month.
For regular bills, though - normally we would get a paper bill in the mail (or e-bill and print it out), cut a check for it, attach the check stub to the paper bill, and put it in a file folder with the vendor name by year. If we paid electronically, we would print that confirmation and attach to the bill and put it in the vendor file.
I can scan the bill, no problem - do I need to scan the check stub too? or write the check number it was paid with on the bill?
For older documents - we have years of files in our office for our corporate office and also our individual locations. What do I need to scan and save here? All of it? (I am guessing this answer is yes, but wonder if there if a guideline for it anywhere.)
I am drowning in paper.
I pay all the bills for our corporate office, issue all the paper checks, receive all the mail and sort it, etc etc. We may not be going back into the office once this is all over - what's the best way to not only minimize the amount of file storage that I have (in my house!) but to digitize the stuff that we have in the office?
(We do have online file storage, through our IT guy, and it is secure, so we have a place for this, it's just a matter of exactly what I need to save and how to organize that.)
Thoughts so far
- scan any receipts/payment confirmations/bills that are backup for credit card charges and keep them on our 'server'
-we are already saving statements (bank account and credit card) and reconciliations instead of printing those
-for bank transfers and deposit confirmations, I am thinking I'll keep a current month and previous month folder, and then will scan them in a month at a time and save them in folders by month.
For regular bills, though - normally we would get a paper bill in the mail (or e-bill and print it out), cut a check for it, attach the check stub to the paper bill, and put it in a file folder with the vendor name by year. If we paid electronically, we would print that confirmation and attach to the bill and put it in the vendor file.
I can scan the bill, no problem - do I need to scan the check stub too? or write the check number it was paid with on the bill?
For older documents - we have years of files in our office for our corporate office and also our individual locations. What do I need to scan and save here? All of it? (I am guessing this answer is yes, but wonder if there if a guideline for it anywhere.)
AFAIK, the general IRS suggestion is to keep 7 years of business accounting stuff, in case of an audit. So in theory you could probably trash anything older than that, or at least scan it & upload it & get rid of all the paper.
(Not an accountant, but I work at a very small company & share office space with our relatively new bookkeeper/office manager, who has been cleaning up old records (including LOTS of paper) for the past year+)
Who does the taxes? If it's not you you should probably get some input from them on what documents they will need in what format. If it is you you might find it helpful to consult with an outside accountant about same.
I also feel in general this is the kind of thing that a company and/or your supervisors should/would have rules for? If you're reluctant to shoot these questions up the chain of command, this might be the perfect opportunity to do so - it seems less dangerous to ask for clarifications and rules in the face of this NOT-business-as-usual pandemic situation. If you're totally on your own and making it up as you go along, again I think a consultation with an outside freelance accountant might be worth it to see what they need or want from their other business clients.
We may not be going back into the office once this is all over - what's the best way to not only minimize the amount of file storage that I have (in my house!)
IF this happens this is where you push back pretty hard - your house is not a business storage space. Where the heck did they keep all this stuff pre-pandemic? If you continue to WFH your company needs to make arrangements to remove the paperwork from your house on a regular basis. Like, monthly.
posted by soundguy99 at 8:54 AM on February 25, 2021 [5 favorites]
(Not an accountant, but I work at a very small company & share office space with our relatively new bookkeeper/office manager, who has been cleaning up old records (including LOTS of paper) for the past year+)
Who does the taxes? If it's not you you should probably get some input from them on what documents they will need in what format. If it is you you might find it helpful to consult with an outside accountant about same.
I also feel in general this is the kind of thing that a company and/or your supervisors should/would have rules for? If you're reluctant to shoot these questions up the chain of command, this might be the perfect opportunity to do so - it seems less dangerous to ask for clarifications and rules in the face of this NOT-business-as-usual pandemic situation. If you're totally on your own and making it up as you go along, again I think a consultation with an outside freelance accountant might be worth it to see what they need or want from their other business clients.
We may not be going back into the office once this is all over - what's the best way to not only minimize the amount of file storage that I have (in my house!)
IF this happens this is where you push back pretty hard - your house is not a business storage space. Where the heck did they keep all this stuff pre-pandemic? If you continue to WFH your company needs to make arrangements to remove the paperwork from your house on a regular basis. Like, monthly.
posted by soundguy99 at 8:54 AM on February 25, 2021 [5 favorites]
Are you not using an electronic accounting system of any kind? Generally you would enter all vendor bills into your accounting system, and most systems will let you attach scans to the transaction so you have your documentation, and then you create a vendor payment that is applied to the bill (so you have a linked trail of transactions) and then if you need a paper check you would print it from the vendor payment and that is the record of that check transaction. Bank reconciliation is done electronically with a file from your bank. Quickbooks does all this.
The documentation for expenses (receipts etc) is kind of a pain to store, as most accounting systems do all the stuff above but less so for this. Most of my customers do scan and store in a fileserver system of some kind if they don't have a third-party expensing platform that does it for them.
posted by Lyn Never at 9:11 AM on February 25, 2021 [1 favorite]
The documentation for expenses (receipts etc) is kind of a pain to store, as most accounting systems do all the stuff above but less so for this. Most of my customers do scan and store in a fileserver system of some kind if they don't have a third-party expensing platform that does it for them.
posted by Lyn Never at 9:11 AM on February 25, 2021 [1 favorite]
I’m in your position. I have a 10 year document retention policy, indefinite retention for hiring and tax records. Prior to pandemic all financial records were on paper, in a locked cabinet, rotated out to file boxes once a year.
We switched to QuickBooks Online and each transaction has a window where you can attach documents. We do an annual audit and require paperwork for all transactions so there’s a lot of scanning. Deposits get check scans plus a cover sheet that explains the account and class. There’s a report I’m starting to use that lists all transactions with an attachment column so my bookkeeper and I can find things that did not get a file attached and go back and find it.
I keep the scans in a shared Google drive folder in case QuickBooks looses our data. It is a company account with two factor authentication.
It’s my policy that all finance files get an ISO date at the start of the filename for example “2021-02-25 check request health insurance”. It is super easy to find “2021-02-25 invoice health insurance” and match the two up on your desktop or crowded downloads folder. Click and drag into the QuickBooks window to attach.
ISO date and putting human readable info in the file name goes so far to make things findable. I keep a few separate folders but you could really file things by month or year and be only two minutes of scrolling or using search function to get to any one document. Sorting alphabetically is also sorting chronologically.
For scanning I use the mid-range Fujitsu ScanSnap scanner (1300 I think). I have also used the Brother scanners. The Brother hardware is better and faster but the software was more fiddle so I went back to the ScanSnap.
Employees in the field either email me invoices or receipts or use their iPhone/android phone and a scanning app to send things to me via email.
If you don’t have a retention policy I would get one ASAP. Even if you Google and write a one page one and send it to boss-owner. If you don’t have a policy written down it will be assumed you keep the option of destroying documents at will.
My bank does not keep check images and old statements for as long as my retention policy requires.
Multiple times I have had a vendor fail and go bankrupt. Years later their debt is sold and collections came after me for non-payment on the vendor’s bills. I had paid all bills, but as the vendors failed and flailed, their cash management and record keeping sucked so they took my money but did not apply it to the accounts payable.
Providing bills and cleared check images via certified made the collections people go away very quickly.
posted by sol at 9:22 AM on February 25, 2021 [2 favorites]
We switched to QuickBooks Online and each transaction has a window where you can attach documents. We do an annual audit and require paperwork for all transactions so there’s a lot of scanning. Deposits get check scans plus a cover sheet that explains the account and class. There’s a report I’m starting to use that lists all transactions with an attachment column so my bookkeeper and I can find things that did not get a file attached and go back and find it.
I keep the scans in a shared Google drive folder in case QuickBooks looses our data. It is a company account with two factor authentication.
It’s my policy that all finance files get an ISO date at the start of the filename for example “2021-02-25 check request health insurance”. It is super easy to find “2021-02-25 invoice health insurance” and match the two up on your desktop or crowded downloads folder. Click and drag into the QuickBooks window to attach.
ISO date and putting human readable info in the file name goes so far to make things findable. I keep a few separate folders but you could really file things by month or year and be only two minutes of scrolling or using search function to get to any one document. Sorting alphabetically is also sorting chronologically.
For scanning I use the mid-range Fujitsu ScanSnap scanner (1300 I think). I have also used the Brother scanners. The Brother hardware is better and faster but the software was more fiddle so I went back to the ScanSnap.
Employees in the field either email me invoices or receipts or use their iPhone/android phone and a scanning app to send things to me via email.
If you don’t have a retention policy I would get one ASAP. Even if you Google and write a one page one and send it to boss-owner. If you don’t have a policy written down it will be assumed you keep the option of destroying documents at will.
My bank does not keep check images and old statements for as long as my retention policy requires.
Multiple times I have had a vendor fail and go bankrupt. Years later their debt is sold and collections came after me for non-payment on the vendor’s bills. I had paid all bills, but as the vendors failed and flailed, their cash management and record keeping sucked so they took my money but did not apply it to the accounts payable.
Providing bills and cleared check images via certified made the collections people go away very quickly.
posted by sol at 9:22 AM on February 25, 2021 [2 favorites]
Seconding that you should not be on the hook for holding more than a month or quarter of paperwork in your space The company needs to compensate you for that space if they want more than that, but that could end up affecting your insurance and or taxes in an annoying way.
If you have gobs of paper that needs to be added to your digital files - that might best be outsourced. If not, you want a scanner with excellent paper feeding - read the reviews! Nothing worse than having to babysit the scanner to make sure it only grabs one sheet at a time.
posted by soelo at 11:23 AM on February 25, 2021
If you have gobs of paper that needs to be added to your digital files - that might best be outsourced. If not, you want a scanner with excellent paper feeding - read the reviews! Nothing worse than having to babysit the scanner to make sure it only grabs one sheet at a time.
posted by soelo at 11:23 AM on February 25, 2021
No need to scan the old stuff, unless you want to dump the paper version and keep only digital files, and even then you will need a fairly high speed scanner with an autofeeder and a good archive program. The old Paperport program from Nuance is pretty painless, but it hadn't been updated in a long while, IIRC.
posted by kschang at 12:33 PM on February 25, 2021
posted by kschang at 12:33 PM on February 25, 2021
Your volume of invoices makes a big difference here. My company concluded that a storage unit for files was far cheaper than paying someone to scan.
I agree with the advice to consult an accountant before making big changes. Try to find someone who has experience working with businesses similar to yours.
posted by Comet Bug at 1:12 PM on February 25, 2021
I agree with the advice to consult an accountant before making big changes. Try to find someone who has experience working with businesses similar to yours.
posted by Comet Bug at 1:12 PM on February 25, 2021
Response by poster: We are using an online accounting program (I should have mentioned that!) - it's NetSuite. yes, it does have the capability to scan and attach, but there is a limit to the data amount I can store there (before they charge us additional fees, of course!)
We are saving all statements, etc, because yes, the bank doesn't keep them long enough. Plus, if you close a bank account (we have 20 of them, for the individual locations), all of that access is gone.
It's possible that we will get a storage unit - it's also possible that we will store our files in a locked room at a location an hour plus away, and so I want access to those files as easily as possible, and to minimize what we move. We just did a sales tax audit, and I had to dig through several years of files, several times - and I would hate for that to be a two hour round trip to look something up.
I suspect I am going to be the one that goes through our main files at our current office - our default has been to save just about everything, since we just put it in a room at the end of the hall.
I can move my files to our office (currently) as often as I like, but I have found that I need 1-2 file boxes here for easy access. I would prefer to knock this down to one file box, and be able to tuck that under my desk on a cart (I know they exist, but I'm trying to determine my needs.). Once we have a storage unit (or the room an hour away) I could go back and forth there as well, but I am trying to figure out ways to avoid that as much as possible.
We have also started to hire remote workers, so I am trying to figure out a way to make access to files easy for them as well - if we have people spread out, and they need something, I don't want the default to be to send me to the storage room for it! :)
I can definitely ask our CPAs what they want us to keep on hand - considering what they have just asked us for for our year end audited financials, I suspect the answer may be everything, at least for the prior year, until the audit is completed.
posted by needlegrrl at 1:38 PM on February 25, 2021
We are saving all statements, etc, because yes, the bank doesn't keep them long enough. Plus, if you close a bank account (we have 20 of them, for the individual locations), all of that access is gone.
It's possible that we will get a storage unit - it's also possible that we will store our files in a locked room at a location an hour plus away, and so I want access to those files as easily as possible, and to minimize what we move. We just did a sales tax audit, and I had to dig through several years of files, several times - and I would hate for that to be a two hour round trip to look something up.
I suspect I am going to be the one that goes through our main files at our current office - our default has been to save just about everything, since we just put it in a room at the end of the hall.
I can move my files to our office (currently) as often as I like, but I have found that I need 1-2 file boxes here for easy access. I would prefer to knock this down to one file box, and be able to tuck that under my desk on a cart (I know they exist, but I'm trying to determine my needs.). Once we have a storage unit (or the room an hour away) I could go back and forth there as well, but I am trying to figure out ways to avoid that as much as possible.
We have also started to hire remote workers, so I am trying to figure out a way to make access to files easy for them as well - if we have people spread out, and they need something, I don't want the default to be to send me to the storage room for it! :)
I can definitely ask our CPAs what they want us to keep on hand - considering what they have just asked us for for our year end audited financials, I suspect the answer may be everything, at least for the prior year, until the audit is completed.
posted by needlegrrl at 1:38 PM on February 25, 2021
This thread is closed to new comments.
The main point is that this should save you time and make it easier to find things. Dont double your workload by say, scanning your checks when all those images are already available through your online banking. Dont print stuff out that's already in a digital format. Get familiar with your online banking. Why save statements yourself when they are available online through your bank?
So. Going forward you want everything digital. Great! Get a good high speed scanner. Get Quickbooks. Notify all your vendors and clients that you will switch to paperless invoicing, and set up ACH push/pulls wherever possible for recurring payments. Dont print those out, or the confirmations. Just download and attach the existing files to the quickbooks journal entry. This goes for bank transfers and deposits too, unless you had to go in person to deposit cash or checks.
If you do pay by check, attach the digital invoice to the relevant journal entry and note the check number you paid with. The stub is online already with your bank.
A note: once you scan a document, shred it. There is literally no reason to keep paper copies once you have it digitized. Save things on a cloud like Google Drive or Dropbox. Make an external hard drive back up. That's what every company I've worked for does.
posted by ananci at 8:47 AM on February 25, 2021 [3 favorites]