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Welcome back to GPL’s interactive newsletter providing monthly information to assist you with increasing the growth, profit & liquidity of your accounting firm. With the accounting industry continually searching for ways to streamline efficiency, therefore increasing productivity, profitability and culture, this month’s newsletter focuses on an ‘electronic document storage’ system. With innovation and technology at the forefront of every operational day this is one article that you won’t want to miss! At our recent 2 day leadership workshop at the Sheraton Marina Mirage on the Gold Coast, Matt Richards from Accounting North presented a segment to 55 firms in attendance on his thought process of going ‘paperless’ in 2006. As it was received extremely well, I wanted Matt to share his story in more detail so you could understand the methodical approach Matt took to make such a decision and the longer term strategic impact it will have on his firm. Enjoy the read!
Electronic Document
Storage – Beyond 2006
In this current age of technology it would be fair to say that many small to medium business operations across all industries would still have the bulk of their critical information stored as paper files. Technology, however, has resulted in our data being stored in a variety of forms, whether it is as a saved Excel or Word document on our hard drive, a scanned document stored somewhere else, an email archived in Outlook and the list goes on. In most cases the most critical information is stored in paper filing systems. And as we continue to spend countless sums on security within our IT systems and backups of data stored in this environment, our most critical information is stored as paper without any backup and in many cases is often at most risk of any information held. As the paper war continues and increases, many organisations are also starting to spend large sums of money on archiving and off site storage to cope with the ever increasing amounts of paper that are generated by today’s record keeping requirements. In addition to the resources allocated to paper storage, it is quite easily shown that in an ever increasingly technology savvy world that holding on to such systems creates and promotes inefficient practices that results in lower productivity and ultimately costs business owners money. The solution to this problem is to invest in Electronic Document Storage (EDS). The first key point to note is that often this is broadly referred to as the “paperless office”. The first step of anyone contemplating EDS is to remove the above phrase from their thinking. This is an ideal that will never be reached – we will still be using paper for many years to come, and to set this as an expectation will only result in the business owner failing to meet their expectations. EDS is all about the establishment of a paperless document storage (i.e. filing) system. More importantly, it also includes integrating most business owners existing mix of electronic data (generally on a hard drive) and paper filing (in filing cabinets and storage).
The benefits to be obtained from using EDS are numerous, and include: • Cut stationery costs My overview of the benefits listed above will split them into three groups (i) Cutting Costs The most easily quantifiable and measurable aspect of changing to EDS is the ongoing cost savings, which should obviously be considered against the cost involved changing to EDS (covered below). At the time of implementation of EDS, my office had approximately seven staff and three hundred plus clients. The business had been in operation for a total of ten years (most under a previous owner). We were at the point of looking to establish an offsite archive storage facility to handle the files that we no longer had the room to store in our office. Our move to EDS saved us from this additional cost, and I have no idea what the set up and ongoing costs involved with this would have been. Even if not substantial, they would have been in the vicinity of at least a few thousand dollars annually. One cost saving that I could definitely measure was my stationery cost. EDS means less printed materials, which means less paper and toner costs. My conservative estimate is that my stationery costs reduced by fifty percent almost immediately, which equated to about five thousand dollars ($5,000) per annum. Moving forward I also know that I do not have to worry about making a major investment in a photocopier, as our usage of our photocopier would probably have been reduced by at least ninety percent, and all photocopying is for internal purposes only, so quality is not as important as it used to be. (II) Reduced opportunity costs The next range of benefits to be obtained from EDS are what I like to refer to as the opportunity costs of continuing to use a paper filing system. After changing to EDS, it is amazing what inefficiencies you belatedly discover in so many facets of your office. Paper records seem to create a lot of double handling, inefficiency and ultimately lost productivity. The EDS process of scanning a document into the system when it enters the office stops this. Once a document is scanned into your EDS, it is accessible and easily located by any member of your team. Compare this to a document that enters your office and instead of being scanned in at source it is looked at and then dropped into a filing tray to be filed later on. Time spent on double handling is a lost opportunity for the staff members in question to be spending their time on something that adds value to your business either internally or that can be charged to a client externally. The other opportunity cost in having paper files is the lost space – I worked out that pre EDS at least ten percent (10%) of the floor space in my office was dedicated to filing cabinets, wall space for lever arch files and archive boxes. This space can be better utilised by productive staff. That is an opportunity lost. This doesn’t reduce your rental expense by ten percent (10%) but it does allow you to grow your business without needing to find extra room. In essence, your occupancy cost per seat has reduced. I have also come across situations where time is set aside annually for the purposes of archiving. One such example involved an office of about twenty (20) staff. One day each year was set aside to archive all of the previous year’s paper files. Knowing the number of productive staff this involved and their average charge out rates, I calculated that this annual process equated to a lost opportunity to perform fifteen thousand dollars ($15,000) worth of work. This doesn’t even consider the ongoing time spent going back and forth to search for documents stored in archive boxes. (III) Improvements to your business Most importantly, I believe the change to EDS helps improve the culture towards change and in many cases be a catalyst to the improvement in or taking up of other electronic systems in your office. Since the introduction of EDS in my office we have experienced an ongoing process of continuous improvement to many of the systems and internal processes in our office. We now use, where possible, electronic versions of anything we can instead of hard copy paper, always with the consideration of how it will make us more efficient. Most EDS environments will also allow you to effectively integrate your existing and new electronic documents in one centralised location, usually with excellent filing and search functions which allow easy access. Having all information stored electronically allows far easier access to all staff to locate documents and information. This also flows through to being able to more quickly respond to client and third party requests for information. No longer do you need to answer a client request for information with “”Sorry, but that is archived. It will take 2-3 weeks and will cost you so many dollars”. In most cases you can now email the same document straight from your desktop, often whilst you are still on speaking to the client. Another major improvement in the way you run your business is the security and safety of your information. If you have the appropriate back up systems in place (and you should regardless) ALL files in your office are now being backed up – not just the electronic ones. The potential cost if something went wrong and destroyed all of your paper files is immeasurable. This is now a thing of the past. The final benefit that I will cover in this article is the improved staff satisfaction. My staff certainly appreciate no longer having to dig through paper files looking for a sought after piece of paper. My staff are enthused by my business investing in new technology. When you employ young and computer savvy staff it is only logical to use EDS, and to not do so can only be detrimental to the long term future of your business. KEY POINT – it is critical that if you do implement an EDS, and over time achieve the improvements in efficiency as outlined above, that you take action. If using a time costing basis for determining fees, improved efficiencies from system should result in shorter time frames to produce the same result. If no increase in charge out rate occurs, in effect you are delivering that end result to the customer for less money, despite the time and money you have invested into creating that improved efficiency. And your competitor down the road is still delivering that end result inefficiently and for more money. Make sure you adjust your charge out rates accordingly to achieve the improvement you deserve. I have previously mentioned the size of my business. The upfront cost of implementing EDS for my business was about ten thousand dollars ($10,000). This involved software purchase and set up, and two high speed scanners. In the eighteen months since installation our ongoing costs have been minimal. Other resources dedicated to the implementation (other than cash outlay) were by far the most substantial. We went through the process of breaking every current client file down on an individual basis as each client file was opened to perform year end work. At the completion of the job, the staff member who was working on that job (and familiar with the file) was responsible for the breaking up of that file into different items for scanning. We estimated that over the twelve months (to completion) the time cost in our office was about thirty thousand dollars ($30,000). This was a once off cost. In terms of ongoing maintenance of the EDS, we have an office junior fulfilling the role of scanning documents – in effect this position replaces that of a filing clerk. With a staff of thirteen we still only use the same two scanners purchased initially with no plans to increase these numbers. We believe we can grow to a staff of at least twenty in total without needing any additional resources in this regard. With virtually all files (with the exception of a small number of archive files) now scanned into the EDS, the total storage space used for all data files is approximately sixty gigabyte (60 Gb). As we continue to grow we can easily add on additional hard drive space to cope with every increasing storage requirements. Hard drives twice this size can now be purchased for little more than $100. With the exception of the up front costs involved with purchase, set up and transfer of paper files, I firmly believe that long term EDS is a more cost effective data storage system than paper filing. Generally speaking, it should also be a more secure form of data storage, with all data now backed up and stored independently offsite, unlike the risk involved with paper files that do not have any back up. Establishing an EDS is also often the catalyst to review many of the other systems in your office, and when this occurs more efficiency should be created. The few key points to be considered when making the decision to change to EDS are as follows:
For more information on the EDS that Matt Richards from Accounting North implemented, please contact the GPL Network office info@gplnetwork.com for further information and the special offers that we have negotiated direct with the wholesaler.
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GPL's Top Performaing Accounting Firms Steven Jones –
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