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The term “paperless workflow” has been a key buzzword in the profession for some time now, yet firms that have adopted a true paperless system still represent the minority. The percentage of accounting firms implementing basic workflow enhancements, such as scanning and on-screen review (via dual monitors), is progressing steadily. However, adoption rates of advanced paperless technologies, such as client portals, tax document automation solutions, and document management systems (DMS), are still relatively low.

Regardless of the value, adoption of technology continues to move along at a crawl, and in turn, so does implementation of a true paperless workflow. To understand why firms are slow to transition, we must first comprehend the profession’s level of “readiness” to move forward.

To get a clear picture of how "ready" the average small, medium, and large firm is to go paperless, we asked nearly 200 randomly-selected firms of all sizes to answer questions on current infrastructure, workflow, and company culture. Here is a summary of the results and the relaed best practices.

Technology Infrastructure

Does your firm currently own a scanner?
Results: Nearly of all firms surveyed reported owning a scanner, 34 percent of the total survey population own scanners that are multi-function printer/scanner/copier devices-which are NOT ideal. Different types of scanners have different capabilities-thus different implications for the end user. While multi-function printers make great printers and copiers, they are designed to scan about 10 to 15 pages per day. Consider that the average client brings in about 50 source documents per year. If your firm is preparing 250 returns annually, this equates to 12,500 pages.

Best Practice: Invest in a sheet-fed scanner that can scan 30-40 pages per minute, duplex
(both sides of a page at once), with a daily duty cycle of at least 1,000 pages. Some quality scanners that fit this description are: HP Scanjet 5000, HP Scanjet 7000, Fujitsu fi-6130, and Fujitsu fi-6140.

What does your firm use as a filing system?
Results: Results were split fairly evenly among small firms with 32 percent using paper filing, 32 percent using a document management system (DMS), and 29 percent using networked folders on a shared computer drive. Medium and large firms faired better, with medium firms at 50 percent DMS use and large firms at 70 percent DMS use.

Best Practice: If you plan to go completely paperless, you need to develop an electronic filing system that works for your firm. This could be as simple as networked file folders on a shared computer drive or something as sophisticated as a DMS. Both options facilitate firm-wide access to documents, which is essential. The key differentiator is that with a DMS, the file structure is built in and the system enforces a uniform filing process.

For firms that develop their own network filing system, development of a unique naming convention is required. However, you do not have to reinvent the wheel-create a filing system that's logical and will fit with your firm's existing conventions. Do you identify clients with a unique client ID? One possibility is to name folders by Client ID and then create subfolders by tax year (Filing System/Client123/2010). Overall, implement a logical and standardized filing structure and make sure everyone within the firm adheres to that structure. An electronic filing system is only as good as you make it.

Does your firm have dual monitor workstations?
Results: Results are trending in the right direction with 60 percent of small firms using dual monitors at some or all workstations and 4 percent using triple monitors. Medium firms reported 90 percent use of dual or triple monitors, and larger firms reported 96 percent use of dual or triple monitors. Clearly, the profession as a whole is embracing multiple monitors, which is moving in the right direction. The value of multiple monitors is realized primarily in time saved. Multi-monitor workstations enable professionals to view multiple documents simultaneously, eliminating the hassle of toggling back and forth, minimizing and maximizing documents repeatedly, and working between monitor and paper copies.

Best Practice: If you haven't already, invest in a second monitor. Dual monitors make it easy to prepare and review returns, allowing you to open the PDF of source documents on one screen and the tax preparation software on the other-for full on-screen review. This eliminates the need to constantly expand and collapse windows and/or look back and forth between screen and paper documents. Firms that use multiple monitors report significant time savings during the busy tax season because complete on-screen review is supported.

Do you use any Software-as-a-Service solutions currently?
Results: Perhaps the biggest discrepancy between firm categories was recognized in the area of SaaS. The percentages of firms that reported they DO NOT use SaaS applications and have NO plans to start are as follows: small firms 72 percent, medium firms 54 percent, and large firms 48 percent.

Best Practice: Firms that report significant time savings during tax season are using SaaS applications to enhance efficiency. Software as a Service supports 24/7 access to applications and client data, so professionals can work from anywhere. Leading scan, organize, and populate SaaS solutions save hours per return because they eliminate manual sorting of source documents and manual data entry. SaaS also allows firms to exchange documents with clients in real time for exceptional service. SaaS-based applications are a powerful element within the paperless tax workflow-allowing firms to accelerate service to clients and increase the volume of work produced without adding professional staff. This means that smaller practices can provide a level of service on par with much larger firms-without breaking the bank.

How does your firm transfer documents to and from clients?
Results: A large percentage of firms continue to deliver files "in person." Results include: small firms at 69 percent, medium firms at 50 percent, and large firms at 26 percent. Overall, few firms are securely delivering documents electronically via online portals or encrypted file exchange-with small firms reporting 9 percent portal use and 2 percent encrypted file exchange, medium firms reporting 22 percent portal use and 8 percent encrypted file exchange, and large firms reporting 13 percent portal use and 35 percent encrypted file exchange.

Best Practice: While face-to-face interaction with clients is important periodically, the majority of communication can be facilitated using technology. Firms that report the highest levels of efficiency have applied technology that supports online data exchange, including gathering source data up-front and delivering final documents. Remember also that clients are just as busy as your firm, so most will expect and appreciate this level of service and the convenience it offers.

If clients send information via encrypted file exchange or portal (remember-email is not secure!), documents are already in electronic format, making it easy to flow data into your tax software. There are also solutions that will automatically retrieve and aggregate client tax information from the leading financial institutions as the information becomes available. Imagine getting W-2s, brokerage statements, and 1099s directly from the document issuer and hosted in an account with client-specific pages where documents are compiled from all institutions. This means no more waiting for clients to deliver documents or last-minute additions at the end of tax season. Leading firms are taking advantage of this technology today and reporting significant improvements in workflow efficiency.

Does your firm have an Information Technology (IT) professional on staff?
Results: Not surprisingly, the need for having an IT professional on staff increased as firm size increased. While small firms are more likely to have no IT (49 percent) or use an IT contractor (46 percent), 50 percent of medium firms use an IT contractor, with 40 percent using dedicated IT staff. Large firms reported 100 percent dedicated IT staff.

Best Practice: If you're going to implement new technology, it is worth the investment to have an IT professional evaluate the software and make sure it is properly installed. For small and medium firms, a contractor is probably the best way to go. This offers access to skilled support that you pay for only when needed. When implementing a paperless tax workflow, firms need to ensure that scanners are set up properly, files are saved in the appropriate locations, and staff is able to work with electronic documents to prepare returns-that is, adding tick marks and comments using programs like Adobe Acrobat. With so many moving parts, the assurance an IT professional offers will make for a smoother transition. For large firms, because of the complexity of workflow and the mere volume of tasks, a dedicated IT staff person is recommended.


Tax Workflow and Processes

Do all tax practitioners at your firm follow the same workflow to process tax returns?
Results: An overwhelming 86 percent of small firms have a standardized process that is followed by everyone in the firm. Medium firms reported 74 percent and large firms reported 83 percent in the area of standardized workflow.

Best Practice: Keep doing what you're doing! A standardized workflow means that process adjustments are more easily applied and will be adhered to by everyone in the firm. It also safeguards against individuals reverting to old practices-standardized processes eliminate this option. Standardizing workflow is an ideal practice for ensuring success of a paperless tax workflow adoption because all staff perform tasks the same way every time.

Do you scan tax documents?
Results: It's clear that scanning is becoming an industry standard-with 67 percent of small firms, 80 percent of medium firms, and 100 percent of large firms scanning tax documents at some point during the preparation process. However, only 13 percent of small firms and 40 percent of medium firms are scanning before preparation. Sixty one percent of large firms do.

Best Practice: When you scan sets the stage for the level of efficiency gains your firm can expect. Firms that scan tax documents before preparation, like many of the medium and large firms, position themselves for a completely automated and highly efficient paperless tax preparation process. By scanning documents before preparation, firms can make use of paperless tax workflow automation systems that automatically extract tax data from scanned tax documents and populate the data directly into tax preparation software. This eliminates manual data entry and paper handling altogether, as documents may be scanned in any order before uploading for data extraction.

Scanning on the front-end also creates a digital library of documents that can be accessed by all staff (through your electronic filing system) throughout tax season, as opposed to scanning after preparation for archival only.

What is your comfort level with using PDF editing tools, like Adobe Acrobat?
Results and Supporting Explanation: Survey results indicate that 33 percent of small firms, 56 percent of medium firms, and 78 percent of large firms are comfortable using editing tools The fact is that understanding Adobe Acrobat (or like tools) is critical for editing and reviewing tax documents on screen. Just as you have traditionally worked with paper files, electronic files also require you to tick and tie information. The best way to digitally tick and tie documents is through Adobe Acrobat Standard or a comparable PDF editing program.

Best Practice: Training your staff to use software tools that make it easy to work with electronic documents promotes a highly efficient on-screen review process. Adobe Acrobat provides several useful and timesaving tools that accelerate the tax preparation process, so it's important that firm staff is adept at the software's broad range of features...not just the basic functions. For example, the application's "comment and markup" toolbar has just about everything required-allowing you to make tick marks (the software refers to tick marks as "stamps") and comments directly on documents.

Cultural Readiness for New Technology

How would you describe your firm's attitude toward new technology?
Results: Early adoption of new technology is progressing slowly in the profession. Thirty-six percent of small firms reported being "early adopters" of new technology, while 44 percent of medium firms and 64 percent of large firms reported being early adopters.

Best Practice: Today's applications have been thoroughly tested and proven-with thousands enjoying the value of powerful functionally and intuitive features that increase workflow efficiency. Firms identified as early technology adopters are demonstrating efficiency gains and time savings that are significant. It is this group of tech-savvy firms that are setting the pace of the industry, because they understand that technology does not replace professional staff, but rather accelerates overall efficiencies and enables professionals to produce more while working less. For the 59 percent of small firms that reported that will "get there eventually"-eventually should be now.

How does your firm evaluate purchasing decisions for acquiring new technology?
Results: Fifty-one percent of small firms make technology decisions at the individual level without the input of IT or management. However, medium (58 percent) and large firms (73 percent) largely make purchasing decisions where IT evaluates the technology and makes recommendations, but the ultimate decision lies with management and partners.

Best Practice:
In order to standardize workflow, it is best to make sure all preparers are using the same software-particularly if it is integral to the tax process. Therefore, moving the decision-making process up the chain to management is highly recommended. While individuals should continue to make suggestions and provide input on technology, final decisions by management will enforce consistency.

Think back to the latest technology that was adopted by your firm-how did the roll-out process go?
Results: When asked about the most recent technology adoption, both small and medium firms answered in the majority that it was "Not bad, but not great, either," with small firms at 72 percent and medium firms at 76 percent. Large firms reported 50 percent "Not bad, but not great, either" and 45 percent "No idea it could be this easy!"

Small firms, specifically, indicated that they were trained on how to use the product, but when an issue arose they had to scramble to figure out how to resolve problems on their own. A firm's experience with initial implementation of technology can make or break the technology's chance of survival within the firm-regardless of its value. If rollout goes smoothly, the software is most often fully adopted. If rollout is a nightmare, the software is most often abandoned.

Best Practice: Successful implementations are led by a champion, who oversees the entire process. So, when rolling out new technology, be sure to identify a champion, preferably a partner. A champion's role is to provide a single, focused point of contact. A champion ensures that the technology is implemented properly, training occurs, and staff is consistently using the application. By naming a champion to your cause, you are more likely to see implementation through to full adoption-and staff will have someone to go to for training and troubleshooting issues.

Last modified on Sunday, 02 June 2013
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