What could Finance Do to Effectively Manage its Documents?

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Editor’s Note: Finance leaders these days are pre-occupied with digital transformation, which is an umbrella term that includes various areas—one of which is document management.

Howard Ng, Director, Technical Operations, Industry Business Solutions & Services (IBSS), Fuji Xerox Singapore shares with CFO Innovation why the finance function needs to transform its document management and how it can do that effectively.

 

The finance function has a lot of documents like other teams in a company. What are the major issues facing the finance function when it comes to this?

Howard Ng: Besides making information immediately available when required, other major issues include information security, legal and regulatory compliance, and document retention management.

In terms of security, organizations need to ensure controlled distribution of documents, protects documents and information against loss/misplacement, secure and authorize file access, and maintain audit trail, which is evidence of data access..

Regulatory compliance varies according to where a business operates. In Singapore, for instance, accounting records and supporting documents must be retained for a period of five years, which is a challenge facing many companies. 

This requirement leads to the need of managing document retention. Companies must know the minimum and maximum retention periods for its business records.

Again, this varies from country to country. In Singapore, this is governed by the Companies Act, Income Tax Act and GST Act.

The destruction or permanent preservation of records—depending on how they are used—is also essential when it comes to document management.

There will come a time when the cost in preservation supersedes the legal value when legal preservation period has passed.

How should the finance function deal with all these document management challenges?

HN: The role of finance today has expanded to providing insight and direction for decision-making across the company. By digitizing documents and automating financial processes, the finance function can make its information more readily available throughout the company and become a larger part of decision making in everyday business.

Finance should leverage IT’s technical knowledge and involve IT as early as the needs-defining stage

Finance leaders these days are pre-occupied with digital transformation, which is an umbrella term that includes various areas. How does document management fit into digital transformation? Can you share a concrete example in which effective document management can help transform the finance function?

HN: Eighty percent of a company’s information started from and remains within documents. By digitizing documents, a company can securely store them and allow immediate access to them by all relevant parties across the business. This is the very first step in implementing digital transformation in a company.

An example I can think of is the preparation for an audit. When documents are organized in a digital document management system which allows the right documents to be quickly located, exported, and/or shared with auditors, the finance team won’t need to spend weeks or months compiling documents and organizing files in the process of audit preparation.

How should a finance leader choose a technology solution to manage documents? How should finance work with IT in the solution selection process?

HN: We recommend the following critical features to be included in any document management system under consideration:

  • being easy to use
  • a user-friendly file structure such as a cabinet-drawer-folder approach
  • a wide variety of options to locate files quickly such as by file name, type, content
  • supporting various scanning devices
  • mobile access
  • open APIs for easy integration with existing applications such as email, ERP, and CRM  
  • access restriction to folders and files

The cabinet-drawer-folder I just mentioned is an approach of document organization with which most people are familiar.

That’s important because an easy-to-understand file structure in a document management system improves the learning curve and productivity by reducing the time one takes to find a document.

Finance should leverage IT’s technical knowledge and involve IT as early as the needs-defining stage. This will enable IT to sufficiently plan for the project and help finance in making the right technology choice.

Finance leaders also need to know that IT can contribute to the solution selection process in the following key areas:

  • on-premise versus cloud-based solution
  • supporting data formats
  • integration with existing infrastructure
  • security
  • in-house versus external expertise
  • solution quality

How can a finance leader effectively manage the cost of deploying a document management and total cost of ownership?

HN: The finance function has to look beyond the initial purchase price or implementation cost of each solution and ensure a balanced focus on both costs and benefits when evaluating a document management project.

This can be achieved through:

  • conducting a proper TCO analysis by forecasting and comparing the total cost of using and maintaining the system—the total cost for technology, processes, and people—for a set period of time; and
  • determining the ROI by analyzing and associating hard and soft dollar values to the tangible and intangible benefits of a document management project.

In addition, finance needs to do the followings to improve cost management:

  • designate an internal champion to manage and ensure completion of project goals in a timely and proficient manner
  • develop a realistic and manageable deployment plan.
  • pick a partner who understands your goals and is committed to work with you to achieve them 

When documents are organized in a digital document management system which allows the right documents to be quickly located, exported, and/or shared with auditors, finance won’t need to spend weeks or months compiling documents in the process of audit preparation

What are some of the foreseeable benefits of automating document management?

HN: One of the benefits is the capability to free up resources for innovation that can drive new business opportunities.

When a company can reduce or eliminate resources and expenses related to creating, using, and storing paper documents, it can better control its costs and improve customer experience with faster access and mobile access to business information.

In addition, it allows strong regulatory compliance with a small investment. After automation, permissions in place ensure only the right people have access to certain documents.

Compliance risk will also be lower, thanks to the he document control and work control which ensures that standard processes are followed.

At the same time, automation helps guard against loss of document and information as all employees use one document repository that allows centralized management and full control of who’s storing what in a central storage.

What other advice would you give to finance leaders who are looking to automate their document management?

HN: There is no one document management system that completely satisfies every business’ requirements.

By selecting a partner that uses analytical tools to conduct assessment of documents generated, a company can quickly identify and address needs and problems.

The results: problems can then be organized and prioritized based on the greatest ROI to be gained.

Once a company has understood the problems, it can decide on a suitable solution that best address it needs.

 

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