Are you Buried Under a Mountain of Paper?

Posted by Kelley LearcloseAuthor: Kelley Lear Name: Kelley Lear
Email: kelley.lear@redmoonsolutions.com
Site: http://blog.redmoonsolutions.com
About: Kelley is a member of the executive leadership team and leads our sales and marketing efforts at Red Moon Solutions. Kelley’s extensive experience in project management, product management, and consulting with Fortune 500 and Global 1000 clients is extremely important in this role.See Authors Posts (127) on Oct 13, 2011 | 4 comments

I was recently on-site at a large corporate client and spending some time with the corporate tax department.  While meeting with various team members in offices and cubes, I felt a twinge of pain as I glanced at the mountains of papers and endless supplies of binders all expanded to their fullest and looming over the team members in a sort of organized chaos.  I then was brought into their tax document  “archives” or “tax document storage room”  which was also so full of files, papers, and binders, that you could barely walk through the narrow corridors.  In addition, this company had long ago overloaded the storage rooms, and had a “spill over effect” or plethora of file cabinets stretching like rows of high school lockers up and down every wall.  They are not alone.  I have seen many a tax department like this.  Hopefully, some of you have implemented electronic data storage or “tax document management”.  Whether you have or haven’t, I thought I’d share some best practices in document management, so that you can check yourself or you can go about getting started. 

#1 – Make Sure You Have Done a Complete Inventory and Implement Electronic File System with Good Analysis

Analyze how all your various tax department employees and/or other stakeholders in the tax lifecycle/process store, name and access their documents.  What you do not want to do is to “re-implement” some of the current chaos that is either in hardcopy files or is out on the network.  Determine how things are getting stored and how best your team would really prefer to access their documents and workpapers.  Is it by tax year, by entity, by period, by tax type?  What is your current hardcopy and electronic network file – file structure?  Analyze it, consolidate it and determine what is the most efficient way to set this up going forward.  Don’t forget…hardcopy files and network file servers constrain end users with hierarchical and “linear” storage, while true document management systems will allow for multi-dimensional document tagging, storage and reporting.  You will no longer need to store multiple copies of the same document across multiple files.

# 2—Implement a Cloud Computing/Software as a Service (SaaS) Paperless Tax Workflow Solution

Implementing the right paperless tax document and workflow solution is of course the most critical element (after knowing what you are storing and how it should be stored).

Some systems already in place are enterprise type solutions that are implemented in every other group within your corporation, and may or may not be completely web based and accessible 24X7.  Some examples of these are Documentum™, MS®Sharepoint®, and Filenet™.  Others are tax department specific with tax “taxonomies” or tailored terminology and document tagging, as well as tax explicit workflow steps and approval processes.  Some systems will also automatically populate data from scanned tax documents or uploaded documents into your system. Taking the paperless workflow a step further, some solutions automatically retrieve and aggregate tax information, provide external and internal links and allow you to track all filings (tax and non-tax), all audit activities and general workflow for every tax cycle.  Data requests, workpaper workflows and other important documents can be managed through proper best practices and controls.  Key things to look for:

• That your solution facilitates access and collaboration between all tax department members (globally) as well as all other participants in the process (via Internet connection).   This could include internal audit, finance, accounting, treasury and regulatory.  Share notes, versioning, and workflow.
•  Provides an electronic record of documents sent, received, and modified.  Real change control on those workpapers and other documents so that your folks don’t spend have their time wondering who has the latest version and “is this the final?” or “the final, final” document?
• Standardizes and organizes files so that you can quickly locate individual documents and fulfill internal and external requests. 
• Significant capability to tag documents with many “tax document tags” and make it an end user process to create and maintain those tags (i.e., you don’t have to contact and schedule IT every time you need some new meta data or to add another jurisdiction or tax year).  A solid system for tax needs to have terminology and tags already there such as:  legal entity, jurisdiction, tax year, period, tax type, adjustment, adjustment type, audit cycle (IDR’s, NPA’s, RAR’s, Protest & Appeals, Tax Claims, etc.). 
• Ability to integrate with email and Outlook.  The ability to email directly into the system is a big plus.
• Unlimited searching, querying and reporting.

#3 – Implement Dual Monitors

If you haven’t done this yet, you really need to do this ASAP!!  I hope that most tax folks are already there on this one.  Just always a bit surprised when I run into folks with just one monitor on their desk.  An efficient paperless process requires dual monitors at every preparer’s workstation (some of my buddies have three). Dual-monitors enable professionals to view multiple documents simultaneously, eliminating the hassle of toggling back and forth, minimizing and maximizing documents repeatedly, and working between two compliance tools on one monitor and paper copies.

Three basic concepts, I know.  Hopefully, you are all already there on these three best practices and I can share some more advanced concepts in another post.  Let me know if you have any questions or if you want to share other thoughts on what has and hasn’t worked for you in tax document management…