Learn more about digitizing financial documents and its importance.
Using a combination of electronic documents and physical copies can enhance the security of your financial information, especially for crucial records. A growing number of individuals are choosing to keep track of financial information electronically, whether by scanning receipts and saving them on a personal computer or accessing statements solely through digital records.
The prospect of reducing paper usage and the risks of cyber theft might cause you to feel both excited and cautious when it comes to storing your financial information on the Internet. Fortunately, there are definite choices for storing documents and guaranteeing you possess the necessary tools to monitor your retirement funds, protect your financial dealings, and reach your estate plans.
Why Do Companies Digitize Financial Documents
Companies digitize financial documents for many reasons such as:
1. Time
One of the main challenges that information management teams continuously face is the lack of ability to keep up with the organization's demands, which is why digitizing documents is necessary. Teams are often required to achieve more results with fewer resources, highlighting the need to comprehend how your team utilizes its time. On average, a knowledge worker typically dedicates 1.8 hours daily to searching for information.
That amounts to more than 9 hours every week! Just envision being able to reclaim that time... Consider all the goals you and your team could achieve. With all the tasks you have to handle, how can you justify spending so much time searching for information? Imagine being able to locate documents in less than half a minute. Therefore, consider having all essential business documents easily accessible in a well-ordered and structured space.
That amounts to more than 9 hours every week! Just envision being able to reclaim that time... Consider all the goals you and your team could achieve. With all the tasks you have to handle, how can you justify spending so much time searching for information? Imagine being able to locate documents in less than half a minute. Therefore, consider having all essential business documents easily accessible in a well-ordered and structured space.
2. Geography
Digitalizing documents is important for organizations spread out across different locations not just for employees who work remotely. Being geographically dispersed could involve having offices in various states, cities, or even different levels within a single building. Take a look at HR documents, for instance. Usually, the recruitment process takes place in a specific office where all the paperwork is managed in one place.
One of the difficulties with this process is logistics. What is the process of transferring the new hire paperwork from point A to point B? How can the hiring manager retrieve those documents? Will they ultimately retain duplicates? To what extent is there a need for communication and review to confirm that all paperwork is both thorough and accurately completed? Issues persist with employee mobility, such as when an employee receives a promotion. What is the process of transferring paperwork from the previous manager to the incoming manager?
Likewise, if that employee changes office locations, business units, or regions, what is the process for the new manager to access the employee file? Is HR generating numerous records for that person? Because paper is the preferred medium for numerous organizations, the constant shuffling of paper is common. And naturally, when an employee performs badly and the manager has to intervene, the issue becomes more difficult.
Take into account your turnover rates, expenses, potential dangers, and the possibility of non-compliance due to incomplete or missing information in employees' records. If your organization is involved in a lawsuit, having an incomplete employee record will not support your case. Digitization of documents eliminates the geographical barrier by enabling access to information from any location.
One of the difficulties with this process is logistics. What is the process of transferring the new hire paperwork from point A to point B? How can the hiring manager retrieve those documents? Will they ultimately retain duplicates? To what extent is there a need for communication and review to confirm that all paperwork is both thorough and accurately completed? Issues persist with employee mobility, such as when an employee receives a promotion. What is the process of transferring paperwork from the previous manager to the incoming manager?
Likewise, if that employee changes office locations, business units, or regions, what is the process for the new manager to access the employee file? Is HR generating numerous records for that person? Because paper is the preferred medium for numerous organizations, the constant shuffling of paper is common. And naturally, when an employee performs badly and the manager has to intervene, the issue becomes more difficult.
Take into account your turnover rates, expenses, potential dangers, and the possibility of non-compliance due to incomplete or missing information in employees' records. If your organization is involved in a lawsuit, having an incomplete employee record will not support your case. Digitization of documents eliminates the geographical barrier by enabling access to information from any location.
3. Access
Another obstacle is presented by documents used for living or working purposes. You require a secure and effective approach for exchanging documents within your organization and with external parties like government agencies, auditors, or legal professionals. Statistics indicate that organizations must enhance their document sharing practices and a recent study showed that 80% of workers utilize email to exchange sensitive information and files with colleagues and external contacts.
Furthermore, the report stated that 83% of companies have encountered data breaches through email. Now, let's explain the significant problem that arises when sharing documents via email. Initially, the document is scanned using a multi-function device and is then sent to your inbox. You send that email, with the document included, to the person who requires it. Currently, a duplicate of that attachment can be found in your outbox and in the recipient's inbox.
Assume you are extremely diligent and remove those 3 copies; however, they still exist on the email server. Furthermore, it is uncertain what actions the recipient has taken with the attachment. Did he print it? Did he send it on? That single sensitive document rapidly transforms into numerous insecure duplicates, similar to the hard copies. What happens after the copies are given to the person who requested them?
What happens with those duplicates? Are they located in a file drawer that is not locked in the manager's desk? The truth is that you should never let go of these records in a digital or physical format. A thorough check is needed to track who has seen them and when. Also, you should be able to limit access to viewing only, preventing copying or forwarding.
Furthermore, the report stated that 83% of companies have encountered data breaches through email. Now, let's explain the significant problem that arises when sharing documents via email. Initially, the document is scanned using a multi-function device and is then sent to your inbox. You send that email, with the document included, to the person who requires it. Currently, a duplicate of that attachment can be found in your outbox and in the recipient's inbox.
Assume you are extremely diligent and remove those 3 copies; however, they still exist on the email server. Furthermore, it is uncertain what actions the recipient has taken with the attachment. Did he print it? Did he send it on? That single sensitive document rapidly transforms into numerous insecure duplicates, similar to the hard copies. What happens after the copies are given to the person who requested them?
What happens with those duplicates? Are they located in a file drawer that is not locked in the manager's desk? The truth is that you should never let go of these records in a digital or physical format. A thorough check is needed to track who has seen them and when. Also, you should be able to limit access to viewing only, preventing copying or forwarding.
4. Information Silos
Undoubtedly, you likely have technological solutions in place that provide specific functions. HRIS, ECM, and ERP systems each have unique functions, produce data, and typically function as isolated sources of information. Creating a unified, all-encompassing perspective of the confidential data managed by your records team can be challenging. You must access each system, understand its operation, and look for the required information. The same documents or information could be found in multiple systems, though they might vary in versions.
At times, individuals may print documents from one system in order to incorporate them into another system or to file them on paper. Regrettably, paper is often the sole integration method that all these systems can comprehend. Digitizing and storing essential documents in a digital records management system reduces the impact of information silos. For peak effectiveness and safety, seek out a choice that is compatible with your existing business solutions.
At times, individuals may print documents from one system in order to incorporate them into another system or to file them on paper. Regrettably, paper is often the sole integration method that all these systems can comprehend. Digitizing and storing essential documents in a digital records management system reduces the impact of information silos. For peak effectiveness and safety, seek out a choice that is compatible with your existing business solutions.
5. Thoroughness
Consider this: How sure are you that all your documents are thorough? Are you able to confidently claim that you have total control over every category of sensitive data? Do you confirm that everything is current and not in draft form? Regrettably, the information in our files does not indicate when there are missing documents.
Discovering you don't have a document when you need it is not the ideal time to realize its absence. Imagine if you were absolutely certain that the files were intact. Could that assist in improving your sleep quality or getting ready for an internal audit? You should have a document management system that has robust workflow and monitoring controls to regularly scan relevant files, check for completeness, and identify expiring or outdated documents.
Discovering you don't have a document when you need it is not the ideal time to realize its absence. Imagine if you were absolutely certain that the files were intact. Could that assist in improving your sleep quality or getting ready for an internal audit? You should have a document management system that has robust workflow and monitoring controls to regularly scan relevant files, check for completeness, and identify expiring or outdated documents.
6. Retention
Most likely, your organization has a policy for retaining records, but implementing it can be difficult for many organizations. With information stored in separate systems, physical records, and emails being the main ways of exchanging information, do you feel certain that you are correctly adhering to your company's policy on retaining data?
For documents that include personally identifiable information (PII), it is important to maintain records for the necessary amount of time and not exceed that. On the other hand, your CFO and General Counsel may aim to guarantee the prompt destruction of all records once they become eligible, in order to have a firm stance of always adhering to policies in case a destroyed document later becomes a legal problem (also referred to as spoliation of evidence).
For documents that include personally identifiable information (PII), it is important to maintain records for the necessary amount of time and not exceed that. On the other hand, your CFO and General Counsel may aim to guarantee the prompt destruction of all records once they become eligible, in order to have a firm stance of always adhering to policies in case a destroyed document later becomes a legal problem (also referred to as spoliation of evidence).
Records Of Taxes
Whether you should maintain a digital or physical copy of tax returns depends on some factors. People now do their taxes with an online service and it stores all their past returns. So, it really just depends on individual taste. A tax preparer in the area may still use paper, but the shift towards e-filing might result in digitally signing and storing returns. If that's the case, inquire about the measures being taken to secure files. Why store personal data in a less secure location when it is already stored more securely elsewhere?
If you are preparing your own tax returns, make sure to save them either digitally or in hard copy and keep them readily available. To prevent cyberthieves, it is important to use a two-factor authenticated, password-protected network and computer for digital storage, or a securely stored flash drive with built-in encryption. If you use a digital method for preparation, make sure to include access instructions in your plan.
If you are preparing your own tax returns, make sure to save them either digitally or in hard copy and keep them readily available. To prevent cyberthieves, it is important to use a two-factor authenticated, password-protected network and computer for digital storage, or a securely stored flash drive with built-in encryption. If you use a digital method for preparation, make sure to include access instructions in your plan.
Receipts
A lot of individuals are now choosing not to list deductions, leading to a decrease in the necessity of holding onto receipts, including electronic ones. After verifying that transactions align with your financial records, you can discard them. If you are unsure, consider capturing a photograph or scanning the receipt, but ensure it does not contain any personal details like a credit card number.
Conclusion
All these reasons for digitizing financial documents are related to the concept of adhering to regulations. As a worker, you are tasked with various duties, and establishing a suitable setting for the secure and compliant handling of documents is paramount. Transitioning from physical documents to digital ones is a significant advancement in your capability to fulfill this crucial duty.
