8 best practices for document management in accounting

Effective document management is the backbone of every successful accounting practice. With countless records, financial statements, and client files to juggle, having an efficient system isn’t just a convenience - it’s a necessity.

Many firms today face key challenges like meeting strict compliance requirements and safeguarding sensitive data that could become significant problems if an efficient document management system is not put in place.

Mastering document management isn’t just about avoiding chaos; it’s about unlocking your practice’s full potential. So, you can enhance security, get yourself audit ready, and earn back time to focus on high-value tasks.

1. Choose the right document management system (DMS)

A document management system (DMS) is similar to a digital filing cabinet where all your documents live, but smarter, faster, and far more secure.

It will enable your organisation to store, manage, and retrieve documents efficiently - without the hassle or headache of wondering where you’ve placed something important. They don’t just save time but can ensure your practice stays compliant.

Your accountancy practice, quite simply, can not function properly without one. Picking the right system, therefore, is crucial. Here’s what we recommend you look out for:

• Scalability: Your practice’s data will only grow with time. Choose a system that can grow with it.
• Integration: A DMS that has the ability to integrate and talk with your existing tools - especially your accounting software - is non-negotiable.
• Ease of use: A system that’s clunky and cumbersome is going to hinder you rather than help you. Try to look for one that’s easy to learn and simple to use.

If you're simply looking to store key documents against a client, job, or quote then consider Xero Practice Manager. You can also integrate and sync this to existing document management solutions for easier management of documents.

No more manual input, misplaced documents, or outdated records - just smooth, streamlined workflows that let you focus on what matters most: delivering expert services to your clients.

You can learn more about Xero Practice Manager here.

2. Digitise paper documents

Paper documents belong to the past. Digitised documents are more secure, far easier to access, and don’t take up mountains of physical storage space. They’re also much harder to lose or damage. So, no more worries about misplaced files or coffee spills ruining important documents.

With digital documents, you can store, organise, and retrieve files with just a few clicks, giving you instant access to the information you need. Imagine you’re trying to meet an urgent deadline, respond to a client query, or handle an audit, having quick access to the documents you need can be a lifesaver. Embracing a digital-first approach isn’t just about keeping up with the times - it’s about running a smarter, more streamlined practice.

3. Establish clear indexing and naming conventions

Setting consistent, logical naming and indexing conventions is essential for keeping your files organised and easily retrievable. Having a unified system across your accountancy practice helps to cut down on wasted time spent looking for documents and improve your operational efficiency.

Plus, it helps with compliance, too. Proper indexing ensures you can quickly produce documents if you ever need to produce them for an audit or inspection. Invest the time creating proper conventions now and save yourself time later down the road.

4. Automate routine document tasks

Repetitive tasks like invoicing, reporting, and document sorting are time-consuming and prone to error. Automating these processes not only saves you hours but also ensures they’re completed consistently and accurately every time.

Xero’s automation features can help do just that. Automating routine tasks like invoicing and data-syncing eliminates the need for manual input of data, helping you to reduce errors and keep your records up-to-date without breaking a sweat.

Let technology handle the repetitive tasks and you’ll win back time to focus on high-value advisory. That could be strategic planning for clients to ensure they’re receiving the best advisory service you can offer.

Or, it could be spent performing compliance oversight so your financial reporting is as accurate as possible. Automation isn’t just about saving time; it’s about freeing up your expertise for the work that makes a real difference.

5. Ensure document security and compliance

When it comes to protecting your clients’ data, ensuring you have the right safeguards in place is essential. Robust security measures like encryption, access controls, and audit trails are the backbone of any reliable document management system. They protect your clients’ financial information from unauthorised access and cyber criminals while ensuring you meet strict data protection standards.

If you’re looking for accounting software that takes care of data protection and compliance so you don’t have to, Xero has everything you need. With advanced features like encrypted access to protect client and financial data. You can implement granular controls, ensuring that only authorised personnel can view or edit sensitive data - which can limit your data’s exposure to people who don’t need to access it.

You can find out more about how Xero can help you protect your data here.

6. Utilise cloud-based document management

Cloud-based document management is the future of efficient accounting. With its remote access and enhanced collaboration capabilities, the cloud offers a level of flexibility that traditional systems simply can’t match. Whether your team is working in the office, at home, or on the go, a cloud-based system ensures everyone has access to the latest files in real-time.

Collaboration becomes seamless when your documents live in the cloud. Team members can work on the same file simultaneously and share updates instantly no matter where they are. Xero’s cloud-based platform takes these benefits one step further. Its real-time document access allows accountants to collaborate efficiently keeping workflows smooth and your clients happy.

If you want to learn more about moving your accounting practice to the cloud, we’ve written a guide that explains how to do just that.

7. Conduct regular document audits

Think of document audits as a health check for your document management; essential for staying compliant, organised, and efficient. Regular reviews ensure you’re keeping what's necessary and clearing out outdated files that no longer serve a purpose.

An up-to-date document system ensures critical information is always easy to find and keeps you ready for anything.

8. Invest in training and continuous improvement

Even the best document management system is only as effective as the people using it. Ongoing staff training is essential to ensure everyone knows how to make the best use out of the system in place and follow best practices. Well-trained staff are the backbone of an efficient, compliant document management strategy.

Foster a culture of continuous improvement to adapt your practices as your business evolves and compliance standards change. Regularly review workflows to ensure everything is as it should be. Make sure to gather team feedback, too. Your staff will have plenty of useful insight into what’s working well, and what isn’t. Also, try to keep on top of software updates to keep your system sharp and fully compliant.

How Xero helps accounting practices with document management

Xero is more than just accounting software - it’s a powerful tool to help you manage your documents with ease. With automation at its core, Xero reduces the manual workload by handling tasks like invoicing, reporting, and data syncing, saving time and minimising errors.

Xero’s cloud-based platform ensures real-time accessibility, so your team can securely collaborate and access critical files from anywhere. Advanced security features, like encrypted access and granular permissions, protect sensitive financial data, giving you peace of mind.

If you want to learn more about how Xero helps accountants and bookkeepers optimise and improve their practices, you can find more information here. Or, if you’re interested in learning more tips and tricks, you can find our content library here.