What Is A Business Filing System? - What to Know

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For the modern business, there are many documents, receipts, invoices, dockets, and slips that you'll want to keep stored for tax purposes and sometimes information stored for clients or customers.

While you could go for paper-based documents and store them in a cabinet, going digital may be a more efficient way of storing this information as it can save you quite a few resources and time as you might need quick access to them.

Read on to find out which is better and how you can make an effective organizing system. 

Also read: The Most Effective Employee Retention Strategies for Keeping Your Best Talent

Table Of Contents

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Paper Versus Digital Filing Systems

With a paper filing system, you have a lot of folders, binders, dividers, and drawers which can work for many individuals as these can be sorted by date, alphabetically. For sums, you could do ascending or descending orders.

A digital filing system uses document management software that has electronic records. If on a database, it can be searched by name, date, recently added, alphabetically, and order of sum, and files can often be found in a few clicks.

While paper files can give your process added authenticity and don't require too much knowledge to set up, a lot of communications done through clients, customers, and 3rd party services are usually done by email, where documents can be attached more easily.

You also have the issue of cost, where a paper filing system can take up quite a lot of storage the more documents you need to keep, and when doing a tax return, it may not always be straightforward on what you need to gather as this could take time to sort through. 

 

Should You Switch To Digital? 

While many businesses have already made the switch, those small to medium-sized ones may still be contemplating if this is the right move for them. While there are many benefits to this, there are still a few considerations that must be considered.

Also read: Ways In Which You Can Show Employees You Are Thankful

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Document Transfer 

One of the biggest sticking points is having to scan or enter your documents into your filing database, which can be difficult if you aren't proficient in software that can transfer JPEG images into PDFs, which may involve scanning the paper document.

To do this, the image you capture needs to have all the relevant information that is clearly marked to make it authentic, as when it comes to an audit, any documents that don't meet this requirement may be rejected, which means you'll have to refer back to the paper document.

Also read: A Guide On How to Continue Hiring During a Pandemic

Monthly Costs 

Even though a paper system can be more costly as you use more paper, you also have to consider the monthly cost of an online database or cloud system, as the price could rise the more documents you upload to the system.

However, a good aspect of these services is that you get dedicated support, training resources, an account manager, and even your own dashboard. You can get a quick overview and make any immediate changes without going too deep into the system.

 

Users 

You might already have employees responsible for data entry; here, you have to think about who has access to the filing system. Including them can affect the service's functionality, as you need some sort of coordination.

Some software may have a minimum or maxim amount of users, so if you are doing bulk file transfers, it may be best to consider how many people it will take to complete this and whether each user has an adequate amount of training in order to use it effectively.

 

How To Organize A Filing System

While you still may be thinking about how an electronic system may cost you more in overhead fees and additional hours beyond business processes, it can be a similar method to paper systems as you can incorporate the same level of organization with a few additions.

 

Be Consistent With Your File Naming  

As soon as you get a paper document, you can scan and file it as quickly as possible, and you can make separate folders that are clear in what they contain. You also want to label everything, so they make sense when you apply filters to search for them.

That is why labeling files or folders differently instead of starting each with the same letter or word can make them easier to find if you're using an alphabetical sorting system, which works for many businesses. Still, individuals may have their own established labeling systems.

 

Choosing Storage 

As a physical filing cabinet is often implemented on a larger scale than what is needed, you can do the same for your electronic storage plan so you can scale it up if you have more clients or make more transactions in the future.

This can also help you expand your files and keep commonly used files at the forefront, as you may need to access these quickly. You'll also find that this form of storage manages itself as it can't be easily damaged, and you can control who uses it.

Also read: Promoting A Culture Of Accountability At Workplace - How Can Businesses Achieve It?

Compliance With Regulations

With any storage system, any information you have on customers and clients has to be highly secured and has to comply with data protection laws to avoid penalties. With an electronic system, you can keep these secure as and when they are added.

If your compliance comes into question, you can also access any records you have so they can be reviewed or deleted as per the customer's request.

Also read: 8 Steps To Create An Effective Employment Development Plan For Your Small Business And Its Benefits

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Conclusion

With these steps, not only do you have a transparent system that has a positive reflection of your business, but it also means that you have an up-to-date filing system that can be optimized to be easier for you to record and use documents when you need them. 

With these in mind you can begin to see why electronic filing systems can be easier for businesses to manage and store their documents. 

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What Is A Business Filing System? - What to Know
Samantha Clark

A Warrington College of Business graduate, Samantha handles all client relations with our top-tier partners. Read More

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