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Accounting is all about documentation. If your organization is small and just beginning, implement a simple and easy-to-understand filing system.
Receipts eventually fade, so scan files in a timely manner. Accelerate this process with OCR technology and tools like Neat® and Shoeboxed. With the two mentioned applications, scanned documents can be imported as transactions into our QuickBooks file. This can condense the bookkeeping process by eliminating most data-entry.
“Always keep a spare.”
In other words, back-up your files with an external hard-drive or another cloud-storage system like Amazon S3, Dropbox, or Google Drive. Because we have now secured our documents with adequate storage, we can now begin the shredding process.
You can start with 4 basic folders:
- Inflow = Invoices & receipts
- Outflow = Bills and payments
- Statements = Bank and credit card statements
- Other = Miscellaneous forms and documents
Folders that are created on your computer will automatically arrange in alphabetical order; to get around this, simply use numbers to control the sorting arrangement (see image). Simply right-click the folder you want to rename, then left-click Rename. First, enter a number; next, choose a name for the folder.
Make your filing system flexible to accommodate organizational growth/change. You can do this by just creating sub-folders when the time is right.
So, when is the right time?
If you have many transactions/source documents (50+ per month) you may want to create a folder for each month. Three-letter months keep each folder uniform, i.e., Jan, Feb, Mar. The naming format for the contents within the folders will be a little different. Refer to the article Operation Organization: Receipts to learn about ways to name your documents.
By reducing routine clerical tasks, we actually create more time for ourselves. Additional time gives us the luxury of finding strategic ways to improve our operations. With a uniform filing system, we increase the chance of building a filing system that remains in place year-after-year.
Structured record-keeping and work-flow help build a financial-reporting system that grants us the ability to quickly gather data and monitor operations.