Is all of your filing up to date?

If you’re like most business owners, there is a pile of it somewhere and you are laden with guilt and shame that you “can’t keep up with it.” You probably fantasize about hiring an intern some summer to do it but never find the time to get that started. I’m here to free you and to assure you that most of this work is a total waste of your time.

Actually, the “failure” that most businesses have here is over managing the process. Expenses cost the business money and the process to manage expenses is arduous, time consuming and inefficient.

Let me begin this explanation with some boring terminology from Wikipedia.

“Records management is the practice of maintaining the records from the time they are created up to their eventual disposal. This may include classifying, storing, securing, and destruction (or in some cases, archival preservation) of records. A record can be either a tangible object or digital information…. Records management is primarily concerned with the evidence of an organization's activities.”

The key phrase here is “evidence.” We keep files (and expenses) for EVIDENCE that we performed an activity. They are, for all intents and purposes, dead documents. They don’t make you any money and they represent a cost (expense) to the organization to manage.

This is different from an action or trigger document/data. For example, I am keeping an email about payment from a client so I can remember to do something for that client. This is a trigger document – it reminds me to do a related thing, the document itself doesn’t necessary help. I am keeping a copy of the gas bill in my inbox because I have been charged incorrectly for the third month running and I have to call the utility company. This is an action document. I’ll need the information on the document to complete the action. When these actions are complete, the document becomes a record (if we need to keep it) or trash.

The key phrase here is “action.” We keep action or trigger documents to MOVE activities forward. They make us money, help grow the business and help save us money. There is a cost (expense) to manage these documents but it tends to be nominal compared to the benefit.

80% of your effort should be spent on action documents and 20% or less on recordkeeping. Remember the keys to efficiency we covered last time?

  • Improve the Process
  • Manage your Information Well
  • Use Appropriate Technology

This is where technology (and process) can help us!

Here are three systems that help automate the process, reduce the amount of steps required and the aggravation it takes to manage records and expenses.

Pendaflex File is an extremely un-technological yet powerful solution. In fact it is so unsexy that it’s rarely considered as an option. Go get a Pendaflex file and label the sorters with the schedule C categories – they start at #8 on the IRS form.  Add additional segments - one for deposit slips and petty cash. Then, when you get a receipt for one of these expenses, shove it into the slot. At the end of the year, rubberband it shut and hand it to your accountant. That’s it. Yep, no data entry every month, no filing by month, no scanning, no nothing. After taxes, write the year on the front, duct tape it shut and throw it in the basement. In seven years, throw it out. This is a great example of not overcomplicating a process with technology when it isn’t necessary. 

Shoeboxed is the technology version of the above system. This company manages all of the scans associated with records and expenses in a snazzy little web based dashboard. You can scan, forward emails, take pictures of receipts with your mobile phone or send documents to them directly. They process other paper too, including your business cards. They have the necessary security encryption, backup and reporting tools to make it extremely useful. This is a great solution for those of you who want to be tech-sexy and don’t have time to find the intern. 

Mint is a FREE, web based expense management tool. Link all of your accounts and it automatically downloads and categorizes all of your expenses. You can create and track budgets with some nifty reporting tools. For example, set a budget limit on business meals and it will turn yellow and send you an email when you are approaching the monthly limit. So it helps keep your expenses in check as well as manage the records associated with them. This truly is a paperless solution in that it downloads the data from your bank directly. It’s geared towards a personal user but it can work well for a small business. It’s powered by Intuit and has some of the most robust security available. If you feel comfortable putting your information into Quickbooks, this is the same company so you should feel just as comfortable here.  I do recommend that if you use this solution, you do it in tandem with the Pendaflex solution above so you can stay compliant to recordkeeping requirements. 

By using one of these systems, you can be clear on what records you need to keep with regards to expenses. With a little pre-planning and configuration, you can automate most of the system, which not only makes your accountant happy when it’s time for taxes, but it allows you to check in with your expense “burn rate.” Too many times when businesses focus on records (the dead documents), they find out too late they’ve overspent what they wanted. Most of these systems allow you to focus on what’s happening now, not spend time on what has already happened. This, of course, is the best way to become successful – manage the future.

About the Author(s)

Amy Larrimore

Amy consults businesses in combining their information with a good piece of operational technology to power efficient humans. She is a certified SCORE business mentor with the Philadelphia chapter and serves as a SCORE volunteer District VP of Information Systems and Technology. | SCORE Mentors | @AmyAllStar | More from Amy

CEO and Chief Strategist, Empire Builders Group

Key Topics

Record Keeping