Workflow Software: What’s it all about?

There is no single definition of what constitutes workflow software. On one hand, it could simply be an Excel spreadsheet that has a routing list that gets checked off as the engagement moves from one step in the process to the next. At the other end of the spectrum, workflow software has the potential to route an electronic document automatically by interpreting the contents of the document and perhaps even take information from the document and transfer it. Think about the scan and populate software for 1040 tax products that takes data on scanned W-2 forms and transfers it directly to the tax software “hands-free.” The automatic routing process even has the potential to determine who to route the document to based on its contents.

The bottom line on defining workflow software is this: It’s any functionality that automates the flow of information based on some level of pre-defined rules. A classic example of basic workflow software is the “rules” feature in MS Outlook that lets you move e-mails from your inbox to a specific folder automatically, based upon pre-defined rules that you establish. For example, move any incoming e-mails sent from CPATechAdvisor.com into the CPATA e-mail folder.

The Evolution

So let’s talk about what workflow for an accounting and tax practice is all about. The current generation of workflow software originated primarily as a by-product of the evolution of document management software. As firms began the journey to a paperless practice model by converting all documents into digital format, it quickly became apparent that we needed an electronic tool to replace our Red Rope or Redweld workpaper folders. These typically had a paper routing sheeting attached to them with a rubber band. After all, if we’re going paperless we don’t need workpaper folders anymore, right? The issue is that these folders served two key functions. One was to be the container for the engagement workpapers, which, by the way, is the role of the DMS now. The other function was to serve as a tangible tool for organizing your workload and moving engagements throughout the office as the engagement progressed. It is this latter function and all that it encompasses that is the primary force driving the evolution of workflow software.

In the big picture, when we talk about transforming an accounting practice to a paperless practice model, there are four primary software applications that are at the core of this initiative: a scanning solution to convert the paper documents into digital documents, the DMS to manage the storage of the digital documents as well as other engagement files, a portal solution to make the digital documents available to clients and others electronically, and, finally, the workflow automation software that facilitates the flow of the documents through these applications. In addition to these core “paperless” applications, you also have all of the other applications that automate your services: tax preparation, trial balance, write-up, etc. All of these applications will ultimately feed into the digital document pipeline and vice-versa. That is why it is important to research the depth of integration these core paperless applications have with the accounting and tax applications that you use in your practice.

RHONDA — Workflow image goes here

Workflow vs. Workflow Light

The scope of functionality in workflow software on the market today is all over the board. Therefore, you can’t simply assume that since an application is branded as workflow that it has a core set of functionality. I think it is helpful to define two broad categories of workflow software, which will provide you with a starting point in developing your workflow software strategy: document-based and engagement-based.

Document-based workflow software is the most prevalent and the most basic. A lot of the DMS vendors tout the inclusion of document routing features in their software as workflow. The essential characteristic of this type of workflow software is that it allows you to set up rules for how a single document should be routed and who it should be routed to. The operative words there are single document. These systems are designed to route one document at a time. There are many benefits to this functionality, i.e., routing a vendor invoice to a designated person for approval based on the invoice amount. From a practical perspective, this doesn’t meet the fundamental workflow needs of an accounting firm. The nature of the vast majority of documents and information that flow through an accounting and tax practice is engagement centric. Therefore, the primary value of workflow software in this environment is the ability to provide the features and functions to serve as the online control center and workpaper container for the engagement. The more robust workflow systems accommodate this through features that include linking multiple files in the DMS to a specific project, a comprehensive feature to record and track engagement review notes, automated e-mail notifications, security controls over access to the engagement folder and the ability to establish a routing roadmap for the engagement process that allows you to pre-define the sequence of individuals or workgroups the engagement will be routed to.

In addition to the workflow features discussed in the preceding paragraph, there are many other workflow features and functions that will help to facilitate your transformation to truly paperless workflows. The short list of these features includes staff scheduling, electronic checklists, deliverable and due date tracking, and user-defined fields to track information tailored to the needs of your firm.

A Picture is Worth a 1,000 Words

It’s a bit of a challenge to accurately describe the nature of an emerging software technology like workflow. Therefore, I recommend that you find some time to participate in a few vendor demos of alternative workflow systems. If you visit their websites, you’ll find that they typically offer free webinar demos available for the public to preview the products, or they will happily schedule a private demo for you. The vendors included in the comprehensive list here range in functions and purpose, but several are considered accounting firm centric. Several are even offered in the web-hosted, software as a service (SaaS) model, which I believe is an essential platform for this application to enable a true anytime, anywhere workflow model.

As we have discussed, workflow software is an important piece in the foundation of a paperless practice model. It is more important now than ever before that you develop your overall paperless strategy. By taking the time to prioritize your objectives and the initiatives and applications that will be required to achieve them, you can avoid making costly mistakes with ineffective solutions that don’t co-exist effectively. Having a roadmap will significantly increase your probability of success. n

John Higgins, CPA.CITP, is the Strategic Advisor for CPA Crossings, LLC, Rochester, Michigan. John specializes in advising accounting, tax and financial professionals on how to leverage technology to improve productivity and profitability. You can visit their CPA Technology Best Practices CPE Center at www.cpacrossings.com or contact John directly at jhiggins@cpata.com.