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Firm Management | February 3, 2025

How to Streamline Your Paper Document Collection This Tax Season

In an era of easy-to-use cloud applications and AI, why does paper persist in the finance sector?  There are many reasons that make it difficult for CPAs to demote paper in lieu of full digitalization.

By Scott Francis, Technology Evangelist, PFU America, Inc.

Most accounting firms strive to go “fully digital” because there are a lot of advantages for both them and their clients. Digitalization done right -– especially during tax season, the busiest time of the year for CPAs – automates and streamlines many of the time-consuming and complex tasks traditionally involved in the tax preparation process. That said, digital transformation doesn’t happen overnight.

CPAs face a number of challenges when it comes to transitioning from paper-dependency to full digitalization. While paper is important for redundancies and continuity in case of a cyberattack, for example, it can be a problem in accountancy because it increases inefficiencies and the likelihood of human error.

Taming the paper tiger

In an era of easy-to-use cloud applications and AI, why does paper persist in the finance sector?  There are many reasons that make it difficult for CPAs to demote paper in lieu of full digitalization. CPAs are in the services business, catering to a wide range of consumers that have varying levels of technology know-how, many of whom are also resistant to change. In meeting clients where they are, from a technology and comfort perspective, CPAs can accommodate their clients’ preferences, keeping them happy as a result. But this doesn’t change the fact that relying on paper documents can get in the way of two key CPA goals: better efficiency and higher accuracy.

While the benefits of digitization are numerous, CPAs should expect some hiccups during the transformation journey:

  • Data Security and Privacy Concerns: CPAs should always prioritize data security, as they handle sensitive client data (e.g., financial records, tax returns, Social Security numbers). With an increasing reliance on digital tools, storing and transmitting this data electronically introduces the risk of cyberattacks and data breaches. Ensuring that all digital systems are secure enough to protect this information is a major challenge. CPAs can provide their clients with assurances their documents are secure by partnering with companies that offer document portals that meet SOC 2 compliance standards. This can help build client trust, the next big challenge CPAs face on the path to digitization.
  • Client Trust: Clients need assurance that their financial data is safe when handled by CPAs. If less technologically savvy clients feel uncomfortable with digital processes, they may be hesitant to fully embrace digital tax preparation, which can slow down the digitalization process.
  • Compliance: CPAs must also ensure they remain compliant with data protection laws and regulations, which could include EU’s General Data Protection Regulation (GDPR) if they count corporations with a global presence as clients. The California Consumer Privacy Act (CCPA), which was modeled on GDPR, is one of the strictest privacy laws in the U.S. These laws require stringent controls on how data is collected, stored, and shared, and failure to comply can result in penalties and reputational damage. CPAs must also keep up with newly enacted laws. Eight states – from Minnesota to New Hampshire – now have laws protecting consumer data. All eight share foundational principles that reflect a broader U.S. trend towards stronger consumer privacy protections.

While the transition to digitalization may occur in phases, over time, it can significantly simplify tax preparation by automating and streamlining many of the time-consuming and complex tasks traditionally involved in the process. One of the biggest time savers is the automation of data entry and other manual tasks.

By using document scanners, data capture of tax documents – including receipts, invoices, etc. – can be automated with OCR, which is required for the extraction of relevant data into accounting software, reducing the need for manual data entry. This decreases the potential for human error and ensures that accounting entries are accurate.

Once scanned, digital platforms can securely store documents and financial records in the cloud. This makes them easier to find and access, reduces the risk of losing physical documents, and ensures all necessary information is in one place. With tax documents no longer in paper form only, they can be integrated with other financial software, bank accounts, payroll systems, secure cloud-based document management and client portal solutions that allow CPAs to access their clients’ financial data and documentation from anywhere for more timely and accurate tax filings.

In addition to saving time, digitalization also drives cost savings because there’s no longer a need for paper forms, reducing clutter as well as costs related to printing, mailing, and storage.

Perhaps most importantly, going digital provides a better client experience because of the benefits that automation and data integration provides. CPAs can process returns faster and more efficiently, which improves the client experience, especially during the busy tax season.

The digital CPA of the future

Digitalization helps CPAs be more effective during tax season and all year round, improving efficiency, accuracy, and collaboration while reducing administrative burdens. As AI-enabled accounting software is more widely adopted, CPAs will be able to take digitalization to a higher level to automatically categorize transactions, reconcile accounts, and prepare preliminary financial statements with minimal human intervention. In the end, not only will digitalization result in higher efficiency and accuracy, but spending less time on routine tasks will enable CPAs to provide clients with a more organized and streamlined tax preparation experience.

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Scott Francis, Technology Evangelist at PFU America, Inc., brings more than 30 years of document imaging expertise to his position where he’s responsible for evangelizing Ricoh’s industry leading scanner technology. With over thirty years of experience in the enterprise content management industry, he frequently provides thought leadership on document scanning use cases and best practices in addition to the overall benefits of digital transformation solutions.

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