A document structure is a formal and comprehensive list of interconnected documents, including their document number, type, part, version, and quantity. It helps in organizing complex information by creating units of information. For instance, a document structure can be used to manage the documentation of a complex product, which may include text files, technical drawings, photographs, service manuals, and instructional videos.
The importance of financial document management lies in maintaining detailed and accurate financial records. These records are crucial for both operational and regulatory purposes. Financial documents such as bank statements, profit and loss statements, tax returns, and payroll statements are necessary for tasks like preparing payroll, filing taxes, obtaining business loans, setting up payment processing accounts, and monitoring the financial health of the business. If financial documents are not properly managed and readily accessible, it can lead to various complications and challenges.
To give you an idea, here are some of the financial documents that businesses should retain:
- Daily transaction records
- Customer invoices
- Purchase orders and invoices
- Employee timesheets and payroll statements
- Bank statements and reconciliations
- Month-end and year-end financial transactions
- Balance sheets
- Profit and loss statements
- Tax returns and related documents
By effectively managing and retaining these financial documents, businesses can ensure compliance, facilitate financial analysis and decision-making, meet reporting requirements, and maintain a clear record of their financial activities.
checklist of important financial documents that should be kept organized:
Insurance Documents:
- Original life insurance policies
- Life insurance premium payment acknowledgments
- Health insurance policy documents
- Health insurance cards
- Health insurance premium payment acknowledgments
- Written communications with insurance agencies
Bank Documents:
- Bank account details
- Documents related to fixed deposits or recurring deposits
- Bank cheques and records of used cheques
- Password slips for ATM or internet banking
- Acknowledgments for cheque deposits
- Locker documents
Investment Papers:
- Mutual fund documents
- Stock-related documents
- PPF (Public Provident Fund) passbook
- EPF (Employee Provident Fund) acknowledgment
- Demat account papers
- Copy of a will
- Bonds
- NSC (National Savings Certificate)
- Post office-related investment documents, if any
Tax Documents:
- Tax return acknowledgments
- TDS (Tax Deducted at Source) certificates
- Acknowledgments of tax payments
- Any other documents related to taxation
Loan Papers:
- Title deeds
- Home loan agreement
- Any written loan agreements
- Car loan papers
- Education loan agreements
- Insurance papers for home loans or other loans
Monthly Bills:
- Electricity bills
- Phone/DTH bills
- Credit card bills
- Netflix subscription
- Water bills
- Internet bills
Other Important Documents:
- Electricity bill
- Phone bills
- Credit card bills
- Water bills
- Internet bills
It is crucial to keep these financial documents organized to ensure easy access, compliance, and effective financial management.
Benefits of a Financial Document Management System
Storing all of your financial documents either digitally/physically and in a single location offers many benefits for small businesses.
Centralizes All Important Documents: If you’re like most businesses, your financial documents are all over the place – literally. Some are in one office, some in another. Some are paper, some are digital, and located on different computers. By storing all your financial documents in one central location, you gain more control over all of them. It also makes it easier to find those documents you need because they’re all in one place. It helps you stay organized.
Eliminates Lost and Misfiled Documents: Using a consistent file structure, you eliminate the possibility of lost and misfiled documents. You know where everything is and can easily find any given document just by searching for it.
Provides More Secure Storage: Digital storage is more secure than physical storage. Digital storage is secure against fraud, physical theft, and cyberattacks. You can also better control access to digital files, which keeps unauthorized users from viewing sensitive documents.
Enhances File Sharing and Collaboration: Securely sharing cloud-based files makes it easier for workers to collaborate. This lets your employees work from anywhere, even their own homes, and still have access to the files they need.
Eases Tax Preparation: When it comes time to prepare your business taxes, having all your financial documents – including supporting paperwork – in a central location makes the process much easier. It also eases the task of filing monthly payroll taxes.
Helps Track Financial Performance: Because all your financial information is now accessible with a click of a mouse, you can set up regular financial reporting and generate on-demand reports as necessary. You don’t have to wait for your accountant to sift through your paperwork to tell you how you’re performing; you can now monitor your performance daily if you want.
Reduces Paperwork: Storing all your financial documents digitally helps you spend less time handling paperwork and save tremendous amounts of space formerly devoted to storing all that paper. Given that the average office worker prints more than 10,000 pages each year – a large percentage devoted to financial documents – that’s a lot of paperwork that can be reduced.