Who Should Manage Source Documents: the Business, or the Bookkeeper?

July 30, 2019 Victoria Hoffman

Source Documents

Source documents – bills, receipts, checks, or anything substantiating a transaction – are critical for small business compliance. They’re also important for accurately and efficiently completing the bookkeeping process, and ultimately, providing informative business insights.

However, there are often a few questions that arise when it comes to source document management best practices. Historically, source documents required a lot of administrative effort to collect and manage. And let’s not forget about storage space – it’s estimated that up to 25% of a firm’s office space could be used for paper document storage! 

Bookkeepers are uniquely positioned to help their small business clients better manage source documents. Let’s break down some frequently asked questions to better understand why and how.  

Who should manage source documents: the business, or the bookkeeper?

The nature of every relationship between a business owner and their outsourced bookkeeper is different; however, a simple way to improve your client relationships is by taking more administrative tasks off their hands – tasks such as document management.

Based on conversations with leading bookkeeping professionals, it’s evident that outsourced bookkeepers who play a significant role in helping their small business clients collect and manage source documents are more likely to have stronger client relationships.

Beyond helping SMBs better manage their source documents for compliance-related reasons (e.g., helping them get through a routine audit), bookkeepers who manage source documents are able to provide more accurate reconciliation, which leads to meaningful business insights. As a result, the client tends to be happier with the services they receive and are more likely to want to subscribe to more bookkeeping services.

This isn’t to say that business owners should neglect their responsibility in keeping track of source documents – rather, since source documents are important to the bookkeeping process, bookkeepers should take the opportunity to play a leading role in helping their clients better manage their documents.

Why are source documents important for bookkeeping?

Source documents are vital for business compliance and audit preparation. It’s important to understand the types of documentation that are required for small businesses to remain compliant in the region(s) you serve (e.g., by keeping up to date on the requirements in the United States, Canada, Australia, New Zealand, and the United Kingdom). 

Source documents are also important for improving bookkeeping quality. Best-in-class bookkeepers will avoid reconciling directly from a bank statement whenever possible to ensure each transaction can be verified with a source document. Having source documents readily available will not only make the reconciliation process faster, easier, and more accurate, it will also help to gather clean data, which can then be translated into business insights.

Which brings us to our next question: source documents are traditionally painful to collect, often requiring several low-value client interactions and confusing back-and-forth communications – how can they be efficiently collected and managed?

What’s the best way to collect and manage source documents?

One of the best ways to collect and manage source documents is to do so digitally – that is, to implement a process and technology that will automate and digitize document management for you. 

There are a number of benefits to digitizing document collection and management, from disaster-proofing, to mitigating physical storage space, to facilitating flexible and remote work... the list goes on! Perhaps best of all, finding a single system for digitizing and collecting source documents will allow for one, centralized document storage solution, making all documents readily available when you need them.

Hubdoc is a tool that can help both bookkeepers and business owners reap these benefits – with our mobile app, intake email, integration with Fujitsu ScanSnap, and automated connections, Hubdoc makes it easy to collect and digitize documents. When documents are added to Hubdoc, they’re automatically filed and easily searchable, keeping them at your fingertips.

Moreover, Hubdoc integrates with cloud storage platforms (Box, Dropbox, ShareFile, SmartVault, and Google Drive) as well as provides the option to push documents to Xero Files, providing redundant backup for easy client access. When integrated with cloud accounting platforms such as Xero, you can publish source documents to create and match to transactions in the bank feed, with the source document automatically attached. Watch a short Hubdoc demo to see how it works!

Digitizing document collection might require some change management – you’ll have to ensure that both your staff and clients see the value, and are trained on their responsibilities in the system (e.g., clients will need to get used to taking photos of receipts when they’re on the go). 

Or, by implementing tools like Hubdoc, clients can continue to submit paper documents and your firm can take care of the digitization, providing even more value to your clients.

But… are digital documents acceptable in the event of an audit?

Yes! Many governments accept digital files as source documents in the event of an audit, including the United States, Canada, Australia, and the United Kingdom. We strongly recommend reviewing your local government legislation to confirm that you’re compliant with record-keeping standards.

With this in mind, having a digital and centralized system for document management can also provide peace of mind to clients who might be anxious about keeping track of documents for audit purposes. In the event of an audit, having all documents readily available in one place will help to ensure the audit process goes smoothly.

How can I start using Hubdoc to collect and manage source documents?

Accounting and bookkeeping practices are eligible for a free Hubdoc partner account

With this account, you can start uploading receipts with our mobile app, collect documents via email, set up automated connections to fetch documents, and experience the power of automated data extraction. We recommend using Hubdoc at your own practice to determine if it’s a good fit for your clients.

Bookkeepers who can help their small business clients digitally manage their source documents are able to provide additional value. Better yet, you’ll be able to further position yourself as an advisor by helping your clients move into an increasingly digitally-enabled world!

On behalf of the Hubdoc team, we’d like to extend a special thank you to Jelena Arkula, President of Books LA, for providing expertise that helped to inform this blog post.


Sign up for your free Hubdoc partner account!

About the Author

Victoria Hoffman

Victoria is the Senior Content Marketing Manager at Hubdoc. She is a graduate of the University of Toronto and has 5+ years of experience in digital marketing. She appreciates a fun pun and is always looking for a good book to read.

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