According to the Association for Information and Image Management International, document management is:

“The use of a computer system and software to store, manage and track electronic documents and electronic images of paper-based information captured through the use of a document scanner.”

In short, document management is a digital method of scanning, storing, and tracking all necessary business documentation. This includes things like your business plan, your profit and loss statements, tax documents, onboarding documentation, brand guidelines, and anything else that is necessary to operate your business. Even simple things like meeting notes and emails could fall under this procedure.

Why is document management important for small businesses?

Successful document management has a large range of benefits for businesses, both large and small. Having a smooth documentation process can alleviate bottlenecks in productivity, keep your entire team informed, and make it far easier to track down important pieces of information.

Now, being able to track and organize your internal documents may come as an afterthought, compared to the immediate needs of day-to-day management. Taking the time to get this sort of process in order can seem time-intensive and unnecessary. However, if implemented correctly, it can save you and your business countless hours and dollars that you would otherwise spend on unproductive tasks.  

Let’s take a closer look at how effective document management is crucial for business success.

1. Improve time allocation 

The amount of time spent on sourcing files can be hours upon hours every week if files aren’t managed correctly. 

This issue can be even more difficult to alleviate if you have a remote work or hybrid business model. Struggling to find information can’t simply be remedied by asking your colleague who is sitting next to you. Instead, there may be messages sent across multiple platforms and hours spent waiting to hear back on the simple location of a document. 

This wasted time could be better utilized for tasks that actually contribute to the business. And by adopting some sort of document management solution, you can help your team easily avoid this pitfall. 

2. Ability to index content

Document management systems provide the option to index content. This means that you can label and code documents in a manner that is best suitable for your employees and industry. There is no set system so you can alter it as you wish and adapt as needed.

For example, if an employee is searching for information, there is no set word they need to enter. They can search by the title, description or simply words that they either remember are in the document or would most likely be in the document, for more fluid access. 

So, while you’re documentation will be more organized, there is no fear that this creates a strict process for searching. Your employees can stick to whichever method works best for their workflow and still find every document just as easy as the next.

3. Ability to run reports

Compiling information and generating reports is another timely task that can completely be streamlined with document management. This is typically automated within the system, taking another task off your employees’ plates, as well as removing the need to invest in another tool.

Similar to additional elements of document management systems, you can customize the reports to suit your business needs. Whether you need inventory reports, account activities, or other operational reports, these are all doable. 

Bear in mind, before you purchase a document management system, you’ll need to double-check its features, as not all systems are created equal. Just like any product or service, there are benefits and drawbacks, making each platform unique in its own way, and suitable to different businesses.

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4. Additional security 

Data breaches have become more and more common and are something that all businesses should be aware of and protect themselves against. These data breaches can expose business documents, employee and customer information, and overall be detrimental to the survival of the entire business.

A crucial benefit of document management systems is that their storage systems are secure and can be trusted. This is arguably one of the most important reasons to store your documentation in this way. 

The entire business of these systems is to file documents, meaning they have a larger incentive to focus on security and keep documents secure from hackers. They often have better controls, and more money to invest in these security measures than your typical small business, which has other priorities. 

5. Assists with confidentiality

This is similar to security except it focuses more internally by ensuring not every team member has access to every single document, such as contracts, proposals, and additional confidential information. Document management systems can automatically organize who has access to what file by utilizing technology, and alternatively, you can manually give access and prevent access to specific files.

For instance, Google Drives allows you to change the settings so that people have different levels of access to shared drives, determined by their roles. From the highest level of access — the Manager, right down to the role with the lowest level of access — the Viewer.

For individual documents, you can choose whether anyone who has the link to the Google Doc can access the document. Or alternatively, you can choose who has access by individually inviting people to access the document. 

Accidentally giving employees or clients access to the wrong files can instantly cause negative situations, inevitably eventually leading to loss of clients or employees. 

6. Ability to reduce and retract file redundancy 

File redundancy is essentially the same information stored in multiple places, resulting in either accidentally accessing old versions of files, or deleting the wrong files. This can cause loss of important data, forwarding the wrong information, and having to repeat work, as well as the loss of time undertaken to rectify these mistakes. 

However, bear in mind, data redundancy can be intentional and there is no need to worry about this form — intentional data redundancy is often utilized for data backup as well as security, allowing access to certain file versions. 

Document management systems organize files where redundant data can be reduced if you wish, so the data that is stored is useful. Depending on the system you opt for, you may be able to implement time stamping, a notification system about updated versions, or other techniques. All techniques have the same result of minimizing repeated data. Therefore, there is no clutter you need to sift through or get confused about. 

7. Offline availability

While Google Docs can be a starting point for document management, its biggest drawback is the inability to access files when the internet connection is faulty or you are needing to work from a different location where it’s just not possible to get WIFI.

A number of other platforms still give you access to files even when there is no internet connection. I know this is helpful when my office internet sometimes disconnects. I am still able to meet deadlines and work, despite the issues. Or, for instance, an employee is meeting a client but arrived early or the client is late. The employee is still able to carry on with tasks and time isn’t wasted. When you do reconnect to the internet, the changes automatically sync.

Investing in document management for business growth

With strategic time management and optimizing all work hours, the time saved having to sort through files can be allocated to doing business that directly brings in profit. Smooth dissemination of files by easily accessing and sharing files, regardless of location assists all business processes, bringing more money into the business.

The amount of money you do earn from utilizing these systems is dependent on the number of employees in your business, the industry you are in, and the length of time you already spend sourcing info. The rule of thumb is the more time saved with these additions, the more money your business will bring in.

While it will cost you upfront to purchase the file management software, overall profits will likely increase in the long run. So, before investing in document management software, be sure to run a cost-benefit analysis and look closely at your budget. More than likely you can find an appropriate solution within your price range, or identify a revenue target where you’ll be able to purchase the surface.

AvatarOlivia Fairhurst

Olivia Fairhurst is a former Journalist and now Content Manager and Business Owner. Olivia is passionate about helping others by utilizing her skills to get important messages out there to her audiences. She is currently writing on all things business for Franklin Engineering, Doc Smart Solutions, and Stack It.