How to Organize Financial Records: Digitization and Storage Best Practices

Ensure your financial records are secure and accessible

With all the daily concerns of running a business, it’s easy to let improving how you handle your financial records be a “tomorrow problem,” then a “day after tomorrow problem”, and so on. But letting potentially poor or inefficient data organization practices lie can add up to one very costly issue: Gartner estimates that poor data quality costs organizations an average of $12.9 million every year.

Businesses that want to know how to organize financial records in a better way need to start with the fundamentals, then build on those practices with proven methods and tools to streamline their recordkeeping process in a way that will pay dividends for years to come.

Financial records management can optimize work and protect against compliance lapses. Read this guide for how to pick and implement the right solution for you.

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How to organize financial records for your business

The best way to learn how to organize financial records for business purposes is to start from most companies’ monetary cornerstone: the balance sheet. Revisiting the way you track how money enters and leaves your business is an excellent first step on the path to more intricate financial recordkeeping. Do your accounting methods rely on accrual, where balances are added as soon as the sale or payment completes, or cash, where balances are only changed when money actually enters or leaves your accounts? Do all of your business’ financial records adhere to this distinction?

From the balance sheet, move on to the types of records your business keeps. The IRS advises small businesses to retain records that fall into six specific categories as some of the types of records you should keep:

  • Gross receipts records showing the income you receive from your business, such as cash register tapes and invoices.
  • Purchase records showing the items you buy and resell to customers, including cost of raw materials or parts purchased.
  • Expenses records showing the costs incurred to carry on your business, aside from purchases. These should identify who was paid, how much, and when, and briefly describe the item purchased or service received.
  • Travel, transportation, entertainment, and gift expenses records showing money spent on special categories of expenses, which you may be able to deduct on taxes.
  • Assets records showing when and how you acquired machinery, furniture, real estate, or other non-consumable things you own and use in your business. You must also retain records needed to compute annual depreciation and gains or losses incurred when selling assets.
  • Employment taxes records, which must be retained for at least four years after filing the 4th quarter of the year.

Retaining these records through the traditional approach involves filing them away based on their category, possibly in duplicate or triplicate depending on who may need the documents and when. Certain employees may have duties dedicated to maintaining the filing system and helping other employees find important records later on (a recent study found the average employee spends just over 3 ½ hours searching for information every day).

Modern best practices for how to organize financial records favor a digital-first approach. Moving to a digital-first business model for your financial records will allow your business to eliminate inefficiencies both in terms of how employees spend their time and how your business physically stores documents, all while reducing the risk of records being misplaced or improperly accessed.

Here are three fundamental steps to reach a digital-first financial records strategy:

  1. Digitize: Paper documents are a reality of doing business for numerous reasons, but that doesn’t mean they need to pile up on desks or fill filing cabinets. Look for document digitization devices that create reliably high-quality scans with minimal need for employee intervention.
  2. Store: Whether a financial record was originally paper or is natively electronic, it should end up in the same place: a digital repository that stores each document through encryption and secure employee log-in requirements.
  3. Organize: Financial records are only as useful as they are accessible. Thankfully, digital corporate records management tools can automate many organizational processes based on logical rules: documents in category “A” are accessible only to the C-suite, documents with the “Tax” tag are retained for 7 years before being automatically destroyed, and so on.

Did You Know?:Looking to go fully paperless? These five records management companies are driving innovation for a digital business future.

Find the right financial records organization tools

Depending on the nature of your organization, your needs for financial records organization may be best served by a simple file structure in a cloud drive, a bespoke software suite created by an in-house IT department, or anything in between. Many companies’ needs will fall somewhere in the middle, and those groups will likely do best by enlisting the help of dedicated records management companies. Here are three such offerings:


Hyland’s automation solutions include methods for automating invoice processing through an integrated content portal that simplifies accounts payable on the vendor and supplier side. Its Brainware intelligent capture software renders key financial records instantly searchable after digitization, and its content management platforms automatically classify documents while extracting critical information.


Kofax’s capture and invoice processing solutions help staff work faster with more accurate, insightful, and compliant financial data. Its AP Agility solution automates accounts payable processes to reduce costs and strengthen internal controls, while its Process Director helps to improve productivity and eliminate inefficient paper invoices.


SmartVault’s online document storage and management solution allows authorized staff to access files securely. Your financial records organization solution is only as effective as it is easy to use for all concerned parties, and SmartVault is built to make it easy for you and your clients to reduce paper handling through intelligently digitized, stored, and organized documents.

Did You Know?:If you prefer to keep maintenance in-house as much as possible, the ScanAid Scanner Consumable and Cleaning kit is an economical alternative to on-site service.

Our recommendation: fi-7300NX network-enabled scanner

Those in the market for a scanner to improve their financial records organization process have no shortage of options. We take great pride in having spent the last 50+ years researching, designing, and developing some of the most advanced and powerful electronics in the world, including our professional grade fi Series scanners.

Built to purpose for the most demanding document handling jobs, fi and SP scanners are capable of processing tens of thousands of pages per day at the highest levels of accuracy. Their intuitive integration capabilities with all existing work suites minimize time-to-value for businesses looking to invest in tools that will pay dividends for years to come.

The fi-7300NX was built to simplify scanning and reduce IT costs through built-in Wi-Fi and ethernet connectivity, allowing easy access to the scanner with or without an accompanying PC. Its 80-page automatic document feeder and scanning speed of up to 60 pages per minute is well-suited for working through stacks of records at small-to-mid-size offices and then maintaining a digital-first environment. Click here to learn more or shop the rest of our production scanner line.

Note: Information and external links are provided for your convenience and for educational purposes only, and shall not be construed, or relied upon, as legal advice. PFU America, Inc. makes no representations about the contents, features, or specifications on such third-party sites, software, and/or offerings (collectively “Third-Party Offerings”) and shall not be responsible for any loss or damage that may arise from your use of such Third-Party Offerings. Please consult with a licensed attorney regarding your specific situation as regulations may be subject to change.