Putting contracts in order and automating document creation

We handed our company's paperwork over to a professional outsourced accounting firm, thinking that would be enough. Then a compliance check arrived from the bank — two weeks before Christmas. We spent the run-up to the holidays glued to the keyboard, the printer and a stack of paper. After that episode, we automated our work with contracts.

Now we draw up even urgent documents quickly and without errors. Preparing an invoice, a contract or an act takes no more than 5 minutes. And in 15 minutes we can pull together all the company's documents and hand them over for inspection (everything will be in perfect order, by the way). Here's what we learned.

Why fully delegating accounting tasks doesn't work

We have relatively few deals — not enough to keep a full-time in-house accountant busy. But handling accounting entirely on our own won't work either. If something is overlooked, filed in the wrong form or past the deadline, we lose more money than we saved on an accountant. So we delegated the work to an outsourced accounting firm.

Unfortunately, our expectations were too high.

However brilliant outsourced specialists are, they work in multitasking mode. Right now they might be preparing our contracts. Five minutes later they're advising someone else. Half an hour after that they're preparing a tax return for a third company. Only then do they get back to our invoices and acts of completed work.

This format didn't suit us, for several reasons:

• You have to wait a long time. External specialists handle requests in order of priority. When we urgently need to set up a client and a big deal is on the line, there's no time to wait.

• Lots of errors. In a rush, the accountant might enter an incomplete payment description, mix up the dates and numbers of contracts, acts and invoices, or send the wrong documents to a counterparty. More than once we lost time and were left red-faced in front of partners because of this. And to pass the check without penalties, a lot had to be redone.

• No 100% delegation. Handing accounting fully to an outsourcer and forgetting about it didn't work out. We still had to get into every document and spend time double-checking it.

That said, the lawyers' consultations, the preparation of tax filings and a number of other operations did prove useful. So we still use outsourced accounting services — but our approach to document management had to be rethought after the bank check.

What a bank or tax inspection can cost you

One day, bank staff did come to check on us. To satisfy themselves that our operations were legal, they asked us to provide the grounds for our transfers:

• contracts and annexes (signed by both the contractor and the client),

• acts of completed work (where work had been done).

Naturally, assurances that we work honestly and simply don't manage to keep our documents in perfect order got us nowhere. The bank staff floated various suspicions:

• A contract and an annex under the same number, but with different counterparties. What if you're just siphoning money out of circulation through third parties?

• The payment description doesn't make clear what exactly you did. Laundering money through a shell company?

• Annexes to the contract are missing. Perhaps you're evading tax?

Yes, a bank won't penalise its own clients on its own initiative. But it acts on the instructions of the relevant authorities. We know of other companies whose accounts were frozen in suspicious situations pending clarification. Not much fun, especially before the holidays when work is in full swing. You're lucky if you manage to restore the documents. If not — hello, administrative and even criminal liability.

After the bank check, we no longer trust our document management to anyone. We automated our paperwork and now handle it ourselves.

Order starts with systematisation

• 1. First, we spelled out the tasks that mattered to us — the ones automating our paperwork needed to solve.

Put documents in order. So there's no confusion among contracts, acts and annexes.

Speed up preparation. Eliminate situations where only one person (the accountant, say) can prepare an invoice for a contract or another document.

Get rid of errors. There should never be two different contracts or acts with the same number. The payment descriptions, dates and other details of every transaction must be correct.

Achieve universality. We always make sure our developments can be deployed in the business processes of different companies.

• 2. Next, we defined the list of documents we have to work with.

• Framework contracts,

• their annexes,

• supplementary agreements,

• invoices.

• 3. We studied all the documents (incoming and outgoing) and split the information they contain into several categories.

Standard information. This includes contract terms, document forms and so on. From this we create universal templates that can still be edited by hand if needed.

Counterparty data. Company name, the name of the director or sole trader, VAT number and so on. The first time we work with a counterparty, we enter the information into a database. After that we just pick the counterparty from a list.

Transaction data. Service date, amount and so on. We enter the information into the annex, and it's duplicated automatically in the act and the invoice.

• 4. We wrote down all the conditions that must be met for documents to be drawn up in a legally sound way.

• Every document must have its own unique sequential number.

• Acts and annexes must contain the correct references to the contract (number and date).

• Each annex must have an act drawn up and signed on time.

• The counterparties' details must be entered correctly everywhere, and so on.

Looking at this from the outside, you might think implementing it all would be expensive. After all, you have to combine different data types, account for dozens of rules and debug the system so it runs flawlessly. Someone has surely concluded that it would take months of programmers' work and never pay off. But let's not jump to conclusions.

We automated document management without programmers

We realised that an automated document-management system can be assembled from ready-made web services. We took Google Docs, Forms (plus Form Publisher) and Drive as the basis and set them up to work together using Zapier.

Now working with documents looks like this:

1. As the contractor, we fill in a Google Form specifying all the data needed to generate the contract and annex. (If we're the ones ordering a service, the supplier picks the correct data from drop-down lists.)

2. Once the form is filled in, the finished documents (with a facsimile signature and stamp) are sent to the counterparty and also appear in the relevant Google Drive folders.

3. The client signs the documents on their side (adding a stamp if needed) and sends them back.

4. So we don't forget about invoices and acts, we set up notifications. When the start or end dates of work approach, a reminder arrives. All that's left is to open the relevant form and fill in its fields.

We've been running this system in our own business for a year. Drawing up contracts now takes about 5 minutes and there are no inconsistencies in them.

Dates, document numbers and other details are entered correctly, because they're generated automatically. At any moment we can print the documentation from the cloud drive and hand it to the inspecting authorities. All that remains is to keep the paper versions in the same order.

Not so long ago, at the end of every reporting period, we'd be bogged down in paperwork. The tedious, pointless double-checking of documents only distracted us from our real work. Instead of earning money, we'd be stuck on the phone with the accountant explaining why this was done this way and not that, why a contract has two annexes and one invoice, and so on.

Last year's holiday season, with its bank check, felt like it had been struck from our lives. Instead of family, festive food and champagne — nothing but bureaucracy and the strained faces of colleagues.

If you're not keen on fiddling with documents either, automate the process. It's not as hard as it seems. You don't need to be a programmer to get to grips with Zapier — you can set aside a week, work through the manuals and do it all yourself. How to structure your information for automation, we explained above. We've already been down this road ourselves and can help if something doesn't work out or you have questions.