How Much Will It Cost for a Company to Switch to Electronic Document Management?

Companies are currently implementing electronic document management (EDM) to optimize their in-house bureaucratic flows and expedite information exchange with counterparties and state regulators. However, certain executives are reluctant to use new technology in their own entities in fear that this will lead to extra costs or tax risks. It is true that the customary hard-copy formats may seem more reliable than their electronic counterparts. But are these concerns really justified?

How Much Will It Cost to Switch to EDM?

Most directors are concerned about the cost of obtaining electronic signatures for employees. Indeed, a company will pay at least RUB 1.9 thous. to obtain a basic certificate for each employee, and this cost item may prove quite significant for a large entity. Meanwhile, the law does not specify whether it is the employer or the employee who has to pay for the signature. This issue is to be addressed case by case followed by making the relevant entry in the employment agreement or addendum thereto.

Electronic documents may be exchanged both with employees and with counterparties. To do this, it will be enough to obtain a single signature for the company that will certify the person responsible for final decisions – either General Director or General Director’s Attorney-in-Fact. An entity will have to pay about RUB 2–4 thous. for the certificate depending on the type of the medium for safe custody of the cypher key. It may be obtained from accredited centres or directly from the provider that the company is planning to work with. The latter’s service fee amount will be calculated according to the total number of outgoing documents. For instance, 600 units per year will be quite enough for a small business, while medium and big businesses will need thousands. The cost per each document sent amounts to about RUB 6-7 depending on the tariff plan.

EDM System Features

Under the basic service package, the company is supposed to have an employee to keep track of the new documents and allocate them to responsible persons by hand. However, large companies with a sophisticated hierarchical structure often resort to additional tools in order to ensure more efficient in-house information allocation. For instance, robots make it possible to sort documents by different categories and forward them to the relevant business units within the entity automatically. The setting of each route will cost around RUB 10 thous. per year.

In addition, you may integrate a special module in your primary accounting system (either SAP or 1C) to download and upload documents directly in order to save employees’ time. This service will cost around RUB 12 thous. per year. In addition, the provider will develop a request confirmation facility for in-house document management or English-language interface at request. The latter option will be useful if the right of last signature is assigned to a foreign citizen.

Thus, a small company will spend less than RUB 10 thous. per year on its EDM system. A medium business will pay extra for at least one automated route and module integration in the accounting system. The cost of this package starts at RUB 40 thous. per year. An entity will have to pay extra if it is willing to implement electronic HR document management and pay for its employees’ electronic digital signatures at its own expense. In this case, a company with a total staff of 50 professionals will pay around RUB 100 thous.

Other Cost Items

Most frequently, executives are concerned about security: electronic documents may be lost as a result of random failure, while hard copies represent a more reliable data transmission and retention method. Besides, there are certain issues that are not clearly spelt out in the statutes: how exactly and how long are electronic documents supposed to be retained? how can they be authenticated? what are the guarantees that they have not been modified? For this reason, the company’s employees and counterparts are oftentimes suspicious of the new format and insist on the preservation of the traditional system.

In this context, it is crucial to figure out the benefits to be secured by the entity upon implementation of electronic document management. The company will have to find a way to ensure data security, develop operating procedures for the system, enshrine the duties and rules in the job descriptions and policies, and control employees’ access to information. Finally, it will have to train employees to use all features of the digital solution. All these items will cost extra to the company. However, they will pay back soon thanks to a more expedient approval and less frequent loss of documents.

Are There Any Benefits?

Paper use reduction is among the benefits of electronic document management. Transition to EDM will make it possible to reduce the regular costs of materials and office equipment maintenance, decrease the labour input in the disposal of securities and work load of the records department, and stop renting extra space. At present, most invoices and reports may be sent and received in digital form. The only exception concerns certain industry-specific documents, e.g., consignment notes.

EDM may prove financially unviable in the instance when a significant number of counterparties refuse to exchange electronic documents. In this case, the entity will have both to pay for EDM system maintenance and to preserve the records and delivery departments virtually as before. On the other hand, Russia’s major suppliers are increasingly refusing to deal with entities unwilling to exchange electronic documents. Thus, the number of companies using EDM will be continuously on the rise.