File Organization in Bookkeeping: By Account or By Month?

In my role at a small Bookkeeping firm, we traditionally organized our files by account and then by month. This meant that if a customer had three bank accounts and a credit card, the structure looked like this:

customer folder > year > Bank Account 1 > all 12 statements
customer folder > year > Bank Account 2 > all 12 statements

Occasionally, if a bank account was complex, we’d create month folders within the account folder, but only when necessary. This system worked well for me.

However, the folder structure has recently changed under new management:

customer folder > year > month > Bank Account 1 > single statement
customer folder > year > month > Bank Account 2 > single statement

This new setup is frustrating for me. As a bookkeeper, I find it more beneficial to view an entire account’s statements at once rather than sorting through a month’s worth of mixed documents, each buried deep in a folder. When resolving discrepancies, I typically need to reference data spanning January to March for a single statement, rather than isolating all documents for just January.

Being relatively new to this field, I’m uncertain about standard practices. Perhaps this method, albeit inconvenient for bookkeepers, better serves the CPAs who review our work. I’m hesitant to voice my concerns, as it seems the current approach prioritizes archival organization over practical access to files.

How is file storage handled at your company, and do you agree with their method?

In file organization within Bookkeeping or any data-intensive field, the system you choose can significantly impact workflow efficiency. There isn’t necessarily a “one-size-fits-all” solution, as the optimal structure often depends on the specific needs of the users and the organization. However, I can provide some insights into different approaches and considerations that might be helpful in your situation.

Common File Organization Approaches

Organizing by Account, Then by Month
Structure: Customer Folder > Year > Bank Account > Month (if needed) > Statements
Pros:
- Easy access to the complete history of a specific account, allowing for efficient error tracking and reconciliation over multiple periods.
- Reduces the time spent searching for documents when analyzing trends or compiling reports for a specific account.
Cons:
- May become unwieldy if an account has a very high volume of transactions or documents, though you mentioned the ability to add month folders as needed.
Organizing by Month, Then by Account
Structure: Customer Folder > Year > Month > Bank Account > Statement
Pros:
- Facilitates chronological reviews across different accounts, which might be useful for specific tax preparations or period-end reconciliations.
- This system could be beneficial for financial professionals who focus on month-end closing activities or need to access all documents from a given period simultaneously.
Cons:
- More challenging to perform longitudinal studies of a single account across multiple months since documents are more fragmented.
- Might increase the complexity of error investigation workflows focusing on individual account performance over time.

Considerations

User Needs and Workflow:
Bookkeepers: Typically require quick access to historical data for single accounts to track errors, reconcile discrepancies, and ensure accurate transaction histories.
CPAs and Financial Analysts: Might prioritize a period-based view if their work involves frequent month-end closings or the preparation of financial statements spanning multiple accounts.
Technology and Tools:
If your systems allow for tagging or advanced search capabilities, these might mitigate some of the downsides of either organization method by enabling quick retrieval of documents regardless of their storage path.

Recommendation

Given the context you’ve shared, it seems that the previous method of organizing by account and then by month (when necessary) aligns more closely with your immediate needs as a bookkeeper

One response

APAdmin

25 February 2025 at 8:16 PM
In file organization within Bookkeeping or any data-intensive field, the system you choose can significantly impact workflow efficiency. There isn’t necessarily a “one-size-fits-all” solution, as the optimal structure often depends on the specific needs of the users and the organization. However, I can provide some insights into different approaches and considerations that might be helpful in your situation.

Common File Organization Approaches
1. Organizing by Account, Then by Month
2. Structure: Customer Folder > Year > Bank Account > Month (if needed) > Statements
3. Pros:
  - Easy access to the complete history of a specific account, allowing for efficient error tracking and reconciliation over multiple periods.
  - Reduces the time spent searching for documents when analyzing trends or compiling reports for a specific account.
4. Cons:
  - May become unwieldy if an account has a very high volume of transactions or documents, though you mentioned the ability to add month folders as needed.
5. Organizing by Month, Then by Account
6. Structure: Customer Folder > Year > Month > Bank Account > Statement
7. Pros:
  - Facilitates chronological reviews across different accounts, which might be useful for specific tax preparations or period-end reconciliations.
  - This system could be beneficial for financial professionals who focus on month-end closing activities or need to access all documents from a given period simultaneously.
8. Cons:
  - More challenging to perform longitudinal studies of a single account across multiple months since documents are more fragmented.
  - Might increase the complexity of error investigation workflows focusing on individual account performance over time.
Considerations
- User Needs and Workflow:
- Bookkeepers: Typically require quick access to historical data for single accounts to track errors, reconcile discrepancies, and ensure accurate transaction histories.
- CPAs and Financial Analysts: Might prioritize a period-based view if their work involves frequent month-end closings or the preparation of financial statements spanning multiple accounts.
- Technology and Tools:
- If your systems allow for tagging or advanced search capabilities, these might mitigate some of the downsides of either organization method by enabling quick retrieval of documents regardless of their storage path.
Recommendation

Given the context you’ve shared, it seems that the previous method of organizing by account and then by month (when necessary) aligns more closely with your immediate needs as a bookkeeper
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Does your company store files by account then month, or month and then account?

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File Organization in Bookkeeping: By Account or By Month?

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Common File Organization Approaches

Considerations

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