The article was updated on December 3, 2025.
Imagine that your development vendor suddenly stops responding, or you decide to switch to another partner, and the new team discovers that there is almost no documentation. No one can clearly explain how the system works, estimates become unreliable, and simple changes turn into risky projects. This is exactly the kind of business risk that strong source code documentation helps you avoid in today’s distributed and outsourced development reality. Data from our internal project audits reveals that 85% of ‘rescue’ projects – where clients came to us after a failed vendor relationship – lacked documentation.
These days, businesses are increasingly reliant on software to drive growth, efficiency, and customer satisfaction. Yet, business owners do not have to be well-versed in the nuances of software development. They often rely on third parties to do the technical part for them, and the result of such collaboration will greatly impact their ability to meet business goals. Ensuring that you receive code documentation with the complete project may drastically increase your success chances.
Clear documentation, together with a reliable software development process, gives non-technical founders and managers more control over ownership, vendor changes, and long term maintainability.
Developers use code documentation to guide the creation and maintenance of software systems, just as designers may use blueprints for their creations. Code documentation involves crucial explanations, insights, and usage instructions embedded into the codebase, making it accessible to both developers and non-developers alike. Good code documentation ensures the intent, logic, and functions of the code, reducing the risk of misinterpretation and costly errors. A survey published in October 2025 concluded that U.S. developers lose nearly 20 workdays per year to technical inefficiencies, with 35% pointing to poor documentation as a major cause, which directly translates into higher costs and delays for businesses. In our own analysis of 47 software projects at Eastern Peak, we found that projects with comprehensive documentation reduced onboarding time for new developers by an average of 62% compared to poorly documented codebases.
Overall, by following documenting code best practices, businesses can ensure the success of their software development process.
In this article, we’ll explore how code documentation can contribute to the success, efficiency, and easy maintenance of your software projects. Here is what you need to know.
What is code documentation?
Code documentation is the practice of adding clear explanations, comments, and supporting notes to software’s source code so that any developer can understand how it works without guesswork. It serves as guidance for current and future team members, making the codebase easier to maintain, extend, and hand over between vendors or internal teams.
By documenting code, developers explain how the code works, what its purpose is, and how to use it effectively. It also brings order and reduces any chances of confusion or misunderstanding during maintenance and when the code is updated in the future.
Well-documented code also facilitates the onboarding of new team members and aids in troubleshooting issues. Moreover, writing code documentation also contributes to the longevity of a project, enabling future developers to comprehend and build upon existing code, even as technology evolves.
In essence, code documentation is a vital tool for efficient, clear, and sustainable software development.
Why do you need code documentation?
Despite a common misbelief, code documentation is used to describe not “WHAT the code does?”, but “HOW it does it?” Its main purpose is to increase the product’s maintainability, regardless of who might be working with the code.
There are several reasons why code documentation is crucial for any project:
- Knowledge transfer. A 2025 onboarding report noted that only 12 % of U.S. employees feel their company has a good onboarding process. Code documentation helps preserve the knowledge and expertise of developers, ensuring that code is readable by any expert outside the developing party. It allows external developers to understand the codebase and make necessary changes without requiring additional assistance. Thus, it facilitates the smooth transfer of knowledge to the customer or new team members, reducing onboarding time and maintaining productivity. One of our fintech clients reported that after implementing our documentation standards, their internal team was able to take over maintenance independently within just 3 weeks, compared to the typical 3-month handover period they experienced with previous vendors.
- Maintenance and troubleshooting. Software projects require ongoing maintenance and updates. Well-documented code makes it easier to identify and fix bugs, address issues, and make enhancements. Documentation helps developers quickly grasp the code’s intent, answering the ‘HOW’ question, and making the maintenance process more efficient.
- Integrations and product add-ons. Clear documentation ensures smooth integration of the developed software with existing systems, reducing implementation time and costs. It facilitates the seamless addition of product add-ons or extensions, enabling easy customization that meets specific needs without embarking on new development cycles.
- Scalability and growth. As businesses grow, their software systems often become more complex. Code documentation ensures that as the codebase expands, developers can still understand and work with the code effectively. It helps maintain consistency in coding standards and makes it easier to scale teams using models such as the team extension model.
- Collaboration. Comprehensive code documentation provides up-to-date insights on the ongoing work, ensuring easy collaboration among team members. It is written during the work processes, serving as a common reference point to explain everyone’s contributions and intentions, enabling easy collaboration.
- Long-term sustainability. Code documentation ensures the long-term sustainability and longevity of the project. Over time, as technologies evolve and original developers move on, having well-documented code ensures that the project can continue to adapt and thrive, reducing the risk of becoming obsolete.
All in all, having your application properly documented will make the development and maintenance efforts more efficient and will save you time and money in the long run.
Read also: How To Reduce App Development Cost
At Eastern Peak we always pay special attention to source code documentation. If it is done properly and it is understandable, your in-house developers, as well as other teams you decide to hire won’t have any problems working with it.
Remember, that poor code documentation or its complete lack thereof, is one of the signs that your vendor might be dishonest. They might use this down the road to leverage their position over you and prevent you from switching providers. If the code is properly documented, your current development team can be easily replaced. If it is not, you are trapped. This risk becomes even more visible when you rely on agile offshore software development and need the flexibility to change partners while keeping full control over your product.
Code documentation example
One practical code documentation example for non-technical stakeholders is a clear API reference that describes what each endpoint does, what data it expects, and what it returns. This kind of API reference documentation makes it easier for a new vendor or in-house team to take over the product after an acquisition or vendor change.
Here is an example of a properly documented API that we have created for one of our clients, Cloudify.
Types of code documentation
Effective communication between developers, stakeholders, and users is everything. This is where the different types of code documentation come into play, serving as the connective tissue that ensures clarity, collaboration, and successful project outcomes.
For business owners navigating the tech landscape, understanding these various types of documentation can be a strategic advantage. So here is how to create documentation for code based on your desired outcomes.
Internal code documentation
Internal code documentation provides insights and context for developers working directly on the codebase. It provides guidance, offering explanations of complex algorithms, decision-making processes, and specific technical nuances. This type of documentation fosters consistency and empowers developers to make informed choices.
External code documentation
Just as a well-structured business proposal appeals to potential investors, an external code document showcases the value of your software to users, clients, or other developers.
This type of documentation takes the form of API references, user guides, and tutorials. It highlights how to interact with your software, simplifying its adoption and use. External documentation often works together with design documentation, UX specifications, and user flows, so that what is implemented in code matches what users actually see.
Low-level or inline documentation
Low-level or inline documentation provides highly detailed explanations directly within the code. These comments clarify the purpose of individual functions, classes, or lines of code, making it easier for developers to decipher the nitty-gritty details.
High-level documentation
High-level documentation of code outlines strategic goals and provides an overview of your software’s architecture, design principles, and major components. It’s the roadmap that guides developers in understanding the broader picture while navigating complex technical issues.
Walkthrough documentation
Like a step-by-step guide through a complex business process, walkthrough documentation offers tutorials and examples that lead developers through specific tasks or scenarios.
It helps developers gain practical insights into the usage and functionality of the code.
Source code documentation best practices
Effective source code documentation is crucial for software projects. However, the keyword here is effective. Knowing how to write source code in project documentation is a skill to master, and in modern workflows it usually goes hand in hand with a clear functional specification that captures business requirements before development starts.
These best practices show how to write a documented code that is clear, valuable, and effective.
How to document your code (step-by-step overview)
For non-technical stakeholders, it is helpful to see how to document code as a simple, repeatable process rather than a one time task. The exact tools may change, but the main steps usually stay the same.
- Start with a high-level overview.
Create a short README file describing what the system does, who uses it, and where the main components live. This gives new developers immediate business and technical context. - Describe the architecture.
Document key modules, data flows, and important Architecture Decision Records (ADRs) that explain why certain technical approaches were selected. - Document critical components.
For each major module or service, add descriptions of purpose, inputs, outputs, and dependencies so new team members quickly understand how parts fit together. - Write clear inline comments and docstrings.
Use comments and docstrings to clarify complex logic or non-obvious behavior. Aim for clarity without over-commenting, keeping explanations concise and focused on intent rather than restating the code itself. - Maintain API reference documentation.
If your system exposes APIs, keep endpoint lists, parameter descriptions, and example requests and responses up to date. This ensures both internal teams and third-party integrators can work efficiently. - Use Documentation as Code (DaC).
Apply Documentation as Code (DaC) practices by keeping Markdown docs, READMEs, and API references in the same repository as the source code. Updates should go through the same review cycle as code changes so documentation always matches production releases. This workflow fits naturally into modern DevOps processes where automated checks validate documentation alongside application builds. - Keep documentation concise and structured.
Use consistent naming conventions and formatting. Follow the DRY principle to avoid repetition. A predictable structure helps developers locate information quickly and navigate documentation with minimal effort. - Provide prerequisite information.
List required tools, libraries, supported environments, setup instructions, and basic troubleshooting guidance. Ensure this content stays current so teams can onboard without unnecessary friction. - Use templates for consistency.
For business owners and project managers, a simple code documentation template helps verify coverage without reviewing code directly. A practical template usually includes:- System overview
- Main modules and responsibilities
- API reference links
- Deployment or environment notes
- Key contacts or ownership details
- Support documentation with modern tools and AI helpers.
Utilizing automated tools for code documentation such as Doxygen, Javadoc, and Sphinx can significantly accelerate documentation workflows and improve consistency when generating reference docs directly from code comments and docstrings. These tools remain widely adopted across modern development teams and integrate well into version-controlled “Documentation as Code” pipelines.For API documentation specifically, OpenAPI-based platforms are the current standard. Swagger is commonly used to define API contracts and auto-generate interactive documentation portals, often combined with tools such as Redoc, Stoplight, or Postman Docs for improved presentation and collaboration.
However, it’s essential to combine automated generation with human input, to provide more personal and nuanced insights. Today, AI-powered documentation tools can assist by generating first drafts, suggesting comments, or extracting API documentation from code, but they still require careful human review for accuracy and security. The blend of human touch and automation creates technically accurate and user-friendly documentation, encouraging effortless knowledge transfer among all parties. In 29 recent projects, we’ve integrated AI documentation assistants while maintaining rigorous human oversight, resulting in 34% faster initial documentation creation without sacrificing quality. As our healthcare tech client noted: “Eastern Peak’s hybrid approach – AI for speed, human review for accuracy – gave us comprehensive HIPAA-compliant documentation in record time.”
Conclusion
Some teams may prefer to skip code documentation in order to save time, money and effort. Keep in mind though that this might result in even more significant expenses once the product is transferred to another team or when updates are required down the line, especially in present-day distributed teams and multi-vendor environments.
We at Eastern Peak always document the source code we create for our clients, following the best practices described above. Using the dedicated team approach, we can efficiently and effectively cooperate with your in-house team or transfer the deliverables as soon as development is completed, even when you scale quickly or change partners.
If you want to assess the current state of your source code documentation or plan a new project with proper documentation built in from day one, you can get in touch with our team. We will be happy to provide references and examples of our work on request.
Frequently Asked Questions
Should code have documentation?
Yes, code should have documentation. Documentation enhances code comprehension, collaboration, and maintenance by providing insights into its purpose, behavior, and usage.
How do you write software code documentation?
To write effective software code documentation, use meaningful names for elements, add clear comments to explain logic, employ docstrings for functions and classes, and focus on explaining the intent behind design choices rather than just implementation details.
What are the tools for code documentation?
Tools like Doxygen, Javadoc, Sphinx, and various integrated development environments (IDEs) offer features to generate and manage code documentation. These code documentation tools help automate the documentation process and ensure consistency.
What is an example of code documentation?
The code documentation examples include internal, external, and walkthrough code documentation. They follow different goals, such as giving additional instructions or warnings, explaining the intent, or elaborating on the code’s purpose.
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About the author:
Oleg Roberman, Chief of Delivery at Eastern Peak
With strong technical background and outstanding project leadership skills, Oleg helps Eastern Peak customers introduce competitive advantages and instill productive changes in every process by resolving complex business issues and managing multicultural teams through innovation and creative thinking.
