Going Paperless

Justin Schellenberg, CPAAdvice, Featured Content, Resources0 Comments

We made the transition to a paperless office, and we learned a lot along the way. First, a disclaimer: you will still find paper in our office. Perhaps the term ‘paperless’ is a bit of a misnomer. It is true that we use much less paper, but we are not a paper free office. It should be noted on the outset that there are various levels of ‘paperless’. Some businesses have gone almost totally paperless and nary a paper will one find in their office. We have chosen a route in which all of our critical files and records are electronic, but paper is still used to supplement our processes.

Let’s look at some advantages and disadvantages of going paperless.

Advantage: Reduced Costs

One of the best arguments for transitioning to a paperless environment is that a business can reduce its’ cost structure. For example, at the very moment this article is being authored we are in the process of building out a new office downstairs in the same building.

As a CPA firm, we have had to allot a sizeable portion of space which is dedicated to document storage. We are in the process of creating electronic copies of all our paper files. The result is that we no longer require as much space to maintain the documents so we can reduce our rent expense.

There are also other reductions in cost, but they might be offset by other increases (See the disadvantages). Some examples of other savings are reduction of paper purchased, reduction of copies (toner, ink etc.), and reduction in postage expenses.

Advantage: Efficiency

Another advantage to be realized by going paperless is the more efficient operations.  This advantage could also be a sub-category of the Reduced Costs advantage, but we decided to give its own space because it is such a great advantage.  How much time is spent by employees going to the printer, copier, filing room or looking for paper files?  The answer might not be easy to quantify, but it’s probably not insignificant.

With an adequately organized system, lost documents are a  thing of the past.  Furthermore, it is extremely quick to find and access documents that are stored electronically.  When documents are stored electronically you have access to any document with only a couple of clicks.  However, some  time will need to be committed during the setup process to ensure that your file structure is logical and able to expand with your business.

As an auditor I often work at a clients office on my laptop.  On numerous occasions, having access to electronic documents has both allowed me to provide an immediate response to an inquiry and saved me from making a trip back to the office to fetch documents; I am more productive during the day and more responsive to colleagues and clients.  If your employees are on the road or work from home, a paperless office can allow them the access to documents whenever and wherever they need the access.

Advantage: Peace of mind

Did you lose important documents in the Tennessee flood in 2010?  What happens if there is an unforeseen event such as a fire at your office? Do you have a disaster recover plan in place?  If you don’t have a disaster recovery plan in place, you should. The good news is that going paperless and using the cloud (An article on the Cloud will probably be forthcoming) makes disaster recovery planning easier.

Part of the process of going paperless includes the establishment a file backup strategy if one isn’t already in place.  Preferably, this process should be routine, automatic and off-site.  There are a number of online services that offer economical backup solutions;  PCmag.com has a good article summarizing some of the providers of online backups here.  If you are considering moving to a cloud environment, much of the backup will likely be taken care of for you by the host, but it is still a good idea to make regular backups to your physical location.

Disadvantage: Up-Front Commitment

Unfortunately, making the move to paperless isn’t as easy as a click of the mouse.  Initially, making the move to a paperless environment will require thoughtful planning and possibly the purchase of new equipment.  In the first phase of the planning, a business should consider a variety of factors.  Here are a couple that should get your thought processes working:

    • Equipment: As already mentioned, the term paperless is a bit of a misnomer, and you will need to have equipment to convert paper to an electronic form; this accomplished by a scanner.  Scanners are available in a variety of form factors and price points.  You might already have the ability to scan via your copier so it’s probably worth a call to your copier salesperson to see what it would take to enable the scanning features.  A dedicated computer on your network for document storage is another piece of equipment that you’ll want to consider; if you already have a network server than the server can provide this function.
    • Timing: Your level of technical acumen will play a factor in the amount of time it will take to make the switch, but plan on spending some time learning your new system.  If your business has a slow time of year it would make sense to make the switch during this time.  Another factor to consider related to the timing is the conversion of existing documents….
    • Conversion of Existing Documents: What about all these files currently sitting if file cabinets?  Well, you can either convert them to an electronic format, keep them in paper form and switch to paperless as of a certain date, or a hybrid of the two options.  Depending on the amount of files the conversion can be daunting.  Some factors to consider are the amount of space you have available, the time it would take to convert the documents and the value of spending the time converting.

So, should you go paperless?

As we look back and consider our office before and after the switch it is clear that going paperless was an excellent choice. However, since the characteristics of small businesses are as varied as the fingerprints of the people who toil to make them run, it’s hard to give a yes or no answer.  Nevertheless, after getting past the up front commitments of the switch the advantages of a paperless office are attractive for businesses of any size.

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