Paperless accounting: What it is and tips on making the switch

In the former years of accounting, offices were paper-laden and void of automation. The result? Human error, loss of files, and frustration whenever something was found to be mislabeled.

The QuickBooks Business Solutions Survey found that 80% of business leaders say that manual data entry and reconciliation are real productivity killers. In fact, 91% report a drop in productivity, 88% see a dip in employee morale, 87% experience delays in financial reporting, and 85% notice a negative impact on profitability and growth.

If you’ve been considering making the switch to paperless accounting, you’re in luck. This post will cover the benefits, definition, considerations, and how to make the jump to paperless. 

Jump to:

• What is paperless accounting?
• Why go paperless?
• 5 Steps to implementing paperless accounting
• How QuickBooks helps
• Video demo
• The potential downside of going paperless
• Invest in the right tools for a paperless transition

What is paperless accounting?

Paperless accounting is the process of implementing an accounting system through digitization and minimizing the use of tangible (paper) documents. It involves using digital accounting and software to automate all or most accounting tasks. 

The thousands of reams of paper a company uses each year to document and organize contracts and invoices could all be eliminated by turning to a cloud-based online system—saving money, space, and time. 

Why go paperless?

Going paperless may seem like an arduous transition, especially within industries that have become comfortable with how tasks have always been performed. Below we’ll take a look at the top four reasons why paperless is a desirable option for any organization.

Save office storage space 

Office appearance and storage space are expensive, and wasting that space on documentation can be avoided through a paperless accounting system. For example, even a small accounting business can rake in a considerable amount of paper for filing purposes. By digitizing those files, you can put that space to better use or downsize your office altogether for greater savings.

Simplify document organization

Gone are the days when you have to sift through multiple boxes of paper statements to find information. With paperless accounting systems, much of the information you need can be found in your database with a quick search. You can create tags, filters, folders, and more to organize documents and data. 

Increase day-to-day convenience

Convenience is also a factor to consider when looking at transitioning to paperless. It’s never been more convenient to access digital files than with cloud-based systems and powerful accounting software that saves your documents and files them strategically. 

Support sustainability efforts

Building a sustainable business does not have to be a powerhouse effort—it can be as easy as digitizing your accounting process and going paperless. Think about all the paper you could save. 

Reduce printing and supply costs

Printing costs are also an issue due to rising ink costs and expensive heavy-duty printers, plus the cost of paper itself. 

Minimize data loss risk

Paper systems have proven to be risky. Think of the problems that could arise if valuable documented information was lost or stolen. There’s also the issue of natural disasters like fires or floods that have the potential to destroy years' worth of documents in minutes. 

Cloud-based systems can be backed up and accessed from anywhere, mitigating the risk of loss you have with paper systems.

5 Steps to implementing paperless accounting

A smooth transition to paperless accounting starts with a clear plan. Before you scan a single page, set expectations with your team, outline roles, and build a rollout schedule so daily operations aren’t disrupted. 

The goal is to create a standardized system that’s easy for everyone to follow. Use these steps as a roadmap to move from paper files to a secure, digital workflow.

1. Choose your storage option

First, the office manager or business owner should select a storage option. This will be the system that replaces your filing cabinets. There are a couple of options for a digital filing system:

• Document management system: This is like a digital filing cabinet that lets you store and manage your documents. While it can be a popular option, it’s worth noting that not all document management systems are accessible from a remote location.
• Cloud-based storage system: Cloud accounting software works similarly to a document management system, except with more access options.

2. Prep for scanning

Once you have your storage system online, you can prepare for the digitization of your current paper system. This will require some legwork for preparation, including: 

• Organizing paper files: Paper files should be organized in the exact order that you want them to show up in the system. Otherwise, you risk having to reorganize once they’re entered, which is much more time-consuming.
• Stripping paper clips and staples: Scanners can be sensitive machinery, easily broken or thrown off by the occasional staple or paper clip. You’ll want to strip these off during the organization phase.

3. Create a naming scheme

A naming scheme is an organized way of naming files that everyone follows for easy recall when a certain document is needed. Without a proper naming scheme, you’re looking at a potential group of thousands of unnamed files that have to be individually sifted through and named. 

It’s much easier to accomplish naming files at the time of scanning. Naming can even be tailored to your business—just as long as the system is consistent and sustainable over a long period of time. For example, a popular naming scheme might be a client name, document title, and year. 

[Jackson, Avery/W2/2023]

Other common naming schemes include:

• Contract number/Company name/Date
• 123X/AcmeCo/10.20.23
• Date/Last name/Project name
• 2023/Jackson/TaxReturn

Consistent naming also helps you meet audit and retention requirements.

4. Scan your documents

Scanning can be finicky, so check your work and pay attention. Do not rely on the “set it and forget it” mentality. For instance, by not double-checking your work or paying attention to what you’re scanning, you could potentially lose important information that can’t be recovered after the paper copy disposal. 

• Pay attention: Only scan small stacks at a time, as larger stacks are more prone to sliding around, folding in on one another, or jamming the scanner. 
• Double-check your work: After each stack is scanned, skim through the file pictures that will pop up on your screen showing how it was scanned in. Check for blurry images, missed papers (they can stick to each other), or dark images that can’t be read. 

5. Eliminate paper copies

Before taking this final step, double-check that all documents have made it into the system, maybe even waiting a week or so until the digital system is up and running. 

Finally, once you have your documents named, prepped, and assuredly scanned into the system, it’s time to eliminate the paper copies. You can do this in one of two ways:

• DIY paper shredding: Any paper copies that are old and no longer needed can be shredded and recycled if sensitive information has been blacked out. 
• Document shredding services: To save the headache of safe disposal, you can use the services of a document shredding company that will safely eliminate sensitive documents off-site.

Take special care to properly dispose of documents that contain sensitive information like Social Security numbers and routing numbers.

How QuickBooks helps

QuickBooks can offer multiple solutions to your paperless accounting woes with storage, organization, convenience, and tools. Here’s the breakdown of everything QuickBooks can assist with:

• Cloud-based software: With QuickBooks cloud-based accounting software, your books are now omnipresent. You can access your financials and accounting information from anywhere there’s internet. 
• Organization and convenience: With accounting software that integrates with your bank accounts, your data is pulled automatically and categorized based on your spending habits. 
• Tools: With budgeting tools and automatic report generation, you can create budgets for your business as well as view financial reports and statements for further analysis.
• Bill payment solutions: Automation continues with QuickBooks Online, which facilitates bill payments, managing your payable accounts by scheduling and executing payments directly within the platform, which saves time and enhances financial security.

Paperless accounts payable demo

The potential downside of going paperless

Although implementing a paperless accounting system has proven to be a worthwhile venture for many businesses, there are sure to be some downsides to making the transition. These include:

• Low productivity during the transition period: Prep and scanning take time, so expect there to be less productivity in regular work from your staff while in the transition. 
• Overwhelming volume of work: When you’re looking at years and years of paperwork that needs to be organized and scanned, it can feel overwhelming. This is where it may be worth it to hire a temporary employee for the task or outsource. 
• Surprising upfront expenses: Whether you choose to do it yourself, hire a new employee or outsource to a scanning service, you’re looking at an extra cost to make the paperless transition. 

Most of these challenges can be managed with a clear transition plan and the right tools in place.

Invest in the right tools for a paperless transition

Switching to paperless accounting is about creating a more efficient, secure financial workflow to reduce manual work and give your team more time to focus on strategy.

If you’re ready to streamline document management, automate accounts payable, and gain better visibility into your financials, QuickBooks Bill Pay gives you the tools to make it happen. Explore how QuickBooks Bill Pay and cloud-based accounting can help you modernize your back-office and move toward a fully digital workflow.

Disclaimers:

QuickBooks Bill Pay: QuickBooks Bill Pay account subject to eligibility criteria, credit, and application approval. Subscription to QuickBooks Online required. Not available in U.S. territories or outside the U.S. Money movement services are provided by Intuit Payments Inc., licensed as a Money Transmitter by the New York State Department of Financial Services. For more information about Intuit Payments' money transmission licenses, please visit https://www.intuit.com/legal/licenses/payment-licenses/.