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. 

We’ve seen a drastic increase in organization and productivity since the incorporation of digitization. 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. You can also use the jump-to the menu below to navigate to your desired topic. 

What is paperless accounting?

Why go paperless?

Steps to implement paperless accounting

The potential downside of going paperless

What is paperless accounting?

Paperless accounting is the process of implementing an accounting system through digitization and minimizing the use of tangible (paper) documents. This works by using digital accounting and software to perform all 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.

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.  

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. 

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. 

Sustainability

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. 

Cost

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

Risk aversion

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.  

Steps to implementing paperless accounting

Small businesses ready to implement paperless accounting should consider these four steps to streamline the process: 

1. Choose your storage option
2. Prepare for scanning (digitization)
3. Create a naming scheme
4. Eliminate the paper copies

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: A cloud storage system works similarly to a document management system, except with more access options.

 2. 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

3. 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.

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. 

This can be done 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.

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. 

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.

Invest in the right tools for a paperless transition

When it comes to ditching your paper trail of filing records, invest in the right tools from the start. This includes a great documentation system or cloud-based software for storage. To get the best bang for your buck, you want this system to not only assist you with your bookkeeping basics but also offer additional features to make your job stress-free. 

From here, it’s all about making the commitment to go paperless and getting your team on board to make the workplace more productive.