Why Your Business Needs Paperless Bookkeeping
Businesses are built on documents. And this is especially true when it comes to bookkeeping and accounting processes.
The purpose of bookkeeping is to maintain a systematic record of financial activities and transactions. Paperless bookkeeping involves transaction processing that is entirely digital with the intent to eliminate document storage. However, because bookkeeping tends to be so paper-heavy, many firms hesitate to digitize their entire bookkeeping functions. After all, is it realistic to try to eliminate every sheet of paper from your office?
As a result, paperless bookkeeping is more of a concept than a reality in most organizations. That said, it’s possible to implement paperless improvements to your existing systems gradually. Doing so has obvious positive impacts on the environment but also has pronounced effects on your bottom line.
Benefits of Adopting Paperless Bookkeeping
1. Consistent records
The digital record never diminishes. Paper records can easily be stolen, damaged, and displaced. With digital bookkeeping, all your documents are stored online, on a local server, or in the cloud.
Keeping accurate and up-to-date records is vital to the functioning of any business. A paperless system ensures files are always in the same place and easily accessible, reducing the potential risk of fraudulent transactions and ensuring compliance. It also means you never have to present a faded-out receipt to an IRS auditor to back up a claimed expense.
2. Better backups and disaster recovery
Too many businesses have lost years or decades’ worth of information due to fires and natural disasters such as floods. With a paperless system, your organization’s data is not subject to damage or destruction.
Cloud-based bookkeeping also improves data security. For example, a document management system tracks information such as who accessed or edited a file and when they did so. Moreover, data confidentiality and integrity are much more difficult to achieve with paper documents than with digital copies.
3. Cost savings
Printing less means saving money, and no small amount of money at that. The accounting industry prints the third largest amount of any industry, and about 17% of printed paperwork never gets used again after the initial printing. Going paperless means saving on the cost of supplies and equipment.
Instead of sending paper invoices, emailing digital invoices to your customers is cheaper and faster. Electronic documentation means saving on the costs of supplies and equipment while significantly reducing your storage needs. In addition to a significant overhead cost, storage can overly clutter the office. Some large businesses have to lease off-site storage space, further adding to the costs.
4. Better access
Paper-bound processes are slow and fraught with risk. In addition, employees must spend hours printing, filing, organizing, and searching through paper documents each year. That translates to labor costs and reduced efficiency.
Paperless bookkeeping instantly makes your organization more flexible. All you need to do is instantly log in to your system to access your files—better access results in streamlined business operations and a more pleasant customer experience.
Making the Transition to Paperless Bookkeeping
Digital bookkeeping is far superior to paper records. It ensures more accurate recordkeeping for tax and regulatory compliance and streamlines access and exchange of information.
Going paperless is a journey worth taking. However, weaning your business off paper will certainly not happen overnight. The easiest way to do so is by outsourcing some processes to third parties that have already implemented paperless solutions or investing in a document management server.