When organizations began integrating computer systems into their businesses, some experts predicted the emergence of a “paperless society.” As business and technology evolve, we see more companies striving to achieve this ‘paperless office’ — many of them by migrating to automated accounting systems.
Here are the six main reasons companies move away from paper-based accounting:
Imagine every slip of paper you’ve saved for your own personal accounting. Now imagine the number of transactions your company conducts in a calendar year. Organizing all of that paperwork in a uniform, safe, yet easily accessible way becomes an impossible task. One misstep can send the entire system you’ve created into disarray.
2. Natural disasters
According to the Federal Emergency Management Agency (FEMA), more than 40% of businesses never reopen after a disaster, and for those that do, only 29% are still operating after two years. This means that if all of your on-site records are damaged by a natural disaster, the outlook is grim for the future of your business.
As a “solution” to the aforementioned problems, some organizations duplicate physical copies of financial ledgers, invoices and other accounting files, then store them in other locations. This leads to excessive amounts of physical and financial waste. Not only does the cost of copying and reprinting documents add up, the extra storage space does too.
4. Human error
Tedious work leads to human error and inconsistencies. Manually handling accounting requires exact transcriptions of all invoices then correctly matching work to maintain proper checks and balances. A poorly orchestrated manual processes can lead to late payments, duplicate payments, missed payments and discounts, process errors and misplaced documents.
When it comes to critical financial information, privacy and security are of utmost importance. Manual processing lacks certain securities that electronic entries are able to provide like encrypted passwords or restricted user access. For example, if CFOs and Controllers are unable to remotely access and leverage real-time metrics, optimization of cash flow planning can come to a halt and other outstanding liabilities can be overlooked.
6. Time consuming
Accounting clerks spend the majority of their days reviewing vendor invoices, ensuring the information on the invoice received is accurate and matches what was purchased, along with securing the proper approvals to process the invoice for payment. As a result, invoice cycle times climb to over 90 days, which could then lead to late payment fees.
Ready to move away from paper-based accounting?
Manual processes like filing, retrieving, copying and mailing take amounts of time, resources, and money that automated systems do not. According to a study by the Aberdeen Group in October 2013, organizations that automate accounts payable processes can shave more than 80% off the cost of processing and can decrease processing time from 17 days to less than five.
Do you have AP challenges? We’ve got solutions! Going paperless can be hard, so don’t go at it alone. Register for the webinar, ‘Start Your AP Automation Journey by Purging the Paper’ on Nov. 15, from 1-2 p.m. CST. Learn how automating the paper out of your financial transactions can be the first big win for your organization’s goal of streamlining AP.