The Benefits of Paperless Accounting

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Transitioning to paperless accounting offers financial advantages for your business, so it’s well worth considering.

Going paperless reduces operational costs, especially in relation to printing, stationery and physical storage space, while it also enhances efficiency and productivity.

Digital accounting tools can automate routine tasks to streamline workflows, freeing up your time to concentrate on other tasks to help grow the business. It’s a much greener approach to managing your finances too!

Paperless accounting system misconceptions

When you’ve used traditional accounting for years, you may have reservations about going paperless, but since it improves accounting efficiency, it’s a bit of a no brainer really.

You may be worried about its impact on clients and employees, especially if they’re older, due to fears they might be resistant to new technology. Perhaps you’re a believer in the old saying, “If it’s not broken, why fix it?” It doesn’t mean your business practices can’t be improved: with the right support, anyone can be comfortable with new technology and different ways of working.

Another reason for hesitation is being part of a paper-based network, with a large volume of existing paperwork accumulated over time. It can be overwhelming to think about transferring it into a digital format.

Perform an analysis of cost benefits and the chances are making an investment of time and money into paperless accounting will bring significant financial advantages that will outweigh the temporary transition period.

Enlisting the services of a small business accountant for advice and practical help can make all the difference to the success of your transition, which can feel daunting when you go it alone.

A recent study by Sage has revealed 92% of SMEs in the UK use an accountant’s services to improve cashflow management, with 49% doing so at least once a week, making them the nation’s most consulted source of advice to improve strategic decisions.

The businesses who use accountants say they are “critical” to their success and “vital” to economic recovery. The main reason why 39% enlisted an accountant’s help was due to Making Tax Digital legislation. When it comes to paperless accounting, there are many potential savings associated with making the transition.

Improve efficiency and productivity

Digital accounting tools that automate routine tasks and streamline workflows can increase productivity, as they reduce the time spent on manual processes.

If you have a massive store of paper documents, it’s easy to become disorganised, especially when you’re busy. Finding any specific document through a manual search can be time-consuming, negatively impacting your focus. Studies show employees can spend up to 40% of their time looking for files.

Businesses who use paper accounting complain that the documents soon build up, according to a survey by Nitro, with 31% of respondents describing the disorganisation this causes as “significant”. With paperless accounting, you can access, store, receive, send and find every document quickly and easily, saving time, eliminating unnecessary steps such as manual filing in cabinets and increasing productivity as a result.

Studies suggest changing to paperless accounting can increase productivity by up to 90%, as it enables employees to access information anywhere and at any time, using mobile devices or working from a remote location.

Reduce costs of paper and printing supplies

The cost of the transition can pay for itself in less than a year in most cases in terms of the money saved, according to studies. A digital marketing strategy reduces the costs of paper and printing supplies, which can be significant.

A survey by Totally Paperless estimates a four-drawer standard filing cabinet can hold around 20,000 sheets of paper, 40 suspension files per drawer and the associated file tabs and labels. It can cost around £19,000 to buy and fill, and up to £2,000 per year to maintain, in terms of additional paper and replacement folders.

When you equate this to the number of filing cabinets in your office, plus the amount of time it takes employees to maintain physical files, it soon adds up.

According to the study by Nitro, 59% of companies who invested in paperless accounting technology received a total ROI in less than one year, with 28% achieving this in under six months.

Improve accuracy and reduce errors

Digital accounting systems enhance accuracy and minimise human error in data management and financial reporting. Using tried and trusted software increases accuracy, saving time that will otherwise be spent fixing mistakes.

Automating processes removes the risk of human fallibility from operations, decreasing the chances of errors. This improves the quality of the work being done, as well as boosting efficiency.

The average employee makes between three and six errors per hour, according to statistics published by Dash, equating to up to 48 mistakes a day over all industries.

Managers say human error accounts for between 70% and 80% of all workplace mistakes. Digital accounting software to manage and process financial information means recording, interpreting, analysing and presenting financial transactions can become more accurate.

The tools can record purchases, sales, income and expenditure in an organised fashion; complete banking reconciliation to ensure statements match accounting records; and produce financial reports, such as cashflow and balance sheets.

Repetitive manual processes, including generating recurring invoices and categorising expenses, can be automated, while the software can be connected to other tools including payment platforms, payroll and more. The software has robust security to protect users’ financial information.

Digital accounting systems can improve cashflow management and real-time financial monitoring, ensuring you have an accurate up-to-date picture of your business’s financial health at any given time.

As your business grows, digital accounting will offer flexibility and scalability to accommodate your changing needs. This will easily handle an increased transaction volume or support multiple currencies and enable your operations to continue without disruption during periods of change.