Paperless Office

In recent years, bold advancements in technology have led an abundance of companies to express their aspirations to take the office paperless. Most organizations are inundated with paper; in many cases you’ll see filing cabinets in every available space. But is this what’s really fueling their desire? Is the mere sight of filing cabinets enough of an incentive to make you invest in technology that will finally make it all go away?

At about a penny per page for the actual paper and another penny for the printing cost, each page costs you around $0.02 a print. That means that a standard file drawer packed with 3,000 pages of paper will end up costing you $60 to fill. Add in another $5 for office supplies needed to file these pages and the cost goes up to $65. So what that means is that the average 5 drawer file cabinet is going to cost you $325 in printing and filing costs – not really enough to get excited about.

In an office setting, it’s been my experience that the driving force behind going paperless has nothing to do with paper at all. It’s really all about the wasted time and effort that paper driven processes represent. Typically, with high volume transactional applications like Accounts Payable automation.

In AP processing many of the documents being worked aren’t even internally generated. Sure, you might cut a Purchase Order to buy products but the documents being worked with the most, the packing slip and the vendor invoice, are both printed on someone else’s dime. Real money only starts to come out of your pocket when you begin working with these documents.

When continually forced to store and retrieve documents from a filing cabinet multiple times a day, you’re faced with several manual processes that are tedious, time-consuming and likely riddled with multiple points of failure. For today’s discussion let’s focus on two such processes: the three way match and invoice routing and approvals.

The Three Way Match: If an organization is going to be GAAP (Generally Accepting Accounting Principles) compliant, they need to do what is called “the three way match.” This manual, paper based process is where the AP clerk matches the Purchase Order with the Packing Slip to ensure that what was ordered is what was delivered, and then to the Invoice to confirm that the pricing is correct. This is done by taking three stacks of paper and then physically matching them based on the original purchase order number. This is about as inefficient as it gets, and not to mention costly to your business and the environment.

Choosing electronic storage over paper methods can create a workflow process set to look up the three documents by using a database to match them automatically and flag each as matched when completed. That’s about as easy as it gets. In addition, during the scanning process, high value information about these transactions can be extracted and fed to your accounting system to automate payables entry. This includes, vendor information, payable amounts, due dates and even line item data. The added benefit of using this information to create a payable voucher can translate into tremendous cost savings as manual data entry processes are eliminated.

Invoice Routing and Approvals: In most organizations an invoice must be approved by the person who placed the order, typically a department head. This ensures that invoices are not paid without the good or services being delivered first. Once again, this is most often a paper based process that is highly inefficient.

The Payables Clerk will typically make a copy of the invoice and either place it in inter-office mail or stick it in a folder; they would then have to walk it down the hall to the recipient. This sounds simple enough but what happens when the file gets misplaced, the recipient is on vacation or there is an error in the invoice? Most commonly this results in even greater inefficiency as everyone scrambles to locate where the invoice is in the approval cycle. It can also lead to lost discounts for paying the invoice early or even penalties for paying it late.

Going paperless will eliminate all of this by using a seamless electronic method for capturing invoices, routing them to the approver, notifying the user of a required action and even reminding them if they forget. For employees on vacation, escalation or delegation rules can forward the invoice to an alternate approver or send them to the approver’s iPad or Android device for immediate action while they’re lying on the beach.

As you can see, the cost of printing really has nothing to do with the savings that can be realized through tools like document management software. It’s the organizational efficiencies that can be realized and more specifically the reduction in labor that have the most impact on reducing costs. The two quick examples described above demonstrate clearly how taking the office paperless, with help from digital filing solutions, is a strategic decision with much broader implications than the elimination of just a few reams of paper.

Check out what our friends at Square 9 are doing to help offices go paperless.

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