Paperless Accounting Concepts And Its Benefits

In business, we all know that the accounting department generally has to deal with a large amount of paper. However, the business world is moving swiftly because of technological advancement. And the traditional way of accounting has changed significantly and continues to do so. Paperless accounting is one of the modern ways of accounting. But, the question is, what is paperless accounting?

In this article, we will discuss the clear concept of ‘Paperless Accounting’. We will also talk about how paperless accounting works, the benefits of paperless accounting, how to make an accounting firm paperless.

Paperless Accounting

A transaction process that does not involve the use of paper. In a word, when accounting activities are done entirely electronically, it is known as paperless accounting. Accounting firms produce a wide range of documents. They have long relied on huge amounts of paper in their operations. Since accounting is so paper-heavy, paperless accounting provides numerous practical benefits to businesses, including increased operational efficiency and improved quality control.

Usually, the concept of ‘Paperless’ implies the elimination of using paper. Based on the concept of paperless, the usage of paper is decreased in offices, schools, and homes. It is environmentally friendly and saves trees. Also, there are enormous benefits to going paperless, such as saving time, saving money, easing transactions, and so on.

How Does Paperless Accounting Work?

The motives to adopt paperless accounting are to eliminate document storage, to lessen transaction error rates, and to streamline processes. Companies are gradually becoming accustomed to paperless accounting. Implementing paperless accounting needs time to adjust for business as the concept is relatively new. Some examples of how paperless accounting works are given below: 

• Expense Reporting: Employees can access expense report reimbursement through a website or app that specialises in paperless options. Expense reports are filled in as needed, receipts are forwarded electronically if requested, and payments are made via electronic bank transfer. The company never receives any paperwork.

• Lockbox: Customers can use a company’s bank lockbox to deposit cheque payments. Each day, the company cashier accesses a secure website on which the bank has posted the scanned cheque information. This information allows the cashier to retrieve payment information.

• Payroll: Through an online portal, employees enter their hours worked, which are then processed by the supplier, who then sends an electronic payment to the employees.

• Payables: The payables department can enter payables into a website or app and specify which things should be paid.

Benefits of Paperless Accounting

In this section, we are going to talk about several benefits of paperless accounting. We will try to find out the reasons behind going paperless in accounting. These are explained below:

1. Save Storage Space: As we discussed earlier, in an organisation, the accounting department generates a lot of documents and records. Traditionally, these documents and records are on paper. Paperless accounting reduces paperwork and frees up storage space. This free space can be used for other purposes. Thus, an office can be smaller and save on rental costs.

• Improve Organisation: The image of the organisation has improved. It brings favourable expressions towards clients and customers of the organisation. The organisation becomes dynamic in nature. When an organisation goes paperless, you’re sending a message to present and potential customers that your company is forward-looking, environmentally conscious, and technologically advanced.

• Cut Expenses: Paperless accounting saves various costs. As the records and documents are paper-based, the cost of printing paper is eliminated. Some other costs are removed because of paperless accounting such as printers and inks, filing cabinets, bindings, writing instruments and so on. An organisation can save its expenses and use that money on other segments. 

• Boost Productivity: Paperless accounting increases the productivity of accountants. They save both time and effort. Just imagine the number of files, records, and documents they need to track. It is so much more difficult to deal with. Paperless accounting makes things easier for them. Because of the capacity to search for files using keywords, paperless records management significantly cuts down on the amount of time needed to locate and refile documents.

• Improve Security: In the event of a natural disaster, such as a storm or a fire, documents stored in the cloud are far safer than those stored locally. Data is safeguarded by encrypting it and only allowing trusted individuals who have been granted permission to view it.

• Unlimited Access: Because the accounting records and documents are stored in the cloud, anyone from any place in the world, at any time, can access them (as long as they are granted access, of course). Paperless accounting brings flexibility that is impossible with paperwork accounting.

• Benefits The Environment: By reducing the consumption of paperwork, the environment is healthier.  The accounting firm will also get recognition as an environmentally friendly organisation. Therefore, going paperless is very effective for our environment. 

How To Make An Accounting Firm Paperless

• Identify The Opportunity: Find out which segment of the accounting firm can be transformed. This is the opportunity from which to start the process of paperless accounting.

• Establish New Process: Store files and documents in a cloud-based data storage, then establish a good process for how to organise these. After that, set up proper security and grant permission to the users. Ensure collaboration between employees.

• Choose The Right Tools: The established process won’t work without the right tools. Invest in the right tools that fit into the organisation. A quality scanner is essential for paperless accounting. 

Any paperless accounting firm needs a strong document management system to act as a central repository for all of its records. To keep papers structured, document management systems index files as they are loaded. To categorize documents regardless of the file format, look for document management systems that have capabilities like indexing and searching optical character recognition (OCR), and email management.

• Strengthen Security: Proper security needs to be in place. To ensure firm security, the accounting firm needs to partner with a trusted cloud storage provider that has a reputation and rigid policies for data safety. 

• Eliminate Risk: Always save a copy of your data in case of a system crash, unintentional document deletion, or other disasters. By creating a backup of your data, you may easily recover any files that have been accidentally deleted or damaged.

• Train Employees: The employees will get sufficient training to adjust to the new paperless accounting and the new tools and new processes.

• Reduce Paper Habit: Always discourage the traditional paperwork habits of employees. Motivate the employees to get accustomed to paperless accounting.

• Update the clients: Explain to the clients about the concepts, benefits, and extra safety of paperless accounting. Urge them to get used to the new process.

Conclusion

Income statements, balance sheets, cash flow statements and other accounting activities all do not necessarily need to be printed. As every department of a company is using digital technology, accounting tasks need to be smarter, faster, and more flexible. This wastage of paper can be halted by performing paperless accounting worldwide. The digital form of accounting is paperless accounting and it is also beneficial for our environment.