Going Paper Free: The True Cost of Paper for Finance Departments

Published On October 28, 2017

Finance professionals know business at the speed of paper is costly and inefficient. But what is the cost of going paper free?

It’s safe to assume most finance professionals know business at the speed of paper is costly and inefficient. And yet, as of year-end 2016, only 25% of organizations are completely paper-free[1]. This leads me to believe that while many senior leaders are aware paper isn’t a cost-effective choice, they see the pains as outweighing the benefits to go paperless.

I get it.

Research by AIIM shows that even if employees are fully committed to moving towards a digital-first workplace, they often lack the necessary direction, know-how, and leadership buy-in to go paperless. High-level executives appear to largely prefer the comfort of the status quo.

But if finance executives understood how a reliance on paper was harming them, I’m confident they’d move to a more digital way of working. Perceived convenience and a preference for keeping things as they are, are not enough to offset the costs, risks and inefficiencies paper brings.

Let me point out a few ugly facts in this first of three-part series.

Hidden Costs

First, let’s just examine paper itself. Obviously, there’s the standard expense of office supplies. But the costs extended far beyond invoicing a couple dozen reams. A recent study estimates that associated paper costs (storage, copying, printing, etc.) could be as much as 31 times the purchasing costs (not including labor). So, for instance, a ream of paper your organization bought for $5 could, in actuality, cost close to $155[2].

Add-in the fact that the amount of information an organization must manage is expected to explode in the coming years, and it’s not too difficult to imagine a future in which the expense of maintaining paper-based processes consumes an ever-increasing amount of your budget.

Increased Risk

Given the amount of sensitive information finance organizations manage, many are prime targets for thieves. While the prevailing thought is these dangers originate digitally—i.e. hackers, ransomware, etc.—the reality is most information loss comes from breakdowns in processes and procedures, such as misplaced or lost documents or employees losing files or laptops that contain sensitive information[3]. And with the average large organization misplacing a single file every 12 seconds, you can see why a lack of document imaging and digital processes can lead to reputational damage, compliance violations and regulatory fines.

Inefficiency

But perhaps the greatest cost of paper is efficiency, or rather, the lack thereof. To varying degrees, the paper slowdown touches virtually every single business process. So much so, that according to research by AIIM, 58% of businesses have admitted to being stuck in-process somewhere in the organisation. When it comes to finance, we estimate that paper-based invoice processing takes 60 to 70 percent longer than using digital workflows.

Other examples of inefficiency include:

• Slow access to data. Requests simply take longer.
• Inability to work remotely, as document imaging is not in use and files aren’t available digitally
• Reduced collaboration across teams and offices
• Slowed down approval processes
• Longer accountable payable/receivable processes times
• Stifled innovation and creativity due to hours spent on processes
• Employees spend time on repetitive, administrative tasks that add little real value, instead of mission critical or higher value activities

In fact, according to AIIM, reduced staff resource requirements, higher productivity and increased visibility and access are the prevailing reasons why organisations seek to move to digital-first processes.

Part two of the three part series examines how paper and manual processes are the enemy of efficient and effective finance organizations in greater detail.

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[1] AIIM, “Paper Free: Are We There Yet” 2016

[2] ‘The 3 E’s of Office Paper Reduction’, Carleton College, https://apps.carleton.edu/…/Office_Paper_Reduction__factsheet.pdf Accessed May, 2017