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How to create a paperless accountancy firm: the four steps to becoming truly paperless

by Jul 2, 2020Automating your processes and systems, Operations, practice management systems, Standardising ways of working

The most dangerous and expensive phrase in business is “this is how we’ve always done it.” As you can imagine, with CV-19 forcing many small accounting firms to move towards virtual working, this phrase has been used a lot in recent weeks. While some firms have figured out how to thrive in this pandemic, many are struggling to transition to a paperless accounting office and then you have the ones who are stubbornly sticking to their old ways. You can probably guess which, out of the three, are being hit the hardest. Regardless of how advanced a firm is, how do you go paperless in accounting is a hot topic at the moment!

There has never been such a need to remove the paper from operations before now, so it begs the question: how do you go paperless in accounting? Here is why you should make the change and how to do it in just four steps.

 

How do you go paperless in accounting?

Going paperless will benefit your firm now AND way into the post-lockdown future

Before I go into how to create a paperless accounting office, I just want to touch on the reasons why you should make the transition. These benefits are essential to know, especially for the doubters out there and for the accountants who are nostalgic about their traditional methods.

So what are the benefits of going paperless?

1. Less waste

Did you know that the average UK office worker uses approximately 10,000 sheets of paper per year? What’s even more shocking is that 75% of this ends up at the landfill (that’s equivalent to a small tree per person!). When more than half of the paper used is eventually thrown away anyway, it makes sense to digitally store and delete these files instead. Not only does this lessen the impact on the environment, but ‘going green’ is one of the sustainable business trends that are shaping the next decade too; a trend that is great for your brand.

2. Increased efficiency and productivity

Lack of organisation makes finding specific documents a long-winded task that accountants just don’t have time for. As well as time, searching for the right piece of paper (just like a needle in a haystack) can also significantly affect focus too. When you have a digital document archive with a powerful search function, you can store, access, send, receive, and find all the documents that you need easily and quickly. To put it simply, paperless work saves a lot of time and greatly improves staff productivity as it eliminates a lot of time-wasting steps (e.g. printing, filing, manually searching and retrieving etc).

3. Saves money

Every cost adds up – the cost of paper, ink, printers, even storage – and these can be significant, even for a small firm. In fact, reduce.org reports that the cost of using paper in your office (printing, storing etc) can range from 13-31 times the cost of the paper itself! When you think about just storage alone, you can see why this is the case. For example, a standard four-drawer cabinet can hold up to 20,000 sheets of paper. On average, that amount of paper would cost roughly £19,000 to buy and the cabinet would cost approximately £1,500 to maintain yearly. The cost doesn’t end here either. Typically, up to 25% of a firm’s office space is used to store paper documents. That’s a massive overhead and one that is preventing firms from using the valuable square feet that they are paying for to take on more staff.

4. Ensures that you remain competitive

When face-to-face meetings are permitted again, going paperless will ensure that you remain competitive and up-to-date. For example, if you have a meeting and you’re referencing a file that you don’t have with you, you can just log in to the cloud and instantly pull up the file that you need. Not only will this make the meeting run more smoothly, but it will boost your firm’s professional image too. Younger generations are tech-savvy so by not making the switch to paperless, you risk looking out of touch and outdated to a whole generation of clients.

5. Increased security

Many accountancy firms refuse to make the switch due to concerns over the security of their data; they believe that going paperless may open the gate for cyber hackers. While having these doubts is completely reasonable, it’s important to realise that storing documents electronically also opens the door to electronic backup, encryption, offsite replication and the type of data resilience that simply isn’t possible with paper files. Did you know that 20% of print jobs are never retrieved from office printers? Did you know that many of these same offices don’t have paper shredders or a secure document disposal process in place? Without even realising, many firms already have security issues with storing their sensitive data in paper files. With cloud storage, however, documents can be encrypted and protected by numerous layers of security including restricted access to only trusted file users. You just need to remember to employ best practice, particularly regular password changes and two-factor authentication.

To get through lockdown and the transition to whatever lies ahead, accounting firms will need to become paperless; the benefits of which will allow them to save money, work more securely and efficiently, and adapt to the market and remain competitive. While all of these will benefit your firm in the short term, they are also essential to grow sustainably in the future (which is the ultimate goal!).

Four steps to creating a paperless accounting office

How do you go paperless in accounting? Now you know the main benefits of going paperless, we can help you address the how. Here’s how to create a paperless accounting office in 4 steps:

Step 1: Start small, know and explain your why

At the moment going paperless seems like a natural and obvious step to take. However, if you are successfully going to move to being a paperless office you need to first know your why. Why are you taking this step? What purpose does it fulfil for you, your firm and your clients? How will it help the firm and everyone who interacts with it? Without having done this thinking you risk the project to go to being paperless not quite getting there and compromises being made along the way. In fact when Marion Thomson, who heads up XU Academy and runs her own small accountancy firm, realised if she could eliminate paper back in 2012 she wouldn’t need an office. This was her ‘why’, alongside being very stubborn and wanting to prove it to herself that it could be done.

Don’t just announce that the firm is going paperless, clearly explain your reasoning behind the undertaking. If your employees know why the change is being made then they are far more likely to be fully on board and engaged with the project. This means a smooth and efficient transition for you and happier employees.

Another way to successfully transition to a paperless office is to start with small changes or to take one process at a time. For example, take stock of all your paper-based processes and pinpoint the one that you can digitise with the least amount of effort. This could be office receipts and bills, something that isn’t too daunting but one that would make a massive impact. Alex Kipp, Head of Cloud at Galloways Accounting, suggests looking at the gateways first when thinking about removing paperwork from your processes. I.e. what is going into the building and what is going out of the building?

Once you know where you’re going to eliminate paper first, you can then start thinking about what software you’re going to use to help make that happen. Just remember, “people must come first in the strategy and thinking,” says Finance Director, Andrew Coulson. “It has to make their job easier, not just going paperless for the sake of being “hip to be digital.” Think people first, process second, and technology third.”

It’s not just about your team. You need to engage with your clients and suppliers. As Chris Gregg, founder and CEO of Lightyear said: “97% of lightyear docs come direct from a supplier. It’s amazing how many people go searching for a paperless office to manage their scanned documents.”

As well as talking to your suppliers about how you want them to work with you, it’s time to challenge them on how they do things. For example, as Chris Gregg mentioned, can they really not send digital documents? After all, how did they actually print out these documents in the first place to send to you?

In this step, you need to look for people in your ecosystem, such as clients, team members or suppliers who may have conflicts of interest. For example, as Gareth Burton, founder of Progress UK, found his IT provider was initially against going paperless as they had a server room to pay for and justify in their fees. Or maybe you have a team member who is worried that if the firm no longer sends out physical letters to clients, they may not have a job.

Step 2: Select the right software

While there are many free apps and tools to help digitise paper-based processes, it’s important to think beyond just making a job easier. What we mean by this is, what software will not only help your office go paperless but will scale with your firm too? When choosing your software, ask yourself these following questions:

  • Does it replace or improve an existing process?
  • Does it integrate with our accounting system?
  • What do existing users say about it?
  • Does it have excellent technical support?
  • How will it scale with my business needs (e.g. as I become completely paperless, will it support thousands of documents every month)?
  • What’s the cost of the software?

If you answer all of the above before choosing the software/hardware that you want to implement, you can be a lot more confident that the changes you are making are for the better and for the long term.

As Steph Merrill, owner of SAS Accounting Solutions found the software subscriptions need to be offset against the saving in paper and equipment costs.

“I was determined to be virtually paperless from the outset. I didn’t necessarily factor all of the licence costs into my pricing when I started so will be reviewing all of this in time and making some changes” – Steph Merrill, SAS Accounting Solutions

To help with your software and hardware selection, we asked many successful accountants, business owners, and professionals what tools have been instrumental in their transition to paperless. Here is a list of the ones that were deemed essential:

  • Optical character recognition (OCR) software – the most time-consuming step in going paperless is scanning existing paperwork to store it digitally. However, another problem emerges when you do this as scanned files are image-based, which means that they are impossible to search for if you need to find a document in the future. To save a lot of time and hassle, OCR technology makes scanned files text-searchable so you can find related client files quickly and easily and ensure compliance with auditing systems. Once you have rid yourself of the backlog of scanning, OCR software can then be used to capture and extract data from receipts, invoices, and bank statements. These OCR tools were the top-recommended by accountants: Receipt Bank, Hubdoc, AutoEntry, and Quickbooks inbuilt tools.
  • E-signing software – electronic signatures save paper and speed up the review and approval process, not to mention that you don’t have to be in the office with access to a printer and scanner! The professionals that we asked recommend one of the following: DocuSign, AdobeSign, and Senta’s inbuilt e-signing feature.
  • Mileage capture software – if you need to travel, apps like Tripcatcher can save you both time and money (and paper!). Not only does the app record your mileage, but it also keeps track of your mileage, calculates your mileage expense, and publishes this directly to Xero, Receipt Bank, and many others.
  • Desktop scanners – to be a ‘less paper’ office, consider having desktop scanners to immediately digitise any post that comes into the office.
  • Multiple desktop monitors – having at least 2 screens allows you to easily drag and drop documents from one source into another such as Receipt Bank. It also allows you to have multiple programmes open at the same time so that you can effortlessly time-manage (e.g. having Excel open at the same time as Xero when processing journals). Something as simple as this can really make an impact. For example, Pension Scheme Auditor, Gareth Burton, said that “when Government guidance advised against non-essential travel due to COVID-19, we bought additional monitors so that team members could have dual monitors at home. Within 24 hours we were fully operational and no disruption to service.”
  • Secure document storage – scanning and digitising documents is one thing, but now you have to manage them, store them securely, control who is able to see them, and you need to back them up. Programmes like Office 365, OneDrive, and SharePoint are great for internal document storage, sharing files, and for tracking things like version control on key documents. Just remember, “you still need to maintain that copy of things that is “somewhere else” in case your service provider has issues” advises Lorna Leonard, Financial Director. Other recommendations include Senta (it has this inbuilt) and Virtual Cabinet.
  • Digital note-taking – scrambling through notes to find what you need can be quite the time-waster, so consider using Goodnotes, a note-taking app on the iPad, or Rocketbooks, a smart notebook that connects and stores your notes. When discussing Goodnotes, Steph Merrill, Director of SAS Accounting Solutions, commented that she “has a notebook set up for each client and this is an absolute Godsend in meetings.”

As well as deciding which software you want to use to eliminate paper, according to Lorna Leonard of Leonard Business Services, you need to make it easy to use the digital document. And that means finding it at the touch of a button, version control and controlling who is able to see what.

The club helped us save over £1000 a month on software costs

Being in the club has given us access to progressive thinkers and the most advanced cloud accountancy firm owners in the profession. This has helped us raise our game and work out in practical terms what being a cloud based digital practice really means. It can be easy to become ‘software drunk’ and feel like you need every piece of cloud software under the sun. But hearing what the other members were using or now not using, gave us the confidence to stop buying into ALL the cloud based tools and slim down the portfolio of software we were using. We’ve switched off all the legacy desktop software and now only use cloud based software. We came into the club as Quickbooks experts, but now have learnt so much from the Xero experts in the club we are equally confident in both software packages.

Rebecca Foy

Owner, Davis & Co

Step 3: Overcome resistance to change

Transitioning to being a paperless accounting office won’t happen overnight. You need to make this transition slowly, you need to approach one process at a time, and you need to be prepared to overcome resistance to this change (because there certainly will be). Remember that dangerous phrase “this is how we’ve always done it?” This will become a barrier for you as you try to change the way of working.

To overcome this resistance to change, you need to do three things:

  1. You need to communicate more and listen to employees and clients – people don’t like change and they find comfort in what they know so it’s your duty to take the time to ease people’s concerns. To do this, you first need to make it clear to your employees that things will get worse before they get better as new things take time to adjust. “If you truly want to go paperless it has to be a fundamental shift in everything you and the team do,” says Accountant, Stuart Hurst. Communicate this with them and emphasise their importance to the team effort. Secondly, help them build their confidence by listening to their concerns. Accountant, Susie Kevern, found that “taking time to talk through people’s concerns and allowing them to develop their own way of working within the overall guidelines helped massively with the transition.”
  2. You need to educate your suppliers – a really interesting point made was by Chris Gregg, Founder and CEO at Lightyear.cloud. He said that “a paperless office doesn’t begin with paper so stop scanning receipts and bills by cutting out the paper completely.” As 97% of his firm’s documents come directly from his suppliers, he recommends registering to receive paperless billing statements so that you can extract and store the data immediately. Many people think that their suppliers can’t send digital documents but if the invoices or credits that they are sending are being generated by a system before they are printed, then they most certainly can. If that’s the case, it’s up to you to educate them on sending you over a digital PDF version.
  3. You need to make paper inconvenient – when you’ve spent time training your employees on your new way of working, start making paper inconvenient so that they won’t be able to revert back. Sounds harsh, I know, but it sure is effective. Many professionals recommended disabling the printing functions on computers or removing fax machines, printers, copy machines, and even filing cabinets altogether! Laura Taylor, founder of Empowered by Cloud, just removed the printer from their office. Another one of our clients, when they went paperless, removed the printers and filing cabinets. This makes sense when you think about it as having them around encourages paper use in the first place. Regarding this, Alex Smith, Director at TaxAssist Accountants, said that “my other tip would be to force change on clients and staff otherwise the benefits are not fully seen. For example, when it comes to payroll, don’t issue paper payslips or reports.”
  4. Simon Howley, Managing partner at Bell Howley Perretton, suggests that you have to be brutal with legacy documentation. And use going paperless as an opportunity to go through your files and spring clean so you just have what you need going forward. But also look at what you really need to keep and document going forward. “Only keep an electronic version of the documents you actually need. If your old filing system was shambolic, then you will just replicate this electronically. It won’t make you any more efficient.”

Changing any way of working will cause resistance but it’s important for you to see this as a barrier that can be overcome. Without communication and training, people see barriers to change that either aren’t there or were exactly the same as before so be transparent and supportive. If you combine this with the removal of ‘paper temptations’ such as printers, you’ll soon see that paperless operation will become a habit for employees, one that makes the way things used to be done seem more burdensome and time-consuming.

Step 4: Rinse and repeat

How do you go paperless in accounting? If you’ve done all first three steps, it’s now a case of rinsing and repeating this process with your next paperless transition. If you keep your team involved and listen to any concerns or ideas that they have to make these processes work, you’ll soon be running a completely paperless office in no time!

How do you go paperless in accounting? Just do it.

Many of the accountants and professionals that I have spoken to about ‘how do you go paperless in accounting,’ in essence, have said “it’s dead simple to go paperless. Don’t overthink it, just do it.” Yes, it will take a lot of time and effort – and at times you may lose sight of why you’re causing such chaos and will ask yourself was it really that bad before? – but if you just commit to the changes, you’ll soon start to see the benefits of doing so.

To get through this pandemic as unscathed as possible and to prepare for the inevitable move to paperless in the future, make the transition to a paperless accounting office now. By reducing the amount of paper you use, you can improve the efficiency of your firm as your staff spend more time working and less time shuffling paper.

This year has been revolutionary for me and my team.

We were pretty maxed out with work and I was always too busy firefighting so I knew I needed some help. 

While working in the business, I had become too focused on day to day operations and was not taking time to plan the direction of the firm.  Working with my coach, Ashley, he was able to help me to see what I truly wanted and what I needed to do to get there.

When we get back to full firepower in 2020 we are all looking forward to welcoming the new clients. This growth will definitely allow me to take more time off to be with my family and get back into cycling more often.

Paul Wareham

PS Accountants