8 Benefits of Converting Your Accounting Books from Paper to Digital

8 Benefits of Converting Your Accounting Books from Paper to Digital
8 Benefits of Converting Your Accounting Books from Paper to Digital

If you are like most business people, then keeping your financial transactions written on paper in the form of journals and ledgers is still part of your accounting system.

Do you think that keeping accounting books on paper is the easiest and most efficient way to keep your records? Do you find that everything is always done correctly and you can always find what you need?

Well, for most of us, the answer is no. The reason for this is simple. The process of entering data and organizing paper is much more difficult than doing the same on a computer.

In 2019, Sage did research, and it shows that a lot of accountants today think that just doing accounting the old-fashioned way isn't going to keep them competitive anymore.

8 Benefits of Converting Your Accounting Books from Paper to Digital

Here's why you should convert your accounting books from paper to digital:

1. Increased Efficiency and Accuracy

A popular saying goes like this: "Rome wasn't built in a day." Though it is impossible for all of us to go to Rome and see how true it is, it is well understood. Nothing worth mentioning takes that small amount of time and effort.

So, why should converting to digital accounting be an exception? We can all use the extra time and effort it would lead to, as we would be able to use accurate accounting figures to make reliable forecasts for the future.

Research shows that 91% of accountants think that using accounting technology has increased their productivity.

For example, company tax liabilities can often be inexplicable. By providing detailed digital records, it's much easier to find out why a company has been charged a certain amount, which can act as solid proof to appeal against overcharges. This, in turn, links to the main reason a company would make such a switch.

It is obvious that every business wants to reduce the cost of operations. As there are fewer and fewer people asking for receipts in an envelope, the comparatively higher cost of paper-based accounting systems is less justified than it was in the past.

The ease of being able to search for specific records and transactions in a digital system can save an incredible amount of time.

For example, think about how long it would take to try and find a specific transaction in a year's worth of accounting books. Now compare that to right-clicking on a folder and clicking search!

2. Cost savings and eco-friendliness

If we were to look at the idea of converting our accounting books from paper to digital, the obvious idea of cost comes to mind. After all, paper, folders, files, and ink are not the cheapest materials to purchase when your business is aiming to save as much money as possible.

However, it's not only the ink and paper costs that you will be saving on. Costs can be saved on human resources as digital databases generally require less time to maintain; there is no need for someone to manually file and organize.

Costs can also be saved on expensive document storage. Requirements for off-site document storage and backup media can be notoriously expensive.

With digital files backed up in multiple locations, there is no longer any need to pay for taking up storage space for years and years, helping to streamline annual budget planning. These are just a few examples of how the conversion to digital can help with cutting costs.

It's also worth remembering the eco-friendly aspects of converting to digital. Global climate issues and the idea of environmental responsibility are key concerns for most people.

By converting to digital, a company can help to reduce waste and save the destruction of precious natural resources.

Each year, the typical office employee uses 10,000 sheets of copy paper, resulting in a staggering 4 million tons of paper used annually in the US alone. This amount constitutes 32% of all landfill waste. However, transitioning to digital platforms offers a solution to curbing this waste.

With concerns for the environment at an all-time high, every company should be thinking about going paperless.

3. Enhanced accessibility and collaboration

Accessibility is one of the most important features of digital accounting. In many cases, paper-based bookkeeping is very hard to find at the time of need, and we have to go all the way to find it.

But in the case of digital accounting, the only thing that we need is a well-defined directory structure that will arrange data in a very accessible manner. We can also take a print of the things that are required without wasting time searching for the original copy of the bill.

In the case of collaboration, if an organization has many branches at different geographical locations and they want to consolidate the information at the end of the financial year, transferring the hard copies of the accounting information will be a hectic job, and there is also a chance of loss of information.

But if we do the accounting using digital form, we can easily transfer the accounting files to the desired location or mail the files, which will make the job a lot easier.

Now, in most accounting software, it is possible that more than one user can log in and work on the account file.

In many cases, the CA of the organization has to visit the organization's place to check the accounting information, but with the use of remote login features, the CA can check the information at his place only. This enhances the ease of getting the information.

8 Benefits of Converting Your Accounting Books from Paper to Digital
8 Benefits of Converting Your Accounting Books from Paper to Digital

4. Improved Data Security and Disaster Recovery

Securing your financial information is a big concern for your company. Initially, you avoided this situation by keeping your business's every financial report detail in many notebooks.

But as time goes on, you'll find so many difficulties in tracking and ensuring your data security. The number of notebooks and reports would definitely result in data scattering, and this is very insecure.

In digital accounting, data is kept in an everlasting format, and you can easily back it up and secure it. By using accounting software, you can put a password on your financial reports to avoid any unauthorized access.

It is indeed a better way to maintain your business data. With safer data security, it reduces your fear of losing financial information.

Disasters can occur at any time. It's true that you can't avoid them, but you can prepare for them.

If you've done your accounting online and the data is stored on a trusted server, you don't need to worry about damaged reports resulting from disasters like fire, flood, earthquake, or anything else. Because you can easily access your backup data at any time and from anywhere to replace the damaged ones.

Under any circumstances, converted accounting books would keep you in a safer position and reduce your fear of financial information loss. This is good for your future business, of course.

5. Streamlined auditing and compliance

Ensuring accounting books are in order and compliant with financial regulations is an ongoing challenge for most businesses. Digital records can alleviate a number of issues that are inherent with paper records.

When first setting up a ledger system, a business must decide how the account numbers will be structured. With a paper system, this can be an arduous task with much rewriting, and it is usually a compromise between what will be most logical and what is actually achievable. 

It is then further complicated if accounts need to be re-categorized and all subsequent data needs to be moved. With a digital system, this is simply a case of re-numbering the account and recoding data from that point. No data is lost or forgotten in the transfer, and complex changes can be made at any time.

This can be crucial in a business' lifespan, as a change to the accounts structure might make the accounts significantly more informative but would be too costly in terms of time to action with a paper system.

Digital accounts can also automatically enforce many constraints during the entry of data that are difficult to consistently enforce with a manual system. This can prevent costly mistakes, and data can later be searched and reported on with far greater ease.

6. Integration with Other Digital Systems

Converting accounting books to a digital form will allow them to be stored on the same kind of medium as your other data, such as databases and spreadsheets. This allows for the ease of sharing different kinds of data through a multitude of different programs and mediums.

No more having to transport different papers and blueprints into the accounts office to see if there are sufficient funds for a certain project. Now all the information necessary for a decision can be accessed through a laptop in the field. 

This will lead to a new era of real-time reporting of financial data. Project leaders can now see the effects of their endeavors on the company's financial standing as they happen.

Digital reports can be generated much quicker than traditional paper-based statements and are easily distributed to all relevant parties. This will improve communication for all stakeholders as the data becomes more accessible.

7. Streamlined Reporting and Analysis

The ability to generate precise reports, whether financial or managerial, is one of the key functions of any accounting software. This is still the same as writing it down one by one, but the end result is much easier and can be understood easily by others.

This method is still applied by many companies that have turned to digital accounting. Internal reports can be quickly and easily generated to review financial events by accountants and business managers, to determine certain outcomes of past decisions, and to attempt to improve on the weaknesses and enhance the strength of the company and its financial changes.

This can be shown as an example in a study entitled "Accountants' perceptions of the effects of electronic data interchange upon accounting information." Research was conducted to determine the effect of a particular financial event that affects EDI (Electronic Data Interchange).

An interesting finding was that the analysis showed that newer and more efficient technology showed an increase in the willingness of the accountants in the company to maintain and better manage the event, an event that is considered to be better shown in today's terms, given the more efficient technology.

8. Office Space Optimization

With hierarchical and compliance-driven business processes, many businesses would assume that they require an ever-increasing amount of space, especially in highly regulated industries. 

However, in practice, much office space is wasted, and automating financial processes is a great way to reduce the required space.

With digital storage space on hard drives becoming increasingly cheaper, the cost differential of storing information on paper and keeping it in folders in file cabinets can sometimes be as much as 10-fold.

This is before factoring in the time taken to manage file cabinets and the increased space they require over time due to continuous growth.

Between 30% - 40% of office space is dedicated to file storage, and this can often be the deciding factor between large savings and incurring long-term debt through office expansion.

Conclusion: Benefits of Converting Your Accounting Books from Paper to Digital

There are so many advantages to converting your accounting books from paper to digital that it is really a no-brainer. The ease with which numbers can be crunched and reports can be customized is invaluable.

In addition, automatic calculations and the seamless integration of financial processes give companies more accurate and useful information than ever with which to make decisions.

The best part is how much time and productivity it saves the company. You know what they say—time equals money!

The only real disadvantage is the initial start-up cost, which can be quite substantial depending on the size of the organization. But if you weigh this against the long-term benefits, it is definitely worth a second thought.

Now more than ever, the accounting industry is moving further and further away from manual processes and towards automated systems and computer technology.

It seems that this is simply the way of the future and that paper-based accounting may soon become a thing of the past.
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