Best Practices for Paperless Accounting
In recent years, more and more companies have transitioned to paperless accounting departments. You’ve probably heard plenty about the benefits – and the promise of improved cash flow has you intrigued. But what about the potential downfalls?
It’s much more likely that you’ll experience significant – and immediate – benefits when you move away from paper invoices and purchase orders. (Even 7/11 is in on the trend, with their Japanese convenience stores saving about 220 million pieces of paper per year!) But, as with any major organizational change, proper planning is crucial. Before you go all-in, make sure you’re following the best practices for paperless accounting:
Best Practice #1: Decide Which Accounting Functions You Want to Automate
Do you want to start small, with just one thing that has been giving you trouble? (i.e., approving non-PO invoices within Accounts Payable, or managing collections within Accounts Receivable)? Or, do you plan to overhaul your entire accounting department?
It’s important to keep in mind that if you plan to use your paperless accounting software for several purposes – either now or in the future – you’ll need a system that can accommodate that. If you choose a challenge-specific solution now but eventually decide to expand, you run the risk of having to scrap everything and start over. That’s why it’s widely considered a best practice to map how your entire process works today (and what sort of exceptions you face) so that you can solve all of your problems with one investment.
Best Practice #2: Brainstorm a List of Requirements For Your Paperless Accounting Software
Once you’ve decided the “why”, it’s time to decide on “how”. You’ll want to figure out:
- What types of documents do your accountants currently use? Which ones (if not all of them) will you want to store electronically?
- How long do you need to keep those documents (both for auditing purposes and for regulatory reasons)?
- Will you want to have different approval permissions so that certain documents can only be accessed by certain employees?
- Do you want your team to have the ability to access and approve your accounting documents on their mobile devices?
- How are you going to get your documents into your paperless archive? Do your employees have the time to manually collect them and scan them in, or would you get more value from a software solution that can automatically do that for you?
As you define your requirements, you’ll need to look out for “tribal knowledge” – information that isn’t documented as part of an official procedure, but that’s common knowledge for the employees who are involved in the day-to-day work.
Best Practice #3: Get Feedback From More Than Just Your Accounting Department
While your accountants will be using the ones actually using your paperless accounting software (and it’s crucial to ask them what features would make the most difference in their day-to-day productivity), you’ll want to get input from your IT team as well. Some accounting automation programs integrate with ERPs and line-of-business systems right out of the box. Others require custom coding – and your IT team might end up being responsible for it. Let them evaluate each potential solution’s technical specifications so that you find the right one for your organization’s needs.
Best Practice #4: Speaking of ERPs…Choose a Paperless Accounting Solution That Can Make the Most of Yours
JD Edwards’ accounting modules are significantly different than SAP’s – and little quirks can make a big difference. When you choose a paperless accounting solution, it’s a good idea to find a vendor who has specific experience with your ERP.
Think of it this way: if you drive a Mercedes, you wouldn’t get it serviced at a Toyota shop. Sure, a car is a car – but you’re going to get the best service from a mechanic who understands the unique parts. The same concept holds true for accounting automation. You’re likely to have the best experience if you choose a vendor that knows your software inside and out.
Best Practice #5: Know Your Timeline
Once you realize how much a paperless accounting department can transform your organization, it’s normal to want to get started right away. But, a truly thorough implementation process – one in which your new solution is custom-configured and extensively tested before it goes live – can take time. After you officially choose a vendor, plan on four to six months to get everything properly set up. But, once you’re up and running, your accounting department won’t look back.
