If you're conducting your business entirely or mostly with paper documentation, you're slowing yourself down.
In the coming months, we'll share ideas and thoughts about document management, improving business processes, and other ways you can use technology to boost productivity and cut costs.
In today's post, I'm going to share statistics from a variety of sources that illustrate HOW paper hurts your business. There are two primary costs of relying only on paper – the cost of STORING that paper and the cost of FINDING the information you need amongst that paper.
Real estate is expensive. Paper takes up space either in your office or in offsite storage. It costs money to store that paper: filing cabinets lining your hallways, conference rooms, and offices; entire rooms devoted to file storage; and offsite storage costs at services like Iron Mountain. Not to mention the time it takes to find a paper file.
PricewaterhouseCoopers reports that on average, a company spends $25,000 to fill one file cabinet and an additional $2,100 a year to maintain that cabinet. The fees quickly add up.
Information use keeps growing. Estimates are that documents double every few years. Do you have room for more paper documents? Probably not.
According to Gartner, workers waste 20% to 30% of their work week managing documents or document-based information. That’s a lot of wasted time, and when there’s wasted time, there’s always wasted money.
Slow response frustrates customers too. Take this scenario for example, a customer calls with a question about their last order – with document management – you can actually answer their query while on the phone by typing in a quick search and pulling up the file.
This not only increases office productivity, it also improves customer service – now your customers don’t have to wait for a callback or sit on hold while you or someone else shuffles through files. And, if the customer wants a copy, you can email it directly to them safely and securely (no scanning involved).
Ask Yourself These Questions
To begin to get a grip on the deluge of documents, ask yourself a few of these questions:
How many filing cabinets do you have in the office?
How many copies do you make of incoming documents?
Where do those copies go – filing cabinets?
How much do you spend on filing per month?
Do you pay rent for offsite storage?
Specific to labor costs, ask yourself:
How long does it take to file a paper document?
How much time does it take to find a paper document?
How many people are handling each document?
The Cost of Paper
Searching for the right information on paper takes time. Losing paper documents means those documents need to be recreated. Here are a few costs:
59% of 1,000 middle managers say they miss important information daily because even though it exists, they can't find it because it's on paper. (Source: Accenture)
A company with 1,000 workers wastes $2.5M to $3.5M each year looking for information that doesn't exist, not finding information that does, and recreating information that can't be found. (Source: IDC)
A 2013 report estimated that executives spend an average of six weeks each year looking for lost documents. (Source: Esselte)
Companies misfile 20% of their documents, essentially losing them. (Source: ARMA)
Here are some paper facts on the average organization: ▪ On average, the cost in labor to file one document is $20. ▪ Between 2% and 5% of an organization's files are lost or misfiled on any given day. ▪ Companies on average spend $120 in labor to find one misfiled document. ▪ 1 out of every 20 documents is lost. ▪ Approximately 25 hours are spent recreating each lost document. ▪ Approximately 10-12% of documents are not found on the first attempt. ▪ The average employee spends 4 weeks each year looking for documents (400 hours). ▪ More than 70% of today's Businesses would fail within 3 weeks if they suffered a catastrophic loss of paper based records due to fire or flood. ▪ It takes an average of 10 minutes per paper document to retrieve, copy, and re-file. ▪ 60% of employee time is spent working with documents. ▪ 90% of a business's information is in documents ▪ Each four drawer file cabinet holds an average of 10-12,000 documents, takes up 9 square feet of floor space and cost $1500 per year.
-Sources: Gartner Group, AIIM, US Dept of Labor, Imaging Magazine, Coopers & Lybrand
Document Management – Your Way Out
You can read about document management and steps to get started removing paper from your business processes in these two blog posts:
I do want to end with an example of how moving at the speed of digital documents can save you money.
Many companies offer a discount of 1% to 2% for early payment of an invoice. An electronic document workflow for approvals will help you meet the terms for these discounts. For example, you have a $20,000 invoice with a 2% discount for an early payment – within 10 days – rather than the Net 30 term. Approving and sending payment in that 10-day window saves your business $400.
How many early payment discounts are you missing out on now?