The Dangers of Paper Accounting
The year is 2018. Electric and self-driving vehicles are a reality. Private businesses are challenging each other in space travel. We can control speakers with our voice. And yet a quarter of all small businesses still rely on paper accounting.
That’s the finding by Clutch, a B2B research, ratings and reviews company, which surveyed 302 small business owners or managers about their accounting resources.
Pen-and-paper accounting was the gold standard for literally decades, but most businesses have switched over to automated processes as computer software has drastically improved ease-of-use, function, affordability and sophistication.
Any small businesses that haven’t yet made the leap are risking far more than just looking behind the times – they risk suffering the various pitfalls of paper accounting that have prompted so many companies to make the switch to electronic recordkeeping.
Here are a few reasons to make the migration:
3 Dangers of Paper Accounting
1. Physical loss:The most obvious risk is that paper records can be easily lost or destroyed, leaving you with no backup plan. Even a small office fire or a plumbing issue could damage years of paperwork beyond recognition, leaving your operations paralyzed as you’re left in the lurch with invoices, expenses and figuring out what you owe the IRS. And there’s more to fear than natural disaster – physical records can be easily stolen, not only leaving you record-less, but putting your and your employees’ and customers’ sensitive information in the wrong hands. Digital accounting records can be saved in multiple locations, or even stored in the cloud, virtually eliminating the risk that a physical disaster would destroy those records. Those storage methods can also be digitally protected.
2. Human error:Humans can introduce numerous problems into the accounting process, from incorrect data input to losing records to simply forgetting to process certain forms. Moreover, because paper accounting simply takes so much more time to do, you introduce another risk – fatigue, which increases the chances of a mistake during the process. Accounting software, meanwhile, typically includes numerous measures that help prevent error, such as alerts when fields are not filled out or conflicting data is entered.
3. Diminished forecasting:One of the benefits of good accounting software is that it helps provide a very clear-to-see picture of your financial situation, whether it’s revenues, income or cash flow. It might be difficult to look at a stack of paper records and notice trend changes in the books that require a shift in strategy – spending less, or even spending more as more cash frees up. But clean spreadsheets with easy-to-read information across numerous data sets can help you better understand where the company is, where it’s going and any changes that might need to be implemented as a result.
That’s not the only thing Clutch found regarding small business’ lack of accounting resources. Its survey also discovered that “Almost half of small businesses (45%) employ neither an accountant nor a bookkeeper,” and “for nearly three-quarters of small businesses (72%), one person handles both HR and accounting responsibilities.”
If you’re still one of the small businesses that relies on paper accounting, McManamon & Co., which serves small- and mid-size firms, has numerous ways to help you. We offer traditional accounting services, such as creating financial statements and maintaining records, but we can even go so far as to provide fully outsourced CFO duties, or empower you by taking your office paperless (including your accounting).
Put down your pencil and push your accounting into the 21stcentury. Call McManamon & Co. at 440.892.9088 or contact us onlineto modernize your books.
Tags: McManamon, paper accounting, paperless office, small business, small business accounting | Posted in accounting, McManamon & Co., paperless office, small business