You may be too young to recall the era before computers. Paper was the medium, and people the processors. In the 1960s even copy machines were rare, so offices had to rely on carbon paper. My elementary school used mimeograph machines that used some sort of magic blue ink that copied documents on a roller that spit out test sheets. I believe my blood pressure would rise if I smelt the ink today, bringing back memories of fifth grade math tests.
I recall tagging along with my mother to a governmental office like the California Department of Motor Vehicles. We would wait, and wait, and wait for someone to call our number. Upon arriving at our window, many times we would be greeted (I’m using that word “greeted” loosely) by a woman who looked like she was counting the days to her next vacation, eleven months away. She would hardly make eye contact and go through the mundane process that she will do seventy times that day. The required business form was to be filled out in triplicate separated by black carbon paper. It regretfully left an unwanted black tattoo on her thumb. She, and clerks like her, would always said the same incantation in order to make the carbon paper magic work. “Please press firmly so as to be legible on all three copies.”
The carbon paper was one of the time-saving tools that spawned in the 1950s. A business practice that relied on its product was the practice of shuffling the forms into filing cabinet folders, many of them never be touched again.
Though as archaic as this may seem, we still acquire clients who still practice it. I don’t mean they use carbon paper or mimeograph machines, but they still lug mountains of paper that contribute to the middle aged bulges of their filing cabinets.
Assuming you don’t have to keep hard copies for such things as required by government regulations and such, the advent of the computer along with a scanner should put an end to most of the paper filing practice. I don’t advise this change just to be technologically advanced, but instead to be more efficient. Business information moves faster than ever. The more time you save performing mundane processes, the more time you can focus on managing your business. Here is a suggested procedure that you can implement in your accounts payable process:
- Paperless Accounts Payable set up: You need a few components to have an accounts payable paperless system.
- An accounting software like QuickBooks that can attach files as part of its functionality.
- A scanner, preferably one that can scan both sides of a document if needed.
- A digital Accounts Payable folder (on your computer) to scan your bills and receipts.
- Scan bills and receipts into folders: The first step is to scan your (approved) bills and receipts into folders that are located on the same computer as QuickBooks. They could be scanned onto other drives in a company network, but I like to see everything in the same place. You can create subfolders by: date, employee, or office location. Identify them by Vendor and invoice number. You do not want to duplicate functions like creating folders for jobs, or vendor names, etc. because that will be superfluous to QuickBooks’s functions. The paper receipt should be initialed and dated by the person before he/she scans it.
- Dual screens work best: After scanning into your respective folders, bring your first bill up on a screen. Dual, synchronized screens work best because you can look at the bill as you process it. You may have to close the view when you attach it in QuickBooks, but not at the point of just entering the bill.
- Enter the bill in QuickBooks: Follow the normal procedures of entering a bill in QuickBooks. We strongly recommend that you enter the job name and use the Class system to allow greater flexibility in reports. If you are entering a credit card remittance (receipt), you may go to the Bank menu and enter it in that menu to the specific credit card, unless you want to track the vendor on the credit card. In that case, you would use the bill paying function and choose “credit card” under Method.
- Attach the bill or receipt to the Vendor Bills: As stated before, you may have to close the scanned item window, but attaching to QuickBooks is as easy as looking up the file.
- Following the Bill Paying Procedures: Open the Choose Bill Paying and follow the procedures you have established.
We normally shred the paper receipts at this point, but if you want to hold on to them initially until you are comfortable with the system, then let your anxiety level be the barometer. If you follow this procedure and tweak it to fit into your specific business, you will have accomplished not only reducing the filing burden, but increase your flexibility to report on your business, the ability to drill down to the actual receipt for each expense, and more time to manage your business.