Saving Money by Reducing Paper

The Big Paper Picture

Does your company still send invoices on paper? Are your offices lined with file cabinets? How much time do your employees spend looking for that one critical document that they need right now?

In short, is your company addicted to paper?

Most businesses are, says former Vistage member Michael Hurley, president of Green Square, Inc. in Chicago. And most companies don’t realize the cost.

Green Square is a consulting company that helps businesses sort through the technology options — and ROI — of reducing reliance on paper. As a result, their clients have less and less sorting to do.

His firm has helped large companies save millions of dollars by breaking their dependency on paper. One of his clients — an insurance company — invested several years in the analysis and deployment of a paper reduction process. The upshot? “They expected to save $7 million, but they saved $14 million. The ROI was 6.9 months,” Hurley says.

Labor savings is the biggest cost-trimming. “Typically these projects can save 20% to 30% of your labor costs,” he says.

“Even for small businesses, they can eliminate data entry by using optical character recognition (OCR) technology,” Hurley says. Scanners use OCR, which allows a computer to “read” documents and translate them into electronic files.

Question Current Business Practices

“What would be the implications if you could knock 20%-40% of your administrative labor costs off the table?,” Hurley asks.

Besides that, he wonders whether Vistage members can answer this: “What would happen to your business today if your building wasn’t available and you didn’t have access to your paper?”

That question is hitting home. Since 9/11 his business has doubled. The images of papers floating irretrievably from windows seems to have created a sense of immediacy about paper reduction.

Hurley advises evaluating your company’s paper dependency with the following steps:

  1. Evaluate how you use information and how much of it is on paper. This is a department-by-department audit.
  2. Start discussions with employees about how much of that paper documentation is necessary. Are there duplications of effort that are unnecessary? How long does it take to find critical documents?
  3. Estimate how much you are spending to maintain paper-based filing systems — both in labor and equipment like file cabinets, etc.
  4. Start looking at paper-based transactions that aren’t necessary. Consider paperless invoicing. “I haven’t mailed a paper invoice in five years. I send all my invoices to my customers electronically,” he says. In the process, Hurley has reduced his accounts receivable by seven days.He e-mails invoices directly to the person who has the authority to approve it — eliminating not only “snail mail” time but also routing time.”What’s the difference coming off my printer or coming off a client’s? A couple of my customers pushed back on that, but it’s our procedure now,” he explains.

    The airlines represent one example of major companies doing business in a different way. “If you want a paper ticket, you will have to pay something like $15,” Hurley says.

  5. Discuss technological options for reducing your reliance on paper documentation. “Most people don’t know about imaging, which is the process of scanning, storing and retrieving paper-based information. You take a digital image of whatever it is, and attach an ID information to it, then store it,” Hurley says.”There are so many options now. People perceive that you have to spend $1 million. But I have a scanner at my desk that I spent $395 for. We’re in Chicago, but our accounts payable is done in Michigan. I can scan and email an invoice to accounts payable clerks, and get the bill paid,” he says.                                                                                                                                                                                                                                                                               Our Chronic Reliance on Paper

“The mantra of our industry is that 80% of business information is still on paper and there’s no system to get at that in a systematic manner,” he says.

Others have tried — and failed — with technology to solve the problem of proliferating information on paper. Sometimes the software solution didn’t fit the problem. Green Square — which does not sell any technology — helps businesses decide what they need, buy the technology that offers the solution, then implement it.

“People are culturally ingrained into using paper,” explains Hurley. “Our job is to help lead people along the path to becoming ‘paper-free’, without using the ‘P’ word,” Hurley says. “When you start using the “P” word, people get nervous that you’re going to change everything. We’re helping them change their culture.”

“It’s like vegetarianism. When I talk about this to people, it’s like you’re questioning a fundamental cultural belief. People love their paper — their mail, newspaper, magazine subscriptions,” he says.

What about the prospect of becoming 100 percent paperless?

“Business will go 100 percent paperless when bathrooms go 100 percent paperless,” says Hurley. “We’re not about that. We’re about moving down that path to less paper and more money.”

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