Calculating Paper Costs for Businesses: 4 FAQs

How much money does your company spend managing paper every year? Most people do not have an answer to this question, or know how to reach one. Of course, paper related expenses vary by company, however the costs of managing paper are quite expensive. Individual companies need to distinguish their current costs of handling paper files to fully comprehend the benefits of implementing a document management solution. Let’s take a look below at 4 of the most frequently asked questions surrounding paper management costs.

What factors are important to estimating the costs of managing paper?

More than just the paper itself contributes to the cost of document management. So although the price tag of one ream may be low, there are multiple other factors that contribute to the full cost of handling paper. The bottom line is, what seems like an affordable, minute business expense quickly escalates due to hidden costs. Additional paper related elements to keep in consideration include printer and copier maintenance, office supplies, storage costs and labor. These associated paper costs could be as much as 31 times the purchasing cost of paper, which includes filing, copying, printing, sharing and disposal.

Of course, storage is a major issue. Current estimates show that 50-70% of space in an office is solely dedicated to filing and storage of documentation. On average, nearly half of the files in those cabinets are duplicated information, and 80% is never accessed again. Even worse, a study by Xerox found that almost 50% of all office papers are discarded on the same day they were printed. Why spend so much on paper with a lifespan of less than eight hours? Paper builds up over time, and so does the cost of office space.

What are the average paper-based costs of a company?

According to the Minnesota Office of Environmental Assistance, the typical office consumes about 10,000 sheets of paper per worker every year. This equals about two cases of paper per employee, adding up to an $80 annual cost per office worker. If your office has been staffed with 75 employees for the past 8 years, that’s $48,000 wasted on paper.

It has also been estimated that every time $1 is spent on printing a document, another $6 is added simply for the handling, storing and distribution of that document. Between the hours spent in proper filing, retrieving and searching for documents, employee handling costs quickly add up. In fact, PricewaterhouseCoopers found that on average, an organization spends $20 in labor to file each paper document, approximately $120 in labor searching for each misfiled document and $220 to recreate each lost document.

Meanwhile, one standard five-drawer filing cabinet cost about $1,000. This style of filing cabinet can consume on average 16 square feet of office space. The current average cost of office space in the U.S. is about $20 per square foot, equaling around $320 for the space of each filing cabinet. Usually due to strict retention policies, many organizations require multiple filing cabinets, causing these companies to seek off-site storage options. Off-site storage will cause companies to incur a number of additional charges including utilities, monthly rental charges and costs of commuting.

Will the technology costs of going paperless exceed my current paper expenses?

Of course there will be initial charges when switching to digital content management solutions but it is important to remember that without paper, costs will significantly drop. When exploring document management software, companies must consider not only the return on investment but the long-term value of paperless processes including increased collaboration, immediate access and improved productivity.

In a 2013 AIIM business survey, the biggest issues caused by paper-based processes included re-keying data as well as constant re-filing, storing and searching for paper records. Document management systems free you from paper to streamline these problem areas while saving you thousands of dollars annually. In that same study, AIIM reports that two-thirds of those adopting paper-free processes report a payback within 18 months.

The most cost-effective strategy to paper management is reduction. Document management programs can help your company reduce paper dependency and eliminate pricey expenses. Document management software also encourages the use of online forms, reporting and collaboration which will avoid unnecessary printing and cause paper costs to reduce immediately.

How can I calculate the specific office costs of my individual business?

Using simple formulas can help you to determine your company’s own annual cost of paper expenses. Experiment with the equations below and add them together to get your total paper usage cost per year. Keep in mind, these figures do not including and filing and office supplies such as folders, labels and binders.

• Monthly Cost for Paper X 12 Months = Amount Spent Solely on Paper
• (Number of Filing Cabinets X 16 sq. ft.) X Cost per sq. ft. of Office Space = Costs of File Storage
• (Monthly Rent of Off-Site Storage + Utilities) X 12 months = Off-site Storage Costs
• (Annual Printer Rental Cost + Annual Printer Maintenance Cost) + (Monthly Toner Cost X 12 Months) = Annual Printing Cost
• ((Hours an Employee Spends Managing Paper X Number of Employees) X Average Hourly Wage) X Number of Workdays in One Year = Amount Spent on Time Employees Spend Handling Paper

Choosing electronic storage methods could save your company more money than you think. Paper is an enormous cost to companies as well as the environment. Configuring a company’s paper cost is the first step in understanding their dependence on paper. To get started on reducing paper usage in your business, contact Square 9 today.