How Costly Is that Paper Trail?

001-picWhen computers first burst onto the business scene, everyone exclaimed, “Think of all the trees we’ll save!” and “Imagine how much less storage space we’ll need for business and client records!” With advances in storage technology, paper didn’t seem to stand a chance. Keeping information on a computer disk or flash drive became easy and inexpensive and you can now carry a thousand-page document on a drive that fits in your purse or pocket.

The idea of confidential health records, business contracts, and stock portfolios housed securely in the mainframe of a computer was very appealing to those who feared that their files would be stolen or destroyed by fire. Now, at long last, our confidential information would be hidden from prying eyes and safe from physical damage.


The Advantages of Paper Copies

Sadly, some of those early, excited predictions didn’t come about. We now know that, instead of using less paper and relying solely on electronic files, we’re backing up those electronic files with—you guessed it!—paper copies. Why? As Alan Knowsley noted, “In a recent case the Employment Relations Authority found against an employee with a personal grievance claim primarily because both the employer and employee had failed to keep a paper trail.”

Other incidents involving health records and legal documents have taught us the value of those paper files we thought obsolete.

Hard copies are definitely required if a document includes original or notarized signatures. There is no way around this—at least, not yet. Realty companies recommend keeping hard copies of signed leases, deeds, home inspection documents, building permits, mortgages, and other files related to the purchase of a home or business.

Law offices also insist that authors of documents like wills, trusts, powers of attorney, and contracts retain hard copies of them.


Security Concerns

Confidentiality and security are always concerns when it comes to highly classified, financial, or legal files.

History has demonstrated that when sensitive information like tax records, bank records, and health information is stored electronically, enterprising hackers can—and have—gained access to them. It should be noted, however, that information pirates could also get to paper files.

You can lower your risks by using an encrypted and password-protected storage system. Electronic files have been shown to be even more secure than paper copies that must pass through two or more hands to be delivered safely.


Other Vulnerabilities

Besides worries about confidentiality, there may also be a very practical reason for creating and carrying hard copies.

Machine failure is a very real possibility. What happens if your computer fails and a backup is not available? Or if there is a power outage? What if you are living, travelling to, or presenting files in an area with poor, unreliable, or non-existent Internet access? What if your flash drive is lost, stolen, or damaged?


The Cost of a Paper Trail

So now that we have acknowledged that there are occasions which require hard copies of files, how costly is it to keep that paper trail?



First there are copying fees, which vary between one to five cents a sheet, depending on who is copying them and how intricate the files are.

You also have to factor in the cost of copying machines and the labor to create, collate, disseminate, and store documents.



And then there are storage fees to worry about.

Most paper record storage is charged by the cubic foot. A standard legal carton is 1.2 cubic feet. The average monthly storage cost is 19 cents per cubic foot. So, if you store a thousand cartons for just three years, it would cost over $8,000 for storage alone. Think about the cost of files that need to be retained for decades!

And that’s just the cost for warehousing files in an archive. Some files are current and can’t be stored off-site unless an employee is available at that site to access and transport them. These are best kept in central filing.

The average cost of a three-drawer filing cabinet is approximately $300. You need one of these for every nine thousand sheets of documents. In addition to the cost of the cabinet itself, you must factor in the office space to house it. Each cabinet takes up about twenty square feet. PricewaterhouseCoopers estimates the cost of one filled cabinet is $25,000. Maintaining that cabinet adds a cost of more than $2,000 to that amount. If you need off-site storage space, the cost rises to over $100 a month plus utilities.


Lost Documents

PricewaterhouseCoopers also estimate that locating a single lost document costs an average of almost $125 in labor. Considering the fact that almost eight percent of all paper files are misplaced, lost, stolen, or destroyed, this is not a negligible cost.

If you have a sizable company, it may be handling up to ten thousand documents at any given time. Using those numbers to make a rough estimate, a medium sized company could spend almost $100,000 on finding lost documents alone.



Even with files that are not misplaced, stolen, or destroyed, there is a cost involved in their handling.

The scenario goes something like this: a client or service provider calls for information available in their file. The call is transferred from reception to someone who has access to that file. That person then goes to central records where the file is located. The employee in central filing is then given the information they need to locate the file and it is brought to the person who responded to the call. That person then scans the file until they locate the requested data. Information is then shared over the phone or by fax or email. The file is returned to central filing and the employee who accessed it walks it back to its proper place. The person who took the file and returned it now goes back to their desk to resume whatever they were doing.

Estimated time to respond: twenty minutes. And this doesn’t include time spent by the central filing clerk to access the file. A single question could cost a half hour in employee labor—all because the information was kept on paper and not digitized.



When we factor in the total cost instead of just focusing on the cost of printing, it’s clear that a paper trail is not as inexpensive as people think. For legal or practical reasons, electronic records are not always possible, but many companies could do without much of their hard copies. If you are maintaining paper copies simply because it’s what you’ve always done, it’s worth taking a close look at how much they’re really costing you.