Environmental Cost of Paper Based Invoice Processing

 

We live in a world that is changing.

The global focus on reducing our environmental impact is growing. The key question in this blog though is, what is the environmental cost of paper based invoice processing?

Most organisations will have an understanding of the cost of processing an invoice once they have received it. Some will have taken that figure as a genuine reason to move to a paperless process and make real savings.

But what of corporate responsibility to our environment?

Should businesses be considering in more depth the real impact that they have, and the impact caused by companies that they do business with.

To start with, let’s set a scene.

Let us assume that our hypothetical organisation receives 50,000 invoices a year. Not a large organisation, but also not insignificant.

To make our lives easy, we will work on the basis that all of the invoices are received as paper, our hypothetical organisation has yet to invest in any form of digital communication with its suppliers. Even if an invoice is e-mailed, they still request a paper copy.

Now, if each of these invoices is on average 2.5 pages (UK standard) and they all include a covering letter, and come in an envelope.

Each invoice received now equates to approximately 5 A4 pages of paper. A total of 250,000 pages of A4 paper, per year.

Now, in this scenario we will assume that everything goes well internally when the invoice is received. No copies are made for processing, handling, storing etc.

The reality in paper based organisations is that these invoices are likely to be duplicated at least 3 times during processing.

 

forest

So here is where we can start to put some numbers against environmental impact.

To start with, let’s keep this simple and consider how many trees have been cut down to make all of this paper.

1 tree provides (on average) 16.67 reams of A4 paper.

1 ream of paper is 500 sheets.

Our hypothetical organisation is receiving roughly 500 reams worth of paper, just for invoices, per year.

If we round this up, this equates to 30 trees a year being mulched to supply all of this paper. Now, I know, this may not sound like much.

What we have to remember is that this is just 1 mid-sized organisation. And we are assuming that at no stage are copies made of these invoices.

Again, this may not sound like many trees, but ask yourself, and your team, how many trees you have planted in the last year? And the year before?

And then consider that it takes 10 to 20 years for 1 tree to grow to such a size as to be used in paper production.

 

Water

And how much water?

According to The World Counts, the paper industry is the 5th largest consumer of energy in the world. Using vast resources in fuel to cut down the trees, transport the lumber and then manufacture the paper.

The same site also states that 1 page of A4 paper requires approximately 10 litres of water to manufacture.

In the case of our hypothetical organisation, that would mean 2.5 MILLION litres of water had been used to produce the invoices that they received.

Because of the chemicals used in production, this water is not re-usable. It is waste.

Now consider, healthline.com recommends that we drink on average 2 litres per day, per person. The amount of water being used to make paper is not an insignificant drop in the ocean.

Sunset

Finally for today…

And quoting back to the same source, 1 ton of virgin paper is estimated to cost 253 gallons of petrol to make.

If you are curious (I was) you get about 400 reams, or 200,000 sheets of A4 per ton… so all that fuel and it wouldn’t even create enough paper for our organisations invoices.

Personally I hate to think about the associated impacts of this industry, and it would probably be more than I can get my head around to try and tie those costs in.

But remember they are there, these are associated impacts of paper production.

 

Lorries

We are yet to consider.

These numbers are really starting to rack up. And remember, this is only to make the paper sheets. We haven’t considered:

Packaging

Transportation

Printing

Mailing

Recycling, shredding or landfill.

So far we have grown the tree, cut it down and mulched it. That’s all. This paper has not been packaged shipped, purchased, printed on, posted etc. etc.

Environmental cost

 

Let us not add to the problems.

We are living in a world where there is a significant push to move away from plastic (thankfully!). Regrettably, a lot of the proposed alternatives are paper based.

Sometimes there are few other options available (although there is some really interesting work being done in this area), but when it comes to receiving invoices there really are.

No organisation needs to receive their invoices as a piece of paper, or print them out once they are received electronically.

There are a multitude of solutions available for organisations of all sizes to allow for a digital process.

Supplier portals have vastly improved over the years, some invoice automation solutions can pull an invoice directly from an e-mail without any human interaction.

For workflow and approval, there is absolutely no need for this to be manual, a digital marker is sufficient for audit trails.

If you are still working in a paper heavy process maybe it is time to start having the conversations about what your organisation can do to make some significant changes.

Post by John Stovold

Responsible within ITESOFT UK for the support of creating and delivering new content, John has worked in B2B environments for more than 10 years. He has established himself as a true thought leader within finance automation, robotics and AI striving to deliver key messages to both senior, and middle management. John’s experience of working closely with business management, he has been able to provide key insights into business challenges, and how ITESOFT can truly help them.

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