Why Small Businesses Need to Digitize Documents

What is document digitization? 

Document digitization is the process of capturing images of paper documents and transforming them into a digital format using capture software. OCR, or optical character recognition, converts document images into text documents that can be searched with relevant keywords. Terms like “document scanning” and “document imaging” also describe this process.

When you digitize documents, you can also add additional data as key index fields (also known as manual data entry services) after scanning. Data keying allows you to meet digital data retention requirements. Once formatted, digital files can be seamlessly incorporated into your company’s digital repository, creating a computerized filing system.

After all paper documents have been scanned, verified for completeness, and rendered editable, they can be destroyed — except those required to remain in physical format due to your state’s record retention laws or other legal obligations.

What are the business benefits of digitizing documents? 

Document digitization can bring businesses the following advantages: 

• Share documents easily. It’s faster to share scanned documents digitally than mail, fax or hand-deliver paper documents. Digitizing also streamlines the document-sharing process, enhancing efficiency and productivity. Additionally, it allows many people and multiple departments to access the same document simultaneously, improving workplace collaboration.
• Store information safely. Scanned documents allow for the safe digital storage of records. Digital files can be securely stored or backed up on remote servers with high-security protocols. Unlike paper documents, digital files carry virtually no risk of being lost or misplaced. Additionally, you can archive and manage digital documents in a structured and organized way.
• Incorporate digital elements. Scanning allows information to be captured from paper files, films, tapes and other physical media. Data can also be read from barcodes, RFID tags, QR codes or other scannable sources. The scanned information can be transformed for use with document management systems, ERP software, management information system software, the best CRM software and other business applications.
• Save time and money. No more searching through heaps of paper files and dedicating warehouses and file rooms to storing papers. You can access and use all scanned documents with just a few clicks. According to ARC, just one employee can use 10,000 sheets of paper yearly, which costs approximately $80. If you multiply that by 100 workers, your company spends $8,000 per year just on paper. (You also save money that would be spent on shredders for proper paper disposal.)
• Improve customer service. Digitized documents can be indexed with metadata, making it easier and faster to access pertinent data to help customers. Jennifer Graham, co-founder of Total Document Solutions, agrees that key information searches are a significant time-saver for customer service. “With the benefit of OCR or ICR, the ability to search for key text or information strings comes within seconds,” Graham noted.
• Minimize storage space. You no longer need to maintain separate office space for storing documents. “This opens possibilities for repurposing the area for more productive, revenue-generating activities,” Graham pointed out.
• Meet compliance regulations. Some industries have statutory compliance norms mandating that specific documents be maintained in a digital format. With scanning, you can meet these requirements quickly and inexpensively.
• Reduce paper waste. As documents are scanned, paper waste is drastically eliminated, helping to discourage deforestation and create a sustainable business model.
• Increase file accessibility. All scanned files can be uploaded to the cloud or shared, allowing anyone with the right credentials to access them from on-site or remote locations. Additionally, information within editable files can be searched instantly, saving time and improving efficiency.
• Automation opportunities. Digitizing documents can streamline operations by removing multiple daily tasks from your workload. Graham noted that clients are often surprised by how they can automate repetitive tasks like sorting documents, managing approvals and sending reminders.

What documents can you digitize? 

There’s no limit to the types of documents you can digitize. However, if you’re starting a digitization overhaul to convert all paper documents to electronic versions, it’s best to prioritize the following document types:

• Official correspondences
• Financial papers
• Contractual agreements
• Medical records
• HR files
• Bills and invoices
• Survey maps
• Other large documents

After digitizing your documents with a high-quality scanner, the next step is entering the descriptive data needed to identify the files. You can transform scanned images into readable text using OCR or ICR (Intelligent Character Recognition) technology, which can then be retrieved, read and shared through different applications.

How are documents digitized? 

The following technologies can help you digitize your documents. 

Multifunction devices

If your documents don’t require a high-quality image capture, consider using a multifunction device you may already have in the office. For example, an office printer with scanning capabilities can be a convenient way for employees to scan paper documents without incurring additional expense. 

Dedicated scanners

Sometimes, a multifunction device doesn’t offer a resolution high enough for scanning office documents. A dedicated scanner can accommodate these requirements and more. Plus, it can often speed up the scanning process, offer greater customization options, and provide more flexibility.

Scanning apps

Don’t have a dedicated scanner or need to digitize documents on the go? A modern smartphone’s scanning capabilities can rival the quality of multifunction printers and scanners. Search the app store for high-rated scanning apps to keep your paperwork organized and in one place. 

Document scanning services

Scanning services help you save time and money by doing all the scanning for you. You won’t have to maintain expensive scanning equipment, assign tedious tasks to your team, or worry about compliance. Document scanning services specialize in expertly scanning, organizing and securing sensitive business files.

Here are the different types of document scanning services and some of the use cases they specialize in:

1. Bulk scanning: Bulk-scanning services use high-quality devices to scan large volumes of documents quickly. There is no need to convert each page individually, which significantly reduces the scanning time.
2. Large-format scanning: This type of scanning service specializes in capturing superior-quality images of large physical documents, such as those measuring 54 x 72 inches. You can customize the scanned documents’ color, size, resolution and file type. Examples of such files include posters, maps and architectural plans.
3. OCR processing: OCR processing services provide fully editable scanned image files. OCR technology converts scanned images into text-searchable documents, allowing you to edit text easily without affecting the original font style.
4. Microfiche and microfilm scanning: These services convert data stored on tapes and microfilms to indexable digital files, making it easier to share, store, access and retrieve digital files.
5. Off-site and on-site scanning: Off-site scanning services digitize documents at their facilities. If you entrust classified or sensitive documents to such a service, verify it passed numerous clearances, such as FBI background checks and fingerprinting. Alternatively, you can choose an on-site service to perform such scans. However, on-site scanning can be slower and more expensive than off-site scanning, as high-volume equipment is usually too large and sensitive to transport to a client location.
6. Medical record scanning: When it comes to paper vs. electronic medical records, there’s no question electronic records are more convenient and secure. Still, any provider you select to scan medical records must comply with HIPAA laws.
7. HR, accounting and legal: Specialized departments can benefit from document scanning services that securely organize highly confidential employee documents, detailed bookkeeping records, and legal files in one place. Scanned documents can be accessed exclusively by the appropriate department or shared for collaboration when permissions are enabled within the repository housing the documents.

What are the biggest barriers to digitizing documents?

Small companies often want to go digital but are wary of what’s involved — and what’s at stake. Graham noted small businesses face multiple challenges when considering digitization. “The biggest barrier to convincing a small company to digitize its documents often revolves around a combination of perceived costs, awareness of the process, and resistance to change,” Graham explained.

• Cost concerns: Digitizing documents can be overwhelming for a small business. Financial concerns, including hiring a digitization provider, securing a cloud storage service, and the challenge of not seeing an immediate financial return, can cause small companies to hesitate. “Many small companies perceive digitization as expensive due to the cost of scanning hardware, software solutions and cloud storage,” Graham noted. “Some worry about recurring costs like subscription fees for document management systems or data migration services.”
• Awareness of the process: Many small businesses lack a clear understanding of digitization, making the task seem daunting. Without understanding the process or benefits, small companies may focus solely on perceived costs and complexity. Graham notes that educating businesses about the process can highlight its advantages, such as increased efficiency, better security and cost savings — and help them overcome this barrier.
• Resistance to change: Small companies are often more comfortable with a handwritten paper trail and may be wary of adopting a digital-based system. While this is understandable, Graham says lacking confidence in tech or worrying about transition disruptions shouldn’t keep you from leveraging the benefits of digitalization.

What are the greatest risks of not digitizing documents?

Not embracing digitization can leave your business at risk of the following: 

• Document loss: Physical documents are prone to human error, damage, or getting lost. “Unlike digital files, physical documents often have no backup, making recovery sometimes impossible,” Graham cautioned.
• Decreased efficiency: Searching for and filing paper documents takes significant time and may require more staff to stay compliant. Communication among teams, the ability to make quick decisions, and a streamlined workflow can all suffer when you rely on paper documents. “Many physical filing systems cannot manage version control,” Graham warned. “This becomes challenging when a small company must produce an ‘official’ record in response to an audit or litigation maneuver.” 
• Higher operational costs: Maintaining physical documents can increase costs in the following areas:
  • Physical space for filing systems (real estate or off-site storage)
  • Office supplies such as paper, ink, folders, etc. (for printing and copying documents)
  • Additional staff or overtime hours for current staff to manage paper documents
  • Security to monitor sensitive physical documents
  • Environmental impact (paper production and disposal)