Records Management 101:
A Lesson That Can Benefit All Business Owners

By Gail Bisbee, President/CEO, Confidential Records Management, Inc.

For Immediate Release   -   June 09 , 2010

Your active records and information are disorganized and always next to impossible to find when needed.  Records in the back file room, who knows what’s in there and if you even need to keep it anymore. You know you should get organized with your records but who has the time for that and if it’s not generating income, it’s not important right now.  Sound familiar?  All too often, business owners are overwhelmed with managing their records and they don’t fully understand the importance of being organized in this area.

Here’s some food for thought:  mismanaging records can mean you’re not complying with certain laws and regulations.  You may be putting your business at risk during an audit, court litigation or having your identity stolen.  Valuable office space is being wasted, personnel aren’t able to work as efficiently as possible and customer service isn’t as high as it could be.  Now that you know the value of proper records management, here are a few things to consider: 

Why keep past files – First and foremost, why do you need to hang onto old files and records?  The bottom line is, federal law says you must keep them.  Many federal laws are based upon the information with PCI (payment card industry) compliance.  PCI compliance applies to all organizations or businesses that accept, transmit or store any cardholder data, regardless of the size of the organization or the number of transactions.  FACTA (Fair and Accurate Credit Transaction Act), HIPAA (Health Insurance Portability and Accountability Act) and Sarbanes-Oxley all need to be taken into account with your records as you or your business can be audited at any time. 

What to keep – What you should be keeping really depends upon each individual situation.  Consult your legal and your accounting staff to determine what should be kept for your business.  Consider keeping the following on file: financial statements, past employee personnel records, accident reports, internal audit reports, purchase orders, expired insurance policies, accounts payable and accounts receivable statements, payroll records and summaries.  You may also want to consider keeping copyrights, trademarks, patents, audit reports of public accounts, year-end financial statements, property records including blue prints and tax returns indefinitely.   

How to securely store files – Many companies believe their files are secure but haven’t taken into account the impact of a disaster like a fire, hurricane or the wrong person getting their hands on your files.  All file and record types can and should be backed up.  Scan documents to convert them into electronic files and remember to back up your hard drive.  To protect your sensitive information from falling into the wrong hands, lock all files in a filing cabinet, safe, vault or separate room and password protect computers.  To further protect your information, consider utilizing the services of an off-site storage facility.  Look for one that is secure with alarms, security cameras and pass codes that will also provide you with activity reports which track when the file was accessed and who utilized the information. Detailed reports are important if there’s an audit or lawsuit.

How long to keep files – Many think seven years is the rule of thumb when it comes to cycling out records; however, this is not true for all documents.  Once again, talk with a trusted advisor and your legal and accounting staff to determine the length of time to keep specific records.  Storage lengths are based on federal regulations, so keep in mind PCI compliance, FACTA, HIPAA and Sarbanes-Oxley.  Never assume it’s better to be safe than sorry when it comes to holding onto documents.  During an audit, federal law says they can go through all of your records on hand, regardless of the age.

How to discard files – When documents have reached their full retention period, it’s critical to discuss the safest and most secure way to properly destroy the record.  Make sure document destruction rules are communicated with staff and roles are clearly defined as to who has permission to handle the destruction of records.  Always make sure to shred files whenever possible, including old discs or CDs with information on them.  If you have large amounts which need to be shredded, take advantage of local services which offer both on and off-site confidential shredding. Make sure the firm has a solid history and that they will provide you with a certificate of destruction as well as recycle all waste produced.  

Now that you know what to keep, for how long and how your company can benefit from proper records management, it’s time to develop your records management policy.  Address all the above topics in your plan and then commit to keeping your plan updated at least quarterly.  While becoming organized may take some time initially, your business will benefit and you’ll have peace of mind knowing your information is protected and finally manageable.