Records Management for Businesses: Understanding Best Practices

Businesses that apply proven best practices to their records management policies enjoy financial and strategic advantages over their competition. Complete and well-organized records help companies optimize processes and information availability, strengthen customer relationships, and safeguard financial health. Records management has also emerged as a mission-critical concept as regulatory, and compliance regimes become increasingly complex.

Conversely, incomplete and improper records management practices can have a significant negative impact on a business. Efficiency can suffer as employees commit too much time searching for critical files and documents; customer service also deteriorates when frontline representatives cannot access relevant information. Business leaders require complete information to arrive at correct decisions—and impediments can lead to potentially costly strategic missteps. The unavailability of data can also lead to noncompliance and carry expensive penalties and fines. Businesses that do not store their records properly also become increasingly prone to data breaches.

Adopting simple, proven strategies can help businesses improve records management and avoid adverse outcomes. Companies can also leverage emerging tech tools to maximize well-maintained and well-organized records' financial and strategic value.

What Is Records Management—and Why Is It Important?

Also known as records information management (RIM), records management covers the supervision, organization, administration, management, storage, and disposal of official company records in both paper and digital formats.

External standards apply to some forms of management, with tax records representing a prominent example—businesses must retain these records for prescribed periods. In other cases, companies use internal policies to guide and govern record and document management. Some examples of policy points include retention standards and procedures, maintenance schedules, and access protocols.

To understand the importance of records management, business operations professionals first need a sound working knowledge of what a “record” is. Put simply, documents contain information subject to change, while records cannot be altered. Records represent finalized files that serve an official purpose regarding a transaction, taxation, regulations, and compliance.

Business records can include many types of information; in the context of records management, they typically cover financial transactions and internal operations that fall under the purview of applicable regulations or compliance standards. Examples of such records include:

• Financial statements
• Contracts and agreements
• Payable and receivable invoices
• Bank transactions
• Tax payments
• Human resources documentation
• Employee pay slips

Some such records must be stored in accordance with legal guidelines. For example, the IRS mandates that businesses must retain their tax returns for two to seven years, depending on how the returns are used.

How Records Management Benefits Businesses

Efficient and compliant approaches to records management deliver essential business benefits. These benefits generally extend across three key categories:

• Cost reduction and efficiency improvements. According to estimates, only 5-10% of records have long-term value. Streamlined record and document management strategies ensure that businesses only retain required or relevant information; keeping only necessary records brings down costs while making access to records efficient.
• Compliance. Multiple regulatory and compliance protocols apply to business records. A few examples that govern data retention include the Health Insurance Portability and Accountability Act (HIPAA), the Fair and Accurate Credit Transactions Act (FACTA), the Gramm-Leach-Bliley Act (GLBA)—and the list goes on. All of these laws require records to be retained for a particular duration. Noncompliance with these regulations can result in fines and other costly penalties, making records management essential for businesses subject to these legal standards.
• Business continuity planning. Access to critical financial and transactional records is a pillar of business continuity and disaster recovery planning.

Understanding the Records Management Lifecycle

Business records go through four main stages during their lifecycles. At each stage, specific principles govern how records are managed and administered. Let’s take a closer look at these four stages:

• Creation or receipt. Some records result from internal processes, while others have external origins. In either case, the creation/receipt phase begins when a business creates or receives an official, unalterable record.
• The active phase. During the active phase, employees have a higher likelihood of needing to access the record. The organization needs detailed policies to govern the retrieval, usage, sharing, and storage of active records.
• The inactive phase. Inactive records are unlikely to be used by the organization but must still be kept for regulatory or compliance reasons. Hence, a records archive is an ideal place for such records.
• Disposition. When maintaining or keeping a particular record is no longer a practical or legal requirement, organizations can delete or dispose of it.

Best Practices in Managing Enterprise Records and Documents

Applying a systematic strategy can quickly improve the performance and effectiveness of organizational approaches to records management. To this end, experts recommend using an eight-step system to organize and govern data management and archiving. Let’s examine this best practice system piece by piece.

Establish and Train a Records Management Team

Assign a qualified individual or team to the task of organizational records management. Provide training covering the internal data management plan and best practices for accessing, sharing, storing, and managing records.

Create an Inventory

First, make a complete list of all existing records. Earmark irrelevant records for deletion and finalize an inventory of records to be retained.

Set Up a Records Lifecycle Plan

Assign each record in the inventory to a schedule covering its creation, active phase, inactive phase, and disposition. Note the time each document will move from one phase to the next.

Comply with Legal, Retention, and Privacy Regulations

External data retention regulatory policies, legal reporting, audit, data privacy, and safety policies should accompany records management strategies and adhere to high-security standards.

Choose a Management and Storage Solution

Businesses increasingly use digital and cloud computing technologies as the backbone of their records management systems. Scan any necessary records that exist only in hard-copy form and store them digitally in your electronic records management system. Enable a multi-location and comprehensive backup and recovery mechanism.

Formulate a Records Management Policy

Set clear standards regarding the access, retrieval, sharing, and storage of records. As a critical part of this process, safeguard sensitive data with elevated cybersecurity and information security tools and strategies.

Have a Backup Plan

Ensure that the retrieval and recovery of critical records are covered in the organization’s continuity and disaster recovery planning.

Evaluate and Adjust Your System Over Time

Monitor the performance of the organization’s records management plan, and watch for shortcomings, inefficiencies, and security vulnerabilities. Adjust the program and the management system as needed to account for and correct any accompanying issues.

Finally, ensure that organizational plans cover all enterprise records and documents. The program should cover not only financial and transactional records but also HR documents and any customer or client data captured throughout business operations.

Consider the Data Management Advantages of an All-In-One Content Services Platform

Intelligent approaches to records management boost operational efficiency, ensure compliance, and reduce liability. Growing businesses require a carefully formulated data management plan, as they tend to generate records and documents in ever-increasing numbers.

For cost-effective and coherent records management support, consider the benefits of an all-in-one content services platform. SOLIXCloud ECS offers a low-cost, compliant, and secure option for businesses seeking a user-friendly records management system with self-service access. To learn more, contact SOLIX today for a free, no-obligation demo or Free Trial