To run an efficient business, it's essential to keep track of the paperwork. Contracts. Proposals. Invoices. Bills. Licenses. Even in the 21st century, when most paperwork is digital, file management is still necessary to keep your administrative operations running smoothly. Many of the principles of business document management stay the same, whether your digital filing system is on your laptop or in the cloud.
File Management Principles
The fundamental law of good file management is that the system should make it easier for you to find documents. If it doesn't, then it isn't any use.
A good document filing system, whether it's based in a steel cabinet or the cloud, should make filing less tedious and difficult; you shouldn't have to spend several minutes just figuring out which file this month's sales report goes in. It should also be easy to retrieve the information you want. Good filing isn't dependent on people: if your administrative assistant or IT person quits, their replacement should be able to figure out the system. File categories should be clear and easy to identify. The system should make it easy to identify and purge inactive records.
Flexibility is also important, particularly with software. A document filing system that locks your business into a single vendor or one specific computer platform could prove a problem down the road.
The system must also be able to handle growth. Files inevitably accumulate as your business grows, adds new customers and expands staff. A good system can handle more data and document storage than you expect to need.
Benefits of File Management
Good business document management can produce concrete benefits for your business. Faster filing and retrieving saves time and makes staff more efficient and productive. If a system reduces misfiles, that can save lots of time and problems. This is particularly true if you're going to court or undergoing an audit: not having key documents handy can lead to an unhappy outcome.
An efficient, well-thought-out system reduces the number of times you have to purchase filing equipment and the amount of space you need to store it. It also makes it easier to train new personnel to file.
Digital and Hard Copy
Using a digital file management system has considerable advantages. Digital filing makes it possible to search for documents by keywords, which can deliver the paperwork you need in a faster time. A good system has other advantages:
- It can store a variety of document types, such as word-processing files, emails and PDFs.
- It restricts access to confidential documents.
- It monitors who reads what document.
- If anyone makes changes, you can track them. If necessary, you can undo them.
- Controlling when older documents can be deleted.
- It's easy to access and edit documents with cellphones and other mobile devices.
Some documents, however, have to stay in hard copy, even if you scan and digitize them. Regulations often require you keep copies of business licenses and permits on paper, not just in cyberspace. Other documents that might be worth keeping in hard copy include annual reports, "doing business as" certificates, insurance documents and promissory notes. Depending on your line of work there may be specific regulations on document storage you have to deal with.
Physical documents are at risk for destruction from fire, earthquake, hurricane or simply a pipe that breaks and floods the office. Your business should take steps to prevent that:
- File documents in clean, secure, environmentally stable and fire-resistant containers.
- Make backup copies, either digital, microfiche or photocopies.
- Find a place to store copies off-site, so that if there's a fire or other disaster, they won't meet the same fate as the originals.
- Your backup storage location should be one you can access after a disaster. One advantage of cloud storage is that you can access information anywhere where the Internet still works.
Indexing Your Records
To get the most use out of a filing system, it has to be indexed effectively. Standard categories could include taxes, contracts, customer correspondence, lawsuits, accounts payable and accounts receivable, for instance. Your paper and digital files should follow the same indexing scheme. That will make it easier to train employees to know where to find paperwork.
Document Disposal Rules
When you plan your file management system, you need to settle on a good document retention schedule or the guidelines for how long to keep files. Even with a digital filing system, this is important: if your business keeps going and growing, eventually a search for "raw materials contract" or the like may turn up dozens of outdated documents.
Your document retention schedule has to consider both legal and business requirements. If you have documents related to your tax statement, such as credit card bills showing business purchases, the IRS says you should keep them a minimum three years after submitting the return. That's how long the IRS can ordinarily look back and audit you. Keep employment tax records for four years and hang on to returns that claim a bad debt expense for seven years.
Different rules apply to different records. You may have files related to environmental compliance, Securities and Exchange Commission filings, federal and state work-safety rules and discrimination lawsuits. Each regulator has its own requirements. You also need a policy for plain business records. For instance, you don't want to erase a contract before you've completed the job you signed for. Records related to ongoing litigation shouldn't be destroyed, even if it would be to your company's advantage.
It's your responsibility, or that of whoever runs your program, to know which records have to be kept and for how long. Whoever handles records should know company policy and train all their subordinates. Regular employees need to know some of this, too. If, say, an employee sends or receives an email that needs to be archived, they need enough training to recognize the necessity.
For physical documents, shredding provides the ultimate level of secure disposal. For digital files, you need procedures that delete them beyond recovery. Keep a report tracking which records you've disposed of and when you destroyed them.
Security and Privacy
Massive hacks and data breaches are a routine fact of 21st-century life. That doesn't mean they're trivial: a data breach can hurt your reputation, cost you money or trigger a wave of lawsuits or fines. Even information leaking within the company can cause trouble. Several federal laws require you to keep employee medical information confidential, for instance. If other employees can access confidential records, you could be in for a world of legal pain.
It's common to share documents online when multiple employees work on the same project. That opens up another window of vulnerability for confidential information getting out. File encryption or using a file sharing system such as Dropbox can help prevent leaks.
This is another reason to shred or delete old, unneeded files. Even if they're no use to your business, they might have confidential information about former employees or customers who wouldn't appreciate it getting out.
Whatever rules you get, it's essential to train all employees not only in how to file and retrieve data but also confidentiality rules and the records retention schedule.
- Sacramento State: Records Management
- DefendX: Three Must-Have Qualities of a Good File Management System
- Business News Daily: Document Management System
- TechTarget: Tips for Protecting Hard Copy Records
- IRS: How Long Should I Keep Records?
- Iron Mountain: Records Management Best Practices Guide
- Business Journals: Do Your Employee Medical Files Meet ADA Privacy Requirements?
- Network World: How To Protect Sensitive Files While Making Them Available For Sharing And Collaboration