Beginner’s Guide to Document Management

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Small businesses are collecting and creating more data than ever. Learn how to create a records management plan to make sense of all that chaos.

Back in the day, document management was all about consolidating tons of business documents into some sort of sensible filing system. Today, most of those physical files have been replaced by electronic records that practically take care of themselves.

And that can be a real problem, according to the Association for Intelligent Information Management (AIIM).

AIIM reports this technology allows companies to collect data faster than they can handle it. This results in serious legal and operational risks.

For example, suppose your small business accepts credit cards. How you collect and store this information affects everything from Payment Card Industry (PCI) security to state sales tax to your federal tax return. Without a comprehensive record-keeping strategy, you can create huge administrative headaches down the road — and even break the law.

This article walks you through the steps of creating a records management system that drives efficiency and ensures compliance.

Presentation: what is a recording?

A business record is a document or other evidence of business activity. Business records can be a data point such as a time card scan or a paper document filed in a locked cabinet.

When you think of records this way, it’s easy to see how every new technology you introduce to your business creates new data. And each record presents a specific value and risk to your business.

Consider these different types of records and the potential value and risk of the information they provide:

  • Electronic key cards record your employees’ entry into the building and their location at all times. Do you want to use them to locate personnel in an emergency? To monitor productivity? Do you have a legal right to?
  • Employee contracts with electronic signature are stored in your employee portal. Once an employee leaves, do you have to keep it on file? For how long?
  • Your e-commerce system logs every abandoned cart. What are you allowed to do with this information by law?
  • Your business collects credit card information over the phone. How do you record this information? Should it be stored? Destroy it?

These are the questions that a document management system must answer.

Screenshot of an AIIM infographic showing that 45% of information management professionals lack support for their initiatives.

Almost half of Image source: author

business leaders are not actively engaged in information management. Source: AIIM.

Benefits of a document management system

The more technology you use, the more options you will have for collecting, storing and sharing data. An effective electronic record keeping system helps ensure that you are meeting legal requirements, protecting employee and customer data, and getting the most out of the data you collect to drive your business success.

Consider these benefits:

1. Operational efficiency

A records management system ensures your staff have immediate access to the records they need, when they need them. This can improve productivity and help you control expenses. It also reduces administrative slippage when searching for documents or duplicating data.

Electronic records management software such as DocSend and eFileCabinet can help you manage documents efficiently and move closer to a paperless environment.

2. Security and privacy

According to IBM 2019 Cost of a data breach, the likelihood of a business experiencing a data breach was nearly one in three in 2019. Small businesses are not exempt; the report showed that small businesses incur higher costs relative to their size.

An effective digital records management system ensures levels of security for all digital records to protect your business from these risks.

Screenshot of the DocSend permissions feature.

Software such as DocSend can make managing digital records easier and more secure. Image source: author

3. Information

A strategic approach to business records also helps your business capitalize on the data you collect every day to drive organizational results.

For example, job applications and job openings are key human resources (HR) records that you can use to shape talent management strategy. Digital touchpoints such as content downloads can be used for customer journey mapping and targeted marketing.

4. Legal protection

Case management allows your business to respond quickly and efficiently to lawsuits and complaints. For example, if you terminate an employee who files a complaint of discrimination and retaliation, the EEOC may ask you to produce hiring and payroll records covering the entire department.

Knowing the legal meaning of your business documents and how long they should be kept protects your business.

5. Compliance

Regulatory authorities such as the Occupational Safety and Health Administration (OSHA), the US Department of Labor (DOL), and the Equal Employment Opportunity Commission (EEOC) require companies to store and secure company records for periods specific.

Payroll records must be kept for at least two to three years under federal law, and accident records must be kept for at least five years. Companies should be aware of the minimum retention standards that apply to each record they create.

Screenshot of eFileCabinet main navigation

eFileCabinet is another great choice for storing and organizing your digital documents. Image source: author

The 4 Phases of Records Management

Here are the phases your company should consider when creating a document management system.

Stage 1: Creation

A record can be created manually, received, or generated automatically through a transaction. It can be collected by your customer relationship management (CRM) system, received in the mail, typed by an employee, or recorded, like a Zoom meeting.

Stage 2: Ranking

AIIM estimates that 60% of data entering businesses is unstructured, leading to what the organization calls “information chaos.” To combat this, a document management strategy must ensure that all documents created by corporate systems are classified according to their value and risk to the business.

Proper classification of records allows for efficient filing, retrieval, archiving and destruction of documents.

Recordings can be classified into several categories. For example, a nondisclosure agreement can be labeled as having a digital signature certificate, as a confidential record, and as a personal document. Here are examples of record classifications:

  • Functions, activities and transactions
  • security level
  • Storage location and access
  • The duration of the conversation
  • Active vs Inactive

Phase 3: Interview

The next phase of a records management system is to maintain active records to enable security and access based on your classification system. This includes the physical and electronic storage of documents.

For example, training materials and employee manuals are often uploaded to an online employee resource library for easy reference at any time. Employee medical records may be kept in a locked cabinet for occasional reference only by a human resources manager.

Customer data can be created and maintained by sales staff in a CRM. Some documents such as tax returns can be stored both in online folders and in secure paper files.

The goals of your maintenance plan are to avoid duplicates, enforce version control, and allow efficient access to the right people.

Phase 4: Layout

Once records reach the end of their lifecycle, they should be permanently archived, disposed of, or destroyed.

To create a disposition plan, you will need to identify the retention period for all of your business records and create a plan to retrieve and dispose of them when appropriate.

Many companies are lax on disposal because it is so easy to accumulate and store data online today. But outdated data can overwhelm your records management system, interfere with version control, and hamper operational efficiency.

If you’re worried about destroying files, you can simply archive them instead. The important thing is to remove them from active use and maintain security protocols throughout the document’s lifecycle.

A place for everything

Chaos is costly in your personal life and your professional life. With so much data collected, created, and stored automatically today, creating effective filing protocols is more important than ever.

With a solid records management plan, you can protect sensitive customer and employee data, access it efficiently, and use it to improve decision-making.