How to Create a Record Retention Schedule

Best practices to minimize risk

As your business grows, so does the associated number of records and documents. Organizing company records often takes a back seat to the immediate employee, customer, or production issues which means many companies today still have metal file cabinets holding their company’s paper records - some dating back to the company’s founding. To minimize legal exposure, maintain compliance, and control access to information, it’s increasingly important for companies to develop comprehensive record retention policies and practices.

Some areas of your business that likely need a better record retention strategy include:

• Legal documents
• Tax returns
• Personnel records
• Payroll information
• Accounting documents
• Bank statements
• Hiring records

Depending on your industry, you may also have things like patient records, vendor contracts, or customer financial documents to consider.

Six steps to a record retention strategy

Consult with the Experts. When determining a record retention plan, it’s best to start with your company’s compliance and legal counsel to ensure you are establishing the appropriate cadence and minimizing any unnecessary risk. If your company is a member of a trade organization, there may also be legal and operational resources available to help you determine best practices for records unique to your industry along with any federal, state, and local laws.

Start your Digital Transformation. Make a plan to move your vital documents from a physical space to a digital space. Bulk document scanning services can facilitate the process of moving your paper records into an electronic records system. Doing so will make your records retention plan much easier and benefit your business in many ways.

• Secure documents electronically instead of maintaining paper records. You don’t need to worry about someone accidentally leaving a confidential paper document laying around or having access to a document they shouldn’t.
• Find documents easier and faster. If your employees need to spend time digging through file cabinets that aren’t organized clearly, they are wasting time that could be better spent on meaningful work.
• Improve your response to a disaster. In the case of natural disasters like floods, fires, and storms, your paper files are at risk. Your business may not be able to recover from losing all your important customer and legal records.

Establish Organization and Access Parameters. Once files are digitized, it’s important to establish a clear organizational structure of the electronic documents along with outlining access restrictions. Through a document management system, electronic files should be indexed and accessible to those who have a legitimate work use for them or those who are legally required to access them. Record-keeping policies should also clearly outline the appropriate locations for different types of documents based on business process groupings, and access should be restricted to those file locations.

Create a Records Retention Schedule. Establishing a record retention schedule serves as a company’s legal authority to retain and purge records. The records retention schedule should outline all types of records and how long those records are required to be retained. This can vary by type of industry, business unit, federal guidelines, and state guidelines. It’s up to each business, in consultation with their legal counsel, to create a record retention plan for each area of their company. Doing so establishes a “good faith” effort in ensuring a consistent records management program.

Purge Records on Schedule. Your company’s records management policy should include how and when documents will be destroyed based on the schedule outlined. In addition, it’s a good idea to have an auditing procedure in place to ensure the requirements are being followed correctly. Failure to purge documents on the planned schedule could open your company to unnecessary risk. If you destroy records too soon and are not able to produce them during an audit, you could risk fines. You can also incur more risk than you should in legal discovery by keeping records beyond their retention dates.

Review Periodically. A record retention policy is dynamic and should be reviewed periodically (likely every 1-2 years) to determine if legal changes have impacted retention periods. Additionally, if business processes have changed, your record retention policy should be reviewed in accordance with those changes.

Start your digital transformation

While getting started on a record retention strategy may seem overwhelming, the team of digital transformation experts at EO Johnson is able to walk you through the steps and help you get started. We will help you think through your unique business records and determine which documents are in scope for digitizing from paper to electronic files. Once we have an inventory of records along with the retention schedule you developed, we apply that schedule to your documents. You may have some records ready to be destroyed right away, and we can assist with that. Other records deemed necessary for retention are digitized and indexed into a document management system. They are entered into the system with the appropriate destroy date and can be sorted and identified for the destroy process in the future.

Moving away from paper-based processes and embracing a digital transformation may come with some hesitation. But they are necessary steps in developing a secure records management system and coordinating a retention schedule that will ensure your business isn’t exposed to unnecessary risks.

Contact our team of digital transformation consultants today to get started.