The Best Practices for Document Retention

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A document retention schedule keeps all employees up to date on storage policies.
A document retention schedule keeps all employees up to date on storage policies. (Image: financial report image by Christopher Hall from Fotolia.com)

Most business functions not directed by policies and procedures become chaotic and disorganized. Records retention is not one of the most exciting aspects of business, but it is one of the most vital. An organized system for document storage eliminates useless records and protects the business in the event of an audit. Knowing when to keep it and when to toss it is a crucial step in developing a successful business operation.

Universal Retention Schedule

All companies should develop a system for retention of records that is universal for all departments. It gets everyone on the same page when it comes to storing records. Research the laws and statutes for your business and operating sector. For example, a law firm may have different requirements than a small grocery store. If necessary, consult an attorney to create this system. Index the plan based on function and department. Make up a schedule and assign classification codes.

Records Inventory

The records inventory is a crucial step in managing retention. This is an accurate listing of all records, electronic and paper, within your organization. The listing should detail a title for each record, such as “General Ledger,” and the location of the document. Additionally, include a classification for records. This will be the benchmark of retention based on your company schedule. For example, compose a spreadsheet; the first column would be a title, “Accounts Payable Aging Report.” The second column header would be a classification, “Accounts Payable.” Column three might be a department, “Accounting.” The remainder of the spreadsheet could entail the location, “East Storage Room, Cabinet Four,” and the retention code, “Schedule A.”

Document Assessments

The evaluation process entails a company-wide analysis of on-site records to eliminate documents that exceed the retention period. This form of house cleaning eliminates the buildup of excess records. Utilizing the records inventory listing, destroy expired documents. Once completed, review all the storage and update the inventory listing. During this time, examine the laws to recognize any changes enacted since the last review. Schedule reviews annually, quarterly or monthly.

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