This complete guide covers records retention definition, schedule, policy, and its importance to organizations.
Records Retention Definition
Records retention refers to methods and practices organizations use to maintain the important information for a required period of time for administrative, financial, legal, and historical purposes.
It applies to paper documents as well as the retention of electronic records such as word documents, spreadsheets, scanned papers, videos.
A record is considered as evidence of certain events that took place within an organization such as purchase order, contract approval, or correspondence.
The duration of time (retention period) specifies how long records should be retained before they are destroyed. Organizations usually define the business document retention period based on multiple factors such as the nature of the business documents, industry regulations, or business needs. Other information is defined by laws and regulations.
In the United States, for example, certain financial and tax records must be stored for seven years due to IRS regulations. This could change if the industry has certain laws or if you need to keep them for a longer period of time.
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The business document retention period is usually declared via well-defined policies and schedules.
Businesses need to have a well-established and routinely updated retention schedule to ensure that information is retained as long as it is operationally and legally needed and other information is disposed of systematically based on disposal schedule of records.
Using an RM system or a DMS will help
- Control the creation, declaration, classification, retention, and destruction of records. That will firmly result in improved compliance and minimize litigation risk.
- Provide accurate, timely, and full information to enable effective decision-making.
- Provide information and maintain records at the lowest possible rate.
- Process collected data as quickly as possible.
Check out this fully detailed article covering the difference between document management and records management
Business Records Retention Schedule
The retention schedule, also called data retention schedule, is the core foundation of an effective records management initiative. The purpose is to define how different types of records are managed.
In addition to how long they should be kept to comply with different laws and regulations requirements.
It is a guide that categorizes the many kinds of documents you have and how long they must be kept. It is based on analysis into all of the legislation and laws that regulate the document in your legal jurisdiction, as well as any business rules that apply.
A well-established and routinely updated general retention schedule is crucial. A company-wide management strategy will eliminate fines and penalties by ensuring full compliance with laws and regulations.
Records retention schedules are frequently included as part of a data retention policy, which is an established methodology for storing information depending on business needs.
The Importance Of Records Retention Schedule
Not all records should be maintained and the cost of managing and maintaining them would have a significant effect on the budget and would necessitate more storage space.
While it is necessary to clean away clutter, throwing the incorrect paper or deleting a crucial e-mail might have negative implications. In a litigation, not having a document might make the difference between winning and losing.
By having a general retention schedule for all business units, businesses can
- Reduce Storage & Operational Cost: Maintaining an enormous number of records requires time, money, and labor. A properly executed policy will help to save money on physical storage by controlling the growth of data volume. Also, it will help improving accessibility & reachability.
- Reduce Litigation Risks: Keeping information for more than it is legally stated or destroying documents that should be available for a definite time will surely expose your business to different types of fines, penalties, or other legal consequences.
- Improved Security: Protecting information that is critical to business operations is extremely important. It will minimize data leakage and make sure information is available if need be.
Document or Record Retention Policies
These are the policies and procedures that regulate document classification, collection, retention, and destruction. This is crucial when you need to demonstrate your good faith intentions to protect critical documents.
Usually document retention policies should answer these questions:
- Retaining Records: Which records should be kept (taxes, legal documents, Accounting, payroll, etc.)
- Records Disposal Schedule: How long should they be kept (months, years, trash/shred/destroy)
- Document Form: In which form the documents should be retained (paper, digital, etc.)
- Where To Store: Warehouses, physical cabinets, digital system.
A strong record retention policy will also minimize litigation threats and discovery costs, as well as the time it takes to recover from actual cases. Document destruction in compliance with a fair corporate record retention program will assist in protecting the company from legal risks.
The Importance Of Automating Records Retention
Depending on industry regulations and business needs, organizations must have a flexible system to configure the retention period based on a predefined schedule.
Good records avoid audit findings and, perhaps, damages in a lawsuit; so, critical documents should be available and easily accessible when required.
Having a system to automatically manage the destruction of records will help in
- Reduced Human Errors: When we automate human processes, the business operations will run more effectively and with less error-prone. In case of retention & disposition, automating the destruction of records based on the schedule defined will make sure that no expired information retain.
- Increased Employees Productivity: Less manual & repetitive tasks will help your employees focus on more crucial projects. That will surely improve their morals & increasing office efficiency.
- Improved Compliance: Using a system to automate the destruction of electronic records will surely improve compliance with different regulations requirements. Companies need to verify that only information that needs to be retained is available.
Benefits Of Using A Digital System For Records Retention
Organization should adopt a system to handle their electronic records lifecycle to achieve the following
Dynamic Schedule Based On Classifications
The disposal schedule of records should be set based on their classifications.
Classifying information associated with legal and operational retention requirements and setting their retention periods will allow you to define the document retention policies to comply with your current rules and regulations.
Powerful RM or ECM solutions should give the ability to monitor records throughout their lifecycle. In that case, employees will be able to get insights about their information, status, retention periods, and even assigned disposition dates.
Automated Destruction Of Records
The system should automatically be able to either dispose of or archive records based on their schedule.
This automated process is essential for reducing human error-prone thus reducing the risk of non-compliance.
Every organization should have a well-defined and routinely updated retention policy. That is extremely essential to be fully compliant with different laws and regulations which will result in cost reduction and increased employee productivity.
A record retention program is essential for a variety of reasons. A records retention program can help you avoid lawsuits while also ensuring compliance with federal and state rules and regulations.
What is Records Retention?
It refers to methods and practices organizations use to maintain important information for a required period of time for administrative, financial, legal, and historical purposes.
How long should you retain records and documents?
The retention period is usually declared via well defined policies and schedule. It is very important for organizations to have a well established and routinely updated retention schedule to ensure that information are retained as long as it is operationally and legally needed and other information are disposed in a systematic manner.
What is the purpose of record retention?
A well established and routinely updated retention schedule is extremely important. An organization-wide management strategy will eliminate fines and penalties by ensuring full compliance with laws and regulations.
What is record retention period?
The duration of time aka retention period specifies for how long records should be kept before they are destroyed.