Filing and records management is a vital - if uninspiring - part of any business. Information is a major element in many companies' competitive advantage, but it can only be utilised if it is available when needed.
At the same time, every business can benefit from cutting the wasted effort associated with looking for misfiled information and misplaced files. The same principles apply to both computer and paper records.
This briefing outlines:
- How to organise your business records.
- How to maintain security.
- Archiving for long-term storage.
- How long specific records must be kept.
1 'Family-tree' filing
You will need one single filing and records system to ensure that people can find the information they need, when they need it.
1.1 Decide the main categories for your filing system. Give each a code.
- For example, sales (SA), accounting (AC), human resources (HR) and general administration (GA).
- Have a project files category (PF) for whatever falls outside the main categories.
1.2 Divide each category into sub-categories.
- For example, divide HR into HR/recruitment, HR/pay, HR/performance appraisals, HR/training, HR/employee files.
1.3 Further divide these sub-categories into sub-sub-categories, to whatever level is necessary.
- For example, if you need to file the CV of a potential secretary (for the first time), you might create a new file called HR/recruitment/candidates/secretary/potential.
1.4 Store files where they are needed, in alphabetical order.
For example, if customers have named files, these can be stored near the sales team, in order eg SA/customer/Amis.
1.5 Businesses with complex filing systems often use a code instead of a name.
- For example, potential secretary candidates might be filed in HR/1/2/1/1 (where the first 1 signifies recruitment, the 2 means candidates, the next 1 means secretary and the last 1 means potential).
Some information needs to be split between two files.
- Record the usefulness of the training course in the HR file HR/training/IT.But record how Smith performed on the course in Smith's personnel record - HR/employee file/Smith.
Some information needs to be copied into two files.
Problems occur when people do not file items within the main system.
- For example, when the person running a training project effectively sets up a second filing system, filing all the information in his or her own 'work-in-progress' file.Or if the information is all filed under Project/training, thus ensuring that this information is never united with related information in the main training files. The danger is that almost anything at all can be put under the project category.
Six filing guidelines
Know what you have got.
- Even in the smallest business, people often waste hours collecting information the business already holds.
Know where information has been put.
- If you cannot find your research data on customer order sizes, you cannot use it to plan your marketing.
Store information efficiently.
- Make sure the system you use closely matches the needs of your business.For example, an employment agency will need vast 'people' and 'pay records' categories, with room for many sub-categories under the main headings.
- Files stored electronically take up a tiny physical space and can be shared easily and searched quickly.It may be worth scanning paper files for computer storage, if you hold large amounts of paperwork. For example, in an insurance brokerage.
Use and re-use the information that you have captured.
- Data filed on a computer database can be 'sliced' in different ways and viewed from several angles to yield different types of information for different purposes.
Do not hold on to records longer than you need to (see 6 and 7).
Dispose of old records safely (see 4.5).
- Personal files and commercially sensitive material must be shredded.
- Consider recycling, where appropriate.
2 Managing the system
2.1 Give one person overall responsibility for your filing and records system.
- Make each manager and individual responsible for managing information within the context of his or her job.
- All records should be available to all those who need them to carry out their work (with appropriate and necessary safeguards for personal and sensitive information).
- Communicate the basics to all employees.
2.2 Ensure that new files are only created with specific approval of the person responsible.
2.3 Good indexing and titling are essential.
- A file's title must be meaningful and must accurately reflect its contents.
- Anyone who knows your system ought to be able to go straight to the right file nine times out of ten.
- If the nature of the contents shifts, the file's title should not usually be changed. It is better to open a new file.
2.4 Develop a clear tracking system for files.
- Ensure that files which are removed from their normal locations are signed out, so that they can be traced.
2.5 Do not allow files that spring up around projects to undermine the system.
- Make moving project data into the main filing system the final phase of any project.
2.6 Discourage the growth of personal filing systems.
3 Making it work
3.1 Write file names on the spines of (narrow) folders or ring binders, writing from the top downwards. Consistency means all the titles on a shelf can be read at a glance.
3.2 If it is not obvious, put an outline of the contents on a record sheet in the front of each file, with dates for each update.
3.3 Use colour to make files easier to use.
- Use a differently coloured file for each category. For example, red for sales and green for accounting.
- Use coloured dividers to separate sections.
- Use coloured paper (or mark the top right corner with a highlighter pen) for important documents. For example, an invoice, a contract or a progress summary.
3.4 Do not let working files get too fat.
3.5 5 Where documents are created electronically, store them on PC hard drives or on local servers where employees can access them - subject to appropriate accessibility rules.
- Discourage employees from saving work-in-progress and other files to their PC desktops. Files saved to the desktop may not get backed-up and could be permanently lost should the PC fail.
3.6 Records of one-off enquiries that do not fit in anywhere else should be filed in date order in a 'general enquiries' folder.
In any business, some information needs to be kept confidential, with access restricted to certain employees, or kept from outsiders.
4.1 Confidential documents must be kept in locked cupboards or filing cabinets.
- Have a simple way of classifying and marking confidential files. For example, by adding an asterisk after the file's name.
4.2 Confidential material in computer files can be given appropriate levels of protection.
4.3 You must have back-up systems in case of loss, theft or damage to files.
- Regular computer back-ups are essential.
- Back-up copies of important files must be stored in a secure, off-site location.
4.4 Install virus protection to safeguard information stored electronically.
- Computers connected to the internet should also be protected from unauthorised access with a firewall.
4.5 Dispose of old files and computers containing confidential information in a secure fashion.
- Paper records should be shredded or disposed of through a recognised waste contractor.
- Hard drives on redundant PCs should be reformatted to make all the data on them irretrievable. Otherwise all emails, for example, will be retained.
5 Legal issues
5.1 The Data Protection Act covers how you must handle and store personal information.
5.2 You are legally required to keep specified tax and financial information for a set period (see 7).
5.3 In any business, some information needs to be kept confidential, with access restricted to certain employees or kept from outsiders.
5.4 Include clauses restricting how employees may use company information in each person's terms of employment.
- For example, sales people may try to take a copy of the sales database when they leave.
6 In the longer term
6.1 Be clear about how long you want to keep different types of file - for your own business reasons - and how long you are compelled by law to keep them (see 7).
- Keep long-term records in good condition by storing them in boxes.
- Move old records out of the main filing system and into an archive to cut costs and storage requirements. This helps keep the filing system efficient and uncluttered.
6.2 Apply sensible disposal schedules that encourage people to get rid of material as soon as it is clearly not going to be needed.
6.3 If you need access to a lot of archive files, consider using a records management company.
- Each file is bar-coded and stored ready for immediate delivery to you when required.
- Legal, accounting and insurance companies use these services, as they cannot afford to mislay customer records.
Record management companies offer consultancy services and can work with other suppliers (eg software houses) to provide an integrated service.
7 How long is long-term?
7.1 Accounting and tax records for an ordinary limited company must be retained for at least six years after the end of the tax period they relate to.
- Self-employed sole traders or partnerships must keep their records for at least five years after the 31 January filing deadline.
- If you file your tax return late, or HM Revenue & Customs starts an investigation, you may need to keep your records longer.
7.2 Pay records must be kept for a minimum of three years after the end of the tax year the earnings relate to. This includes sickness and pay records, and records relating to maternity, paternity and adoption pay.
7.3 VAT records and documents must be kept for six years.
7.4 Contracts should usually be kept for six years after the contract ends, though contracts under seal (eg deeds) should be kept for 12 years. Legal claims under a contract cannot usually be brought outside these limitation periods, though there are exceptions.
7.5 Health and safety records should be kept for at least three years.
- Records relating to hazardous substances may need to be kept longer. For example, asbestos records should be retained indefinitely.
7.6 The requirement to retain your compulsory employers' liability insurance certificates for 40 years ended on 1 October 2008.
- Employers are still required to display their certificate of insurance at each place of business. The certificate can be made available to employees electronically providing all employees can gain access to it.