How To Develop A Document Retention Policy

What is a Document Retention Policy?

A document retention policy is a series of standard operating procedures that guide your business’ handling, storage, and destruction of documents. So, how does a document retention policy (DRP) help your business? Well there are three main ways it helps your business, which range from operational benefits to legal safety.

A document retention policy provides your business with increased profitability and efficiency, safeguards for litigation, and helps your business maintain regulatory compliance. Let’s take a close look at how a document retention policy provides each of these benefits.

A Document Retention Policy Can Increase Profitability and Efficiency

The procedures developed in your DRP will reduce the time spent handling and storing each document. Additionally, it will reduce document bloat within your organization. A document retention policy will help you determine and monitor who should have access to which documents and help you find the right documents quickly.

A Document Retention Policy Provides Legal Safeguards to Your Business

If a customer owes your business money or a contractor has failed to fulfill their obligations to you, having the proper documentation will give your business legal recourse and the means to prove it.

Similarly, if you are involved with legal proceedings with another business, you could be held liable if you’re unable to produce the necessary documents due to destruction or misplacement.

A document retention policy will provide your business with procedures for how to store and destroy documents in a way that supports your business legally. A DRP can help you know when to suspend document destruction in case important files are shredded.

A DRP Helps Your Business Maintain Regulatory Compliance

Depending on your industry, you may be required to keep certain documents for a set period of time. For example, many businesses in the health field, such as hospitals, may be required to store or destroy documents in accordance with EPA regulations or HIPAA guidelines. Financial companies will want to keep their tax documents safely preserved for at least six years for auditing purposes.

Overall, a document retention policy will help your business identify the documents that need to be retained to maintain compliance for your industry. A well-planned and executed DRP can take the guesswork out of locating files and protect your business from legal and regulatory vulnerabilities.

How to Create a Document Retention Schedule for Your Business

​Clearly, having a document retention policy in place provides an array of benefits to your business. But how do you make one? Well, to execute a successful document retention policy for your business, there are five key steps you should follow: selecting a document manager, identifying pertinent documents, determining which should be stored, creating a file organization system, and implementing a document destruction plan. Let’s take a closer look at each of them.

Select a Document Manager

The first step is to select a person within your business to serve as the administrator of the document retention policy. This should be the person who will become the most familiar with your document retention policy. They should have the authority to implement it, teach other employees to follow it, and provide answers in any situation the policy doesn’t cover.

​Crucially, this person should be able to stop the destruction of documents when necessary, and quickly retrieve critical business documents.

What Kinds of Documents or Records do you Have or Use?

Next, it’s important that your business take a close look at what kinds of files and documents they need to store. Each business will have documents they need to keep track of, such as employee records, tax documents, various receipts, and much more.

On top of that, each industry will have specific documents that need storage, protection, or destruction. We won’t belabor the countless types of records this could be, from financial institutions’ accounting records to law firms’ deposition transcripts, but the important part is identifying the key kinds of documents and records your business needs to store.

Which Documents are you Required to Keep?

When you’ve identified the documents that your retention policy should be focused on, it’s time to determine which documents you need to store or destroy. You’ll want to know how long you need to keep a document for liability and compliance reasons, as well as to know when it will become nothing more than a burden on your file organization system.

This is also a good time to think about how your business stores and organizes files. You’ll want to consider the following:

  • How are files managed?
  • Where are documents stored?
  • Who can access the files?
  • Does your business follow a standard naming convention for documents?​

This becomes more and more important as files build up and the retrieval process becomes more tedious, and storage becomes more costly. Coming up with a clear plan for storing, retrieving, and creating documents will largely simplify the entire process of document retention and destruction.

Document Destruction

Finally, after a document has been held the designated amount of time, or holding it further has been determined to be unnecessary, there comes the time to destroy it. Documents should be rendered unreadable, so shredding is the best and most common method of document destruction.

Document destruction is equally as important to your DRP as storage, as your business could incur liability if you’ve held a document too long and it falls into the wrong hands. However, as document destruction becomes commonplace after you’ve implemented your document retention policy, it’s crucial your DRP administrator is able to stop the presses and prevent documents from being shredded if you’re in the litigation process.

R4 Services Can Help Keep Your Business Safe & Compliant

Developing a document retention policy is critical to enhancing your company’s security, profitability and regulatory compliance. But it’s also important to review your records annually and decide what can stay, and what can be purged. Just be sure to invest in secure, confidential document shredding services to protect your company’s critical information.

Every organization will come to their own conclusion on the timing of document destruction. It’s important to weigh the risk factors and your litigation strategy, and make the right decision on the timing of purging your company’s records.

Need help with securely destroying your confidential information this year? Let R4 Services help you achieve compliance and reduce costs.

Have questions? Give us a call today to discuss your needs!