Your company has documents that are currently in use and those that are inactive but must be kept for a set time or indefinitely. Inactive documents are usually referred to as records. Terminating a document's active phase doesn’t diminish its importance. In this blog post, we’ll discuss the significance of document archiving and explain the advantages of using a document management system (DMS) to digitize the process.
Table of Contents
What is document archiving?
Document archiving is the process of placing inactive documents into long-term storage while ensuring they’re easy to retrieve at a moment’s notice if needed. It should provide security and enable compliance with data retention and privacy regulations.
A document becomes a record once a business process is completed. Records may also include drawings, photos, and videos. Records are kept in their final state in case they are required for verifying an action. They cannot be changed or revised.
Paper records vs. digital archiving
You may wonder about the effect digital archiving will have on meeting compliance requirements. Actually, there are no explicit laws or regulations that mandate saving documents on paper. In most cases, electronic documents meet the same legal and compliance requirements as paper does. There are still documents that should be kept in a paper format. They include wills or trusts, notarized contracts with raised seals, titles to property and promissory notes. Often, companies scan these documents and store them digitally as well to create an electronic back-up.
The two most important US regulations that support the validity of digital records and signatures are the US Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transaction Act (UETA).
E-SIGN facilitates the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered electronically.
UETA establishes the legal equivalence of electronic records and signatures with hard copy records and manually signed signatures. With certain exceptions, this act eliminated barriers to electronic commerce. Both acts state that if there are other laws that specifically require hard copy, those laws take precedence.
Deciding what to archive
The documents you chose to archive depends on your company’s need to refer to them, and industry and legal regulations that are specific to your business. These documents may include:
- Legal: Contracts, agreements, certificates, compliance records and legal correspondence
- Financial: Invoices, receipts, financial statements, tax records and audit reports
- Human resources (HR): Employee benefits documentation, payroll records, performance review sand HR policies and procedures
- Correspondence: Emails, letters, memos
- Reports: Research, project proposals and feasibility studies
- Corporate policies: Policies and procedures, manuals, guidelines and standard operating procedures
- Customer records: Customer orders, client contracts, customer feedback and sales records
- Intellectual property: Patents, trademarks, copyright registrations and licensing agreements
- Educational records: Academic transcripts, student records and educational policies
- Projects: Project plans, progress reports, meeting minutes and design documents
- Technical specifications: Manuals, engineering documents and drawings
- Environmental and safety documents: Safety procedures, incident reports, and certifications
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How does the digital archiving process start?
When a document or other media is captured or created in your digital system, it is indexed and stored for active use. Index fields contain metadata such as document type, project or customer name, date of creation or receipt, and other terms that your departments are likely to search on. These data fields can also contain information about the date a document should be archived and deleted.
Many archiving workflows are triggered by the date a document is scheduled to be transferred into long-term storage. If the archiving process is not kicked off by a specific date, there are other fields your team can use to initiate the automated workflow. For example, a staff member can add a status field that archives files for companies that are no longer customers. Once that field is populated, the document workflow will store these records automatically.
A digital stamp can also be used to start a workflow. The stamp can be applied to every document in a folder at one time. You can configure the system to archive every document that is stamped with a certain workflow trigger. For example, this method can be used to archive documents associated with a completed project or an expired contract.
Why is document archiving important?
Documents keep your organization running, so safeguarding them should be a top priority. In addition to the overarching benefits of staying compliant with legal regulations and keeping all documents in a centralized location, archiving helps your company to:
1. Reduce costs and save time
Digital document archiving eliminates the cost of physical storage, streamlines document retrieval and minimizes the risk of data loss. Your company will also avoid fines for noncompliance.
2. Improve security
Look for a Document Management System (DMS) that provides user authentication, HTTPS data transfer, 256-bit encryption, multi-level access control and traceability, and robust protection against malware and other forms of cyberattacks, among other features.
3. Become audit proof
With electronic document management, you can provide secure, online access for auditors to free AP and accounting staff to concentrate on their own work. Business records are fully searchable in a few clicks and easy for auditors to find. If you’ve integrated document management with your financial software, auditors can access supporting information without leaving your accounting system or ERP.
4. Be ready for anything
Archiving contributes to business continuity by providing multiple backups of inactive documents. In the event of a natural disaster or system failure, your company can recover critical information from your archive quickly and easily. This minimizes downtime and business disruption.
5. Meet customer expectations
Archiving systems help organizations meet customer service expectations and comply with service level agreements (SLAs) by providing quick access to all customer-related documents and records.
6. Improve workflow efficiency
Streamline management of the document lifecycle by automating processes such as capture, indexing and retention schedules. This improves overall workflow management and reduces human intervention.
7. Gain insight and create transparency
Having a historical record of activities is invaluable for retrospective analysis,
decision-making and learning from past experience. In addition, audit trails can enable you to see who accessed archived records adding to your understanding of how the information is used.
What are the legal requirements for document archiving?
These are examples of laws that affect the archiving process.
Data privacy
There is currently no all-inclusive US federal legislation that protects data privacy. A collection of federal, state and industry laws and offer varying levels of protection. You should be aware of these regulations and other initiatives that are specific to your business or industry.
General Data Protection Regulation (GDPR)
GDPR mandates responsible handling and storage of personal data for citizens in the European Union (EU) and it applies to any US company that does business with the EU. Companies are required to implement measures to protect the rights and privacy of individuals, including the secure archiving of relevant documents.
Health Insurance Portability and Accountability Act (HIPAA)
HIPAA ensures the protection of personal health data, including hard copies and information shared verbally or digitally. Its purpose is to establish confidentiality systems that restrict the use of protected information only to those who need access to it. HIPAA covers health care facilities, billing companies, health plans, electronic medical record companies, non-patient care employees, and students.
HIPAA addresses how protected health information (PHI) is used and shared by organizations subject to the rule: the "covered entities" and "business associates." It also details individuals' privacy rights to know and control how their health information is used.
California Privacy Rights Act (CPRA)
CPRA is an extension of the California Consumer Privacy Act (CCPA). It gives California residents the right to view data a company collects about them, receive a copy of this data, find out whether the information has been sold or shared with another company and to say no to further sale of their data. Californians can also request that their data be deleted.
The law impacts businesses that make over $25 million in gross annual revenues or maintain personal information for 50,000-plus consumers, households and devices. Additional regulations apply to businesses that have collected data on 4 million or more consumers.
CPRA is the most comprehensive state law on the books today. As of January 2024, 15 states have enacted data privacy laws like CPRA. Several other states are poised to follow their lead.
Financial reporting
Sarbanes-Oxley Act (SOX)
SOX applies to all publicly traded companies, their subsidiaries, and foreign firms trading publicly in the US. Accounting firms auditing these companies are also regulated by SOX. The regulation requires companies to implement internal controls to improve financial reporting.
SOX was enacted in 2002 in response to a series of corporate scandals involving companies such as Enron and WorldCom. It increased fines and criminal sentences for fraudulent reporting. Although there is no legal obligation for nonprofits and private companies to adhere to SOX, many consider it a best practice.
A closer look at document retention schedules
Many business records must be kept for a specific period according to federal, state, local or industry laws and regulations. These laws include tax, employee benefit, occupational safety, and wage and hour provisions. As you’ll see in the examples below, these retention periods differ significantly making it nearly impossible to keep track of them without an automated system.
| Law or regulation |
Retention period |
| Fair Labor Standards Act (FLSA): Records to compute pay, which include timecards, work and time schedules and records of additions to or reductions from wages |
3 years |
| Health Insurance and Portability Act (HIPAA): Safeguards Protected Health Information (PHI) which refers to information that can identify an individual. |
At least 6 years |
| Sarbanes-Oxley Act (SOX): Financial records of public companies |
5 years |
| Industry-specific regulations |
|
| Occupational Health and Safety Act (OSHA): Work related injuries and illnesses |
5 years |
| Environmental Protection Agency (EPA): Companies that produce or handles hazardous material or waste or produce, process or store certain chemicals |
10 years |
| Federal Drug Administration (FDA): For principal investigators in clinical trials after a drug is approved |
2 years |
Which software works well for secure archiving?
A document management system provides the ability to retrieve archived records instantly for reference and to stay compliant. It stores both active and inactive electronic and scanned paper documents and secures them with comprehensive access rights, encryption and protection against cyberattacks. The solution can create multiple backups and log changes, as well as control who accesses, prints or deletes documents or records with complete audit trails.
When you’re ready to take a closer look at your company’s archiving process, using a DMS simplifies and automates the process, eliminates potential human error and lightens your staff’s workload — so, your team can focus on what’s really import. It’s an invaluable tool for companies looking to implement an effective long-term data storage strategy.
The information in this blog post is not intended as legal advice. It is to be used for educational purposes only.