The auditors tell you that they’re spot-checking for compliance and want to see all documents related to three particular transactions.
So begins the long process of locating, photocopying and refiling the physical documents. Soon, you realize you’ve missed an important set of documents. Misfiled, perhaps. But how would you prove they weren’t destroyed on purpose?That’s when you wake up, in a cold sweat.
The word “audit” is enough to give someone a nightmare. That’s especially true when you’re stuck with a paper-based system, instead of electronic or digital document management.
Because of its importance to an organization’s health, compliance is often included with a company’s governance and risk management strategies. Failure to comply could result in breach of contract, fines or even criminal penalties.
Meeting Compliance Requirements
Here are five ways that digital document management could help your organization meet various compliance requirements:
- Instant access to records: When you get a request for information, it’s easy to locate and access all relevant documents. Instead of digging through filing cabinets, just type in a keyword, such as a contract ID number. Then, at the touch of a button, you’re able to make these documents available for review, internal compliancy checks or audits.
- Provable rights management: Many industries are required to restrict certain types of information to those who have a legitimate business need for access. With paper documents, you might control this information by locking them in a file cabinet and giving the keys to certain people.
With an electronic document management system, it’s easy to secure your documents using digital rights management. You could restrict access to a certain document by individual user, group or business function, so that only the right people have access. This not only safeguards the documents, it also proves that you’re following regulations. Simply generate the security report and hand it to the auditor.
- Deletion controls: The ability to detect and prevent unauthorized destruction of documents is important in many forms of compliance. With physical paper, it’s hard to prevent accidental or intentional destruction, and difficult to prove that a missing document wasn’t destroyed.
With document management, however, it’s easy to set up deletion controls. As with configuring the rights for viewing certain documents, you have control over who (if anyone) is able to delete a document. This automatically prevents unauthorized destruction of documents, improving compliance.
- Automated audit trails: An audit trail should cover the document’s entire lifecycle, from creation to destruction. A digital document management system automatically maintains a complete log of everyone who has retrieved, printed, edited, emailed or deleted a document.
With the system in place, you always know exactly who touched a document when, and what they did. This helps you prove you’re in compliance and that no unauthorized user has read a specific document.
- Produce hard copies of documents: Most regulations in the United States require companies to provide hard copies of certain documents upon request. If you’re using paper files, this is a cumbersome, expensive process. With digital document management, you’re able to quickly collect the electronic documents you need and print them as needed. Avoiding manual retrieval and refiling is a huge benefit.
Managing Compliance Costs
Complying with regulations is only part of the problem for most organizations. The other challenge is the sheer cost of maintaining compliance: storing documents, following retention policies, retrieving documents for audits, etc.
Fortunately, several aspects of digital document management also reduce the cost of maintaining compliance.
First of all, electronic document management dramatically reduces the number of employee hours you spend on preparing for an audit. You no longer have to search through file cabinets, photocopy thousands of sheets of paper and prepare them for a third party. Simply search for the electronic documents you need and export them. From there, you have several options for delivering them: CD, DVD, hard drive or hard copies.
Next, document management allows you to automate many business processes, increasing efficiency. Some business processes must follow specific steps to ensure compliance, and that’s difficult with paper processes. You have to be able to prove that everyone understands the process and follows it.
When you build the compliance steps into digital workflows, however, people follow the predefined business process with no opportunity for variance. It’s more efficient, and easier to prove that the right steps were taken.
A document management system also offers savings through 100-percent automation of document retention policies and schedules. Managing retention manually is burdensome and time-consuming, so this is a significant benefit.
Last, but not least, digital document storage allows many companies to dramatically reduce the costs of storing paper documents either onsite or in a warehouse.
Almost all businesses have to deal with compliance, whether by contract, regulation or internal policy. In the past, managing the various requirements has been both difficult and extremely costly. But today’s businesses have the benefit of document management tools that make compliance easier and more affordable.
Ready to learn more about successfully implementing an ECM solution at your organization? Read our free e-book, An ECM Insider’s Guide: The 7 Factors For Success.