Records Management: What It Is and Why You Need It

Records management is a structured approach that determines how records are stored and managed throughout their lifecycle.  In this article, we’ll tackle the basics from explaining the difference between a document and a record to defining its benefits and goals.

Table of Contents

• What is records management?
• Why is records management crucial for businesses?
• What are the benefits of effective records management?
• How does modern records management work?
• Why use a document management system for records management?

What is records management? 

A document contains information in active use. In contrast, records are evidence of a transaction, decision or commitment that an organization or individual has made. They are stored in final form in case they’re needed to confirm that an action took place. Records management ensures that this information is organized, accessible, and maintained in accordance with legal, regulatory and operational requirements. Companies, non-profits, educational institutions and government agencies are subject to retention requirements.  

The process involves securely storing records, disposing of them when their retention period elapses and preserving records that must be kept permanently.  

 Common record types include: 

• Contracts: When terms are agreed upon, they have been signed by all stakeholders and are ready to be executed   

• Invoices: When they are approved and paid 

• Real estate closing statements: When property is transferred to a new owner 

• Expense reports: When the report and accompanying receipts are submitted, and the employee is reimbursed 

Some documents can be disposed of as soon as they are no longer useful and never become a record. They usually include items such as drafts; incorrect versions of documents that contained errors in spelling, grammar or format; duplicates and auto-generated notifications and reminders. 

Why is records management crucial for businesses?

Records management isn’t just another “nice to have.” Although records are no longer needed to carry out daily tasks, they’re still an essential reference. Your staff relies upon them when, for example, they need to answer questions from customers, suppliers or service providers.  Responding to auditors and proving compliance are other situations when well-organized records are vital. 

Information governance establishes business protocols and processes and defines which function is responsible for ensuring they are done. Records management is an important part of an organization’s overall governance structure.  

These are some of the most significant supporting roles that records management plays in supporting the overall objectives of information governance. 

Risk management: Risk management identifies and addresses vulnerabilities that could affect an organization’s financial health, data security, reputation and legal exposure. Robust records management mitigates risks associated with incomplete record keeping, data breaches, unauthorized access and legal disputes. It supports the preservation of vital records and helps organizations plan for the future.  

Compliance: Companies are subject to laws and regulations governing the retention and protection of certain types of information. To ensure your company continues to be in compliance: 

• Keep up with recent changes in records management regulations 

• Understand the consequences of violations 

• Identify weaknesses in your present records management procedures  

Putting the past in context: Records serve as a history of an organization's activities, decisions and achievements. They provide a basis for analysis and future planning. 

What are the benefits of effective records management? 

Records management improves efficiency, streamlines operations, enhances data protection and can save businesses money.  

• Efficiency and productivity: Well-organized records contribute to operational efficiency. Employees can quickly locate and retrieve information, reducing time spent searching for records and improving overall productivity.  
• More informed decision-making: Access to accurate and timely information is crucial for informed decision-making. Records management ensures that decision-makers have reliable data at their fingertips to make the right choices for the business and its employees. 
• Cost savings: Effective records management can lead to cost savings by decreasing physical, reducing the risk of litigation and streamlining business processes. 

How does modern records management work? 

Each record type has a predetermined lifecycle that takes it from creation to disposal, with each stage demanding careful attention. Digital tools play a vital role, offering automated solutions for categorization, indexing, secure storage and archiving and disposal when their retention period is over. 

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, trusts, notarized contracts with raised seals, titles to property, checks and promissory notes. Often, companies scan these documents and store them digitally as well to create an electronic back-up. 

As technology advances, so does the way records management works. Below are some key aspects of modern records management: 

• Digitalization: Modern records management is usually digital, with an emphasis on creating, storing and managing records in an electronic format. This facilitates easier access, retrieval and sharing of information. 
• Automated retention schedules: Modern records management involves automating and adhering to retention schedules required by state, federal or industry regulations and your business needs. These schedules outline how long records should be kept and when or if they can be disposed of.
• Cloud-based solutions: Many organizations opt for cloud-based records management solutions. This allows for remote and mobile access, scalability and enhanced security. Plus, there’s the added benefit of real-time data backup in multiple locations and rapid disaster recovery.
• Advanced security measures: Given the increasing threats to data security, modern records management incorporates robust security measures. This includes encryption, access controls and regular security audits to protect sensitive information.
• Automation and AI: Automation and artificial intelligence (AI) are increasingly integrated into records management processes. This includes automated classification of documents, intelligent search capabilities and the use of AI for data analytics to derive deeper insight.
• Integration with business processes: Records management is more effective when integrated with an organization's broader business processes. This ensures that records are created and managed seamlessly as part of everyday workflow management.
• Compliance monitoring: Modern records management systems often include features for monitoring and ensuring compliance with various regulations and legal requirements. This is critical for avoiding legal issues and penalties.
• Continuous improvement: Organizations regularly assess and update their records management processes. Continuous improvement involves incorporating feedback, staying abreast of technological advancements and adapting to changes in regulatory landscapes. 

Why use a document management system for records management? 

Records management is focused on providing access to authorized personnel, ensuring security of proprietary information and enforcing retention schedules. A document management system provides these functions as well as capabilities for managing documents that are part of ongoing business processes. Its objectives include easy storage and retrieval, capture and categorization of paper and electronic documents, workflow automation, document and data security, and protection against cyberthreats. 

Active documents and other media are tagged with metadata in a DMS based on their content, creation date and other relevant information. Once this material becomes part of a record, additional metadata can be added. This simplifies the records management process by providing an organized framework for classification, storage and retrieval. 

Here's why organizations like yours choose to use a DMS for records management. 

• Centralized storage: A DMS provides a centralized repository that ensures records are kept in a structured manner, making it easy to locate and retrieve them. 
• Advanced document capture: Efficient capture whether through scanning physical documents or importing electronic files.  
• Version control: Document management systems often include version control features. These features are crucial for tracking document changes over time, ensuring the most current and accurate version is always available. 
• Metadata and indexing: A DMS allows for the assignment of metadata to documents, which includes information such as document type, author, creation date and keywords, facilitating organized categorization and quick retrieval. 
• Access controls: Restricts and manages who can view, edit or delete specific records. Ultimately, this helps maintain data security and ensures sensitive information is only accessible to authorized users. 
• Workflow integration: ensures that records management is seamlessly embedded into the organization's daily operations. Documents can be sent through approval processes and records can be automatically categorized based on predefined rules. 
• Search and retrieval: Document management systems hasrobust search functionalities, allowing users to locate specific records quickly. Advanced search options, including keyword, meta data and full-text search, make it easy to find specific records. 
• Audit trails: documents who accessed a document, when it was accessed, and if changes made. This is crucial for compliance purposes and provides transparency in the usage of records. 
• Retention policies: DMS allows organizations to define and enforce retention policies for diverse types of documents, ensuring records are kept for the necessary duration to meet legal and regulatory requirements and are disposed of appropriately. 
• Backup and disaster recovery: Document management systems often include robust backup and disaster recovery features. This safeguards records against data loss due to system failures, disasters or other unforeseen events. 
• Integration with other business software: A DMS can be integrated with other enterprise systems, such as Customer Relationship Management (CRM) or Enterprise Resource Planning (ERP) systems, ensuring consistency and coherence across different organizational functions. 

A document management system enables your company to systematically organize, track and protect records. Using a DMS to meet records management requirements provides enhanced accessibility, automated retention schedules and advanced security. It can be a vital part of modernizing information governance practices at your organization. 

Find out more about how Docuware can help by requesting a demo.

The information in this blog post is not intended as legal advice. It is to be used for educational purposes only.