The cost of poor document storage planning

Many companies only become aware during an audit of the fact that where they choose to store company records is a matter of legislative concern. By that stage, the effect of making the wrong initial decisions has already settled into the coffers, waiting to be unleashed on unsuspecting FDs.

Everyone knows they need to store company records. They know a court somewhere may request a document for any one of numerous and currently unknown reasons. Some are even aware that failure to produce the records may result in financial losses. Some think that`s the only reason not to dump them in the basement. It isn`t.

If you don`t make the right storage location choices up-front, it will cost you. You`ll have to move your documents at a later date, which is costly. You`ll lose documents, which could later prove as costly. Moving the documents will cost time. If you then decide to implement a proper document storage process and get the consultants in who know what they`re doing, it`s going to cost a lot more.

Many South African businesses are still storing their own records. The typical process they follow, from first-hand experience, is to file everything in an office and when it overflows to dump it in the basement and finally, when that begins splitting at the foundations, move it out to a third-party document storage business. And the purse strings start howling a high-pitched wail as the consultants come marching in two by two. Consider the following:

Don`t fix what ain`t broke is a poor methodology to employ in document storage.

Paul Mullon, marketing director, Metrofile

Even if a document is stored in an office or basement somewhere in the building or at another location owned by the business, if you cannot find it, access it and locate the piece of information on it that you seek, it is to all intents and purposes, lost. But you know it`s there somewhere, which means you`re paying for its storage without being able to extract any of the benefit. That`s why it is critical to establish an effective indexing methodology up-front. It also ensures there is no duplication. This becomes particularly problematic working across divisions and as document storage volumes grow.

I`ve been into organisations where literally hundreds of printouts are stored one atop the other, hidden behind cabinets, and nobody has a clue what information they contain.

If those documents contained contractual or customer information, then being unable to locate them could cost the company acutely.

If documents cost so much in so many ways to be moved then why would a company consider doing it? Quite simply, companies run out of space. One year into haphazard document storage can see previously empty offices spilling into the hallways. Mergers and acquisitions, a common occurrence, necessitate moving documents that companies store themselves.

Had they been stored with an outsource partner, whose core business it is to properly manage the process, these costs and problems would be minimised. These are fairly obvious reasons, but one not so obvious reason is age. Company record fossils, rarely accessed, can be moved further afield to cheaper storage locations, or destroyed at the right time without creating risk for the owner.

Consulting of any nature can be prohibitively costly, although it can add significant value to the business. What tends to cost companies a fortune in time and money, with squads of consultants marching about the premises delivering PowerPoint presentations to bespectacled and broken-pencilled accountants and directors, is calling them in to fix what broke.

At that stage they need to spend far more costly time ascertaining firstly what the problem is before designing an expensive plan to rectify it and then following through with some terribly pricey implementation.

Don`t fix what ain`t broke is a poor methodology to employ in document storage. Calling in the consultants before the wind bears south keeps the costs manageable and non-repeatable. If the company later decides to move to electronic document storage and it already has a proper policy and process in place, this becomes much less trouble, is more quickly achieved and at far lower cost.

Not just any outsource document storage service provider will do. It has become commonplace for the local operation of global businesses to inspect the service provider`s premises to ensure they comply with Sarbanes-Oxley requirements. This is now beginning to appear on the task list of local auditing firms. If the auditors don`t approve of your outsource service provider, you could be in for a hefty bill to move everything to one that is approved. It`s worth working with auditors to acquire a partner with the right methodologies, systems, processes, services, track record and infrastructure in place.

Following a plan such as this one is the reason why many articles have appeared in the press stating that becoming compliant in terms of document storage can be beneficial to the business and not simply an additional financial burden. If properly approached, the process can deliver a return for the business but if not, can quickly siphon the coffers dry.