All businesses have important documents that need to be stored for internal operations, reference by clients or compliance with government regulations. In the past, file cabinets typically lined the walls of offices, but as technology has evolved, so have document management methods.
While document management might seem straightforward, there are many factors to consider. Read on for our top file management tips and advice for choosing the best document management system for your business.
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To keep your documents secure and accessible, it’s essential to understand how to properly set up and maintain a digital archive. Here are three file management tips to help you get started.
The first step in establishing a digital archive is to scan documents or import your existing records into a centralized system. Document management systems are designed to make it easier for you to establish and maintain a complete digital archive of the records your business requires.
“Records can be scanned when they are received or being processed … or you can assign an internal employee to scan in batches on an agreed-upon frequency that can range from daily to annually,” said Jim Collins, principal at Chicago-based document imaging company Datamation. “If you prefer not to use internal resources, you can outsource this work to a document-scanning service bureau who can go through your records, batch-scan everything and deliver you the digital files.”
Digitization of paper records begins with a process known as document imaging, which involves scanning documents into your document management software. Most document management systems use a method known as optical character recognition (OCR) to automatically identify and index documents based on their content.
“Today’s OCR programs are extremely intelligent and can accurately detect a high percentage of printed and handwritten text,” said Faith Kubicki, director of marketing at InTempo Software. “That said, each program’s accuracy rate depends on the quality of the document that’s being put into the system. If pages are smudged or stained, or images are blurry, the program may have a harder time recognizing the information.”
While much of the digitization process can be automated through document imaging, accuracy is essential. The next step in digitizing your archives is to establish a system for quality control.
To ensure your documents have been captured correctly, many document management systems allow you to set a “custom confidence rate,” which means the software accepts only the files that meet a particular threshold. For example, if the software believes it has imaged a document 90 percent accurately but your custom confidence rate is 95 percent, that document would not be accepted without manual review and approval.
“All records that are digitized must be quality-control reviewed for accuracy, integrity and completeness,” Collins said. “This can be done either right at scanning or after by checking the images.”
Make sure to remove staples, paper clips and other obstructions from paper records before you scan them into the system.
Once you have digitized your documents and imported the digital files you need, organize them for easy retrieval. The documents in your archive need to be easily accessible. Just as you wouldn’t want to search multiple file cabinets for a specific document, you don’t want to pore over a vast, disorganized digital archive.
Luckily, most document management software begins the organization process for you with OCR. The software identifies certain keywords and elements in the document and affixes metadata that automatically indexes documents for you.
However, to be truly organized and accurate, it’s wise to further delineate documents by adding more details and metadata manually.
Just as you would use physical folders in a file cabinet, you should organize your digital files into clearly named digital folders. This way, when you open your digital asset management software, you’re not looking at a disorganized, overwhelming list of files.
Divide your files into different folder categories. For example, create folders for clients, suppliers, internal finances, taxes, employees and whatever other broad categories apply to your business.
You should also further divide them into subcategories. For example, in your Clients folder, each client should have a subfolder, as should each month of your work for the client. This logic also applies to your files. Develop consistent nomenclature standards for your files to keep them arranged in a logical order within your folders.
This could mean storing a document containing the first part of a project with the number 1 at the start of the file name, for example, or storing invoices with the month leading the file name so you can more easily access your most recent invoices.
You have two options for storing your documents: on-premises servers and cloud-based platforms.
On-premises servers demand a higher upfront investment and in-house IT resources for ongoing maintenance. However, they give you greater control over your documents and fall under the umbrella of your security measures. Cloud-based platforms remove the burden of maintenance and generally cost less, but they require you to trust a third party to manage your data for you, potentially creating additional vulnerabilities.
“Both [on-premises and cloud storage] options are viable, but the cloud provides an automatic off-site backup,” Collins said. “This is increasingly becoming the storage choice for most companies. Most cloud sites are certified, secure and very efficient.”
It’s important to research cloud storage providers and ensure the one you have in mind meets your standards for security. Collins recommended maintaining a backup of your records and systems.
“This backup can come in many ways, such as having a scanner to scan and archive records, storing important files in multiple locations, and establishing policies and practices to capture documents and keep them secure as a regular practice,” Collins said.
Your archive contains all of your business’s critical documents, including the most sensitive ones. As data breaches become more common, it should be a top priority to ensure your archive is as secure as possible.
“When selecting a software program, small businesses should also look for configurable firewalls, active directory authentication and SSL technologies,” Kubicki said. “They should also find a system that provides them with a comprehensive, uneditable record of every single time a document was accessed (and by which employee).”
In addition, most document management systems include user access permissions, which allow admins to determine which users can access, or even see, certain files stored in the archive. This helps minimize vulnerabilities that put confidential information at risk.
“It’s important for small businesses to customize their access permissions, especially when multiple departments are using the same document management system,” Kubicki said. “This ensures that financial data stays within accounting, sensitive employee information can only be viewed by HR, and so on.”
Understanding how long you should retain certain documents improves security and frees up storage space. Some documents don’t need to be kept permanently, while others are important enough to retain.
“Most documents shouldn’t be stored in perpetuity,” Kubicki said. “For instance, the IRS recommends that small businesses retain financial records for seven years. But when it comes to internal business documents, like supplier contracts and customer order records, it’s normal to retain those for longer.”
Following all of the above steps is just the start of implementing new file management practices. To ensure that you achieve proper file organization for your small business, you should also educate your colleagues on your file organization methodology.
Establishing a concrete file organization system begins with outlining consistent filing practices. The system you set up should encompass all of the procedures and considerations listed above. Once you determine how your company will adhere to these best practices, put your procedures in writing, perhaps in your employee handbook.
Supplement your written protocols with training on how to follow the guidelines you’ve put in place. With firm systems and an educated team, digital file organization for your small business should be hassle-free.
>> Learn more: What Is a Document Management System?
Finally, once your archive is fully digitized and organized to be easily accessible, your team needs to be able to revise documents quickly, without creating contradictory edits. The best document management systems have built-in tools to help teams collaborate.
“Good systems will track versions of all content, allow multiple simultaneous access to the same documents, and facilitate production collaboration,” Collins said. “For more complex applications, workflows can add structure and accuracy to defined processes through routing, approvals, signatures, checklists and reminders.”
Collaboration tools help your team work together seamlessly within the document management software. They also prevent contradictory edits from occurring on a document when multiple users are trying to access it.
Collaboration tools are essential for teams that continually revisit and edit files.
If you’re looking for the best document management software for your business, here are the best options to consider:
Jamie Johnson and Max Freedman contributed to this article. Some source interviews were conducted for a previous version of this article.