Lost files, lost revenue: the costs of poor record management

Poor record management can lead to significant financial losses and operational inefficiencies. Nearly half of employees struggle to navigate their company’s system for digital organization, resulting in missed opportunities, regulatory penalties, and reduced productivity.

The following article examines the negative consequences of bad records management on businesses and offers strategies to improve your record management practices.

Key takeaways

• Poor record management can result in hidden costs from operational inefficiencies as well as legal and business continuity risks.
• Lack of a standardized system, using outdated technology, and insufficient employee training are three primary causes of bad records management.
• A key way that businesses can solve this challenge is by implementing a robust digital record management system.

The hidden costs of poor record management

The challenge of record management stems from both direct and indirect costs, which often go unnoticed until the problem escalates. These hidden costs can be bucketed into three main areas:

Operational inefficiencies: disorganization and loss of productivity

Digital disorganization can greatly reduce productivity and increase labor costs. One study found that 71% of employees say disorganization disrupts their ability to work efficiently. Time wasted searching for documents creates workflow bottlenecks and delays projects. This chaos can also slow decision making and approvals, further affecting project timelines and profitability.

Legal and compliance risks

Non-compliance with document retention regulations, such as the Sarbanes-Oxley Act or HIPAA, may lead to expensive fines and penalties. Disorganized records can undermine a company’s ability to protect itself in legal disputes. The cost of defense can quickly exceed the initial investment in a records management system.

Business continuity threats

Poorly managed records can result in threats to business continuity, especially during crises like litigation or IT failures. In these high pressure situations, quick access to accurate and organized records is essential for maintaining workflows and regulatory compliance. Without a reliable system, you may struggle to retrieve critical documents, leading to extended downtime and the inability to respond effectively.

Causes of poor records management practices

What exactly causes digital disorganization? Let’s explore examples of poor record management.

Lacking a standardized system

Without a clear and consistent framework, businesses often face sloppy workflows and governance challenges. When employees create their own filing systems or rely on ad hoc practices, it leads to a fragmented approach. With documents stored in various formats and locations, the chance of misplaced information and operational breakdowns increases.

Using outdated tech or manual processes

Relying on outdated technology or manual processes for record management creates a labor-intensive, error-prone system. Businesses that use paper documents face challenges like limited physical storage and the threat of loss or damage. It also contends with time-consuming manual sorting and retrieval. Similarly, outdated software can cause bottlenecks, as legacy systems often lack the functionality needed to meet demands, delaying access to information.

Related read: Complete guide to document workflow management

Training for employees is insufficient

Inadequate training on record handling can lead to costly challenges for businesses, including file misclassification and non-compliance. These oversights result in inefficiencies and exposure to legal and financial penalties. Training helps employees understand the importance of records management. It equips them with essential skills, such as best practices for handling sensitive information and navigating digital systems.

How do you solve poor records management?

There’s an overwhelming amount of information created daily. Unsurprisingly, 42% of Americans keep documents they no longer need. Here are three simple strategies to help avoid this and improve records management.

Implement a digital record management system

Switching to a cloud-based record management system can greatly enhance organization and performance. Traditional paper-based systems are prone to hidden costs from mistakes and document loss. Digital solutions, however, streamline record storage and management.

ShareFile is a prime example of such a solution, offering features like automated workflows and document versioning. By using this technology, you can gain better visibility into records, optimize workflows, and ultimately boost bottom lines.

Develop a standard operating procedure (SOP)

An SOP ensures consistency in record management across the business, establishing clear guidelines for handling and storing documents. This minimizes errors and inadequacies while still adhering to legal and regulatory requirements.

Here are steps to create an effective SOP for records management:

• Identify key stakeholders: Involve employees from various departments who interact with records to gather insights and confirm the SOP addresses diverse needs.
• Define objectives: Clearly outline the goals of the SOP, such as improving performance or protecting sensitive information.
• Document procedures: Provide detailed, step-by-step processes for handling and storing records. Include guidelines for document creation, classification, storage, retrieval, archiving, and disposal.
• Review and revise: Regularly review the SOP to keep it relevant and up to date with changes in factors like regulations or business practices.
• Train employees: Conduct training sessions to familiarize employees with the SOP and its importance. Confirm they understand their roles in the records management process.
• Enforce compliance: Establish a system to monitor adherence to the SOP, including periodic audits and feedback mechanisms. Encourage accountability by recognizing employees who consistently follow the procedures.

Conduct regular audits and updates

Audits are a critical checkpoint for evaluating your records management practices. You can use it to identify discrepancies and resolve emerging issues. Routine analysis helps ensure records are accurate and complete, reducing the risk of losses and disruptions.

Solve the challenge of record management with ShareFile

Poor record management can lead to significant operational inefficiencies, legal liabilities, and disruptions to business continuity. You can effectively mitigate these challenges with digital record management systems and SOPs.

ShareFile offers a scalable solution for the storage and sharing of documents, creating a secure and organized environment. Transitioning to a cloud-enabled record management platform can help streamline processes and improve overall performance.