Financial records in a company’s archive are the most crucial of all the documents.Financial records contain the transactional history of the company, banking sheets, investment tracks, tax filing records,
legal and compliance records, and others which correspond to business operations. Though, financial records fall strictly under the domain of a business’ tax/finance and legal team, there are a few common mistakes that can be easily overlooked.
In this post, we will look at some commonly occurring mistakes that organizations make while preserving their financial records. Let’s get started!
1. Not Using a Separate Archive for Financial Records
This is one frequently occurring mistake that businesses make while curating important organizational records. What they do is ‘treat’ the financial records like any other record and list it in the archive. However, when the time dictates, the financial records often get mixed up with the other documents becoming hard to access and even getting misplaced. What businesses need to ensure is to use a separate archive to curate and preserve the critical financial document such that they are always accessible on the go to the associated personnel.
2. Not Sticking to a ‘Schedule’
Any record related to an enterprise deserves due attention. Financial records, being one of the most critical ones, need a dedicated schedule in which they must be audited, stored and secured within the organization. If a company does not follow a schedule for preserving its financial records, there arises a high probability of risk. ‘Schedule’ does not only mean curation of the financial records, but also securely shredding them when their lifecycle is complete.
3. Saying ‘No’ to Digitization
Digitizing your records in the present time is no longer a matter of technological supremacy or ‘luxury factor. Rather, it has become a necessity for the businesses as the new regulations dawn upon them along with a need to scale the operations. Not only digitization saves storage requirements, logistics and in-house infrastructure, it also enables seamless and rapid access to the finance records as needed by the Tax team, finance personnel or Legal compliance team.
Companies can also leverage the professional Record Management Service vendors who specialize in digitizing the physical records rapidly and efficiently. A Record Management Company can translate all your physical data into the preferred digital format to ensure its availability anytime of the day.
4. No Backupss
This mistake might prove to be disastrous for businesses, especially if they rely on on-site record management. It is a rare occurrence that physical archives of the financial records have duplicate copies or carbon copies that are neatly preserved at a different location. A lack of backup compromises with the security of the documents in the event they are subjected to intentional (Espionage, break-in) or unintentional harm (disasters like fire, etc.). Financial records, especially, need an off-site backup (or a separate server/cloud in case of the digital documents) to mitigate any such risk. Consulting a Record Management Service provider will help your business identify such vulnerabilities and effective solutions to address them.
5.Lack of Processes & Training
Lack of standard documenting processes, Record preservation and the basic training to handle the records can lead to a clutter which ultimately results in slowed tasks and plummeting productivity. Businesses, often in a haste of focusing on the core tasks, forget to set Documentation processes in place. From the very beginning, this results in misplacement of records, inability to retrieve them at the right time, and halting of crucial processes, and even litigation/compliance vulnerabilities. To keep your business on the straight track of growth, you need to train your teams on proper record management and the in-house policies regarding the same. Begin with the Finance & tax teams before moving onto the others!
Financial Records form a substantial part of the Overall records handled by any business. Curating and storing them properly must be on the top of your company’s checklist. Avert the obstacles that might arise due to the mistakes mentioned above. Good luck!