5 Key Use Cases for an Inactive Records Strategy
What does a past employee’s personnel file, last year’s tax return and closed case files have in common? They are all inactive records.
What are inactive records?
Also known as unused files or archives, these are “documents which are no longer referenced on a regular basis and tend to be stored in a less accessible place since they are not used frequently.” There are a few typical reasons for keeping them around.
- Often times records need to be retained until they reach their life-cycle as defined on a records retention schedule.
- Some records may need to be accessed at some point, but just not on a daily basis. Say an old employee asks for their files, or a past client needs information from their files. You may even want to reference an inactive policy document from 2012 as you are creating a new policy for 2019.
- Some documents may need to be kept permanently—like sales receipts, warranties and workers comp claims.
Inactive records present a myriad of challenges to California companies including the high costs of keeping and managing inactive records as well as finding the space to store them. Additionally, there are risks associated with inactive record keeping such as various forms of data security breaches. That’s why you need an inactive records strategy.
What is an inactive records strategy?
A strategic plan that allows you to understand which types of documents your company deems inactive, and at what point they become inactive. The next step is to develop an inactive storage management system with an easy way to retrieve old documents. This should include opting to store your inactive records with a secure offsite records storage facility—where your files are accessible, organized and most importantly, secure.
Real-world cases where you should have one.
Searching for files uses up too much personnel time.
Consider our story about one of the largest public school educational districts in California, where roughly 6,000 boxes of educational files were stored in a disorganized fashion. School district administrators became aware that simply searching for a file was chewing up 20% of a staffer’s time.
You’re paying premium office space rent and storing records on-site.
Your files are taking up 3 cubicles and a storage closet on-site where you are paying premium office space rent. Since inactive records aren’t accessed on a daily basis and the cost of office space is so high—currently reported by San Francisco Business Times as being upwards of $100 p/sq foot for premium space San Francisco—it makes better business sense to use lower-cost storage facilities designed just for this purpose. This strategy will free up that high-cost space for more profitable uses.
Also, the lack of security in office spaces poses a risk of the files getting into the wrong hands and possibly being part of a data breach. The cost of a data breach for one record is $141 per data record. With GDPR now in effect, this cost could rise.
Files are stored in an “out of sight, out of mind” self-storage unit.
If you Google the phrase “self-storage break-ins,” the results will leave you with the question: just how safe is my extra space storage? Self-storage lacks document safety and security tools and processes where the threat of break-in or damage to the unit could result in a self-storage nightmare where your company’s records are lost forever.
Preparing for a successful merger or acquisition.
According to Forbes, a company that is being sold is typically unprepared with completed documents and the data necessary to engage in a smooth M&A transaction. If you are prepping to set your company up for sale—or have already begun the process—it’s important that all of your documents, even the outdated ones, are organized and in reasonable shape for the acquirer to do their due diligence. Having your files in order could mean the difference between your company and your competition getting sold. You may also gain kudos for your choice of records management partners!
Getting ready to go public.
Initiating an IPO is one of the biggest decisions a private company can make. This is especially true in today’s environment, where investor and regulatory scrutiny are high, and investment dollars remain scarce. Business records are operational—and sometimes strategic—assets. They have economic, legal, fiscal, risk-management, and competitive values. As a company prepares to go public, every detail is put under a microscope and, if inactive records are not easily accessible and in good order for review, the company risks penalties for non-compliance with recordkeeping regulations and possibly a public-relations nightmare. Additionally, if the investment community feels that historical facts are not presented clearly and in a time-sensitive fashion, the entire IPO can be at risk of failure. The investment community is extremely “risk-sensitive” and if they feel for one second that a company is not producing all the historical documents that are required, they simply won’t invest.
Taking Control of Inactive Records with Corodata
Properly labeling and tracking inactive files, and moving them safely offsite, can save your company space, time and money; remove the threat of losing documents; providing easy retrieval of files when needed, and set your reputation as a secure company.learn more
Sources9 Key Ways to Prepare for an MA Transaction | Forbes
Active/Inactive Records | University of Washington
What Facebook’s massive deal means for San Francisco’s — and Oakland’s — office market | San Francisco Business Times