Self Employed Web

Shred Documents?

Posted on Saturday, July 2nd, 2005 by

Before you drown in a sea of paper, consider streamlining your operations by scanning, shredding,
or both

Edgar Higgins disdain for paper stretches back to 1990. That year, he purchased an insurance automation software program for the Thousand Islands Agency, his Clayton, N.Y.–based insurance
company. The program allowed employees to record new client transactions and account information on their computers.

As those new records took shape, Higgins looked at his firm’s ten year’s worth of old paper files and saw a system that no longer made sense. He bought a scanner, and set to work converting those dusty files to digital records.

Today, his six-person office is virtually paperless. Client records, contracts with insurance companies, and every other vital business record are stored on a company-wide database. “It was good to get
rid of our filing cabinets and free up space,” says Higgins. “But the greatest benefit is that everyone in this business can do their jobs without leaving their chairs to track down information. It’s amazing how much faster you can work when you have that data at your fingertips.”

Almost anyone who works at a small business—let alone anyone who owns or helps run one—can grasp the allure of paring down paperwork. Many firms are buried in documents, with bulging files packed into cabinets that clutter up the office.

You can cut down on the clutter and confusion by making some key decisions, and then acting on them. First, you’ll need to decide which documents you can discard and which you must keep. Next, you’ll need a strategy for storing those records. You’ll want to make sure that your strategy
makes the most of existing technology, including low-cost scanners and easy-to-use document management software that can make your task much easier.


Out with the … Uh-oh!

You may feel sorely tempted to load all of your old files into a truck and toss them in the nearest dumpster, but resist the temptation. The FTC received more than 245,000 identity theft complaints last year alone—you don’t want to be part of this year’s statistic. Moreover, federal laws increasingly dictate what businesses must do with their trash.

“…the greatest benefit is that
everyone in this business can do their jobs without leaving their chairs to track down information.”

Take the 1996 Health Insurance Portability and Accountability Act (HIPAA). It requires physicians and other medical providers to destroy all records that contain patients’ personal information, ranging from insurance information and clinical notes to appointment schedules.

You’re not in the medical sector? Consider this: A provision of the Fair and Accurate Credit Transactions Act (FACTA), effective June 1 of this year, requires any one with at least one employee—even a parent who employs a nanny—to shred, burn or otherwise annihilate any paper that contains personal information about employees, such as Social Security numbers or the results of background checks.

No business wants to run afoul of IRS auditors or federal rules. Still, that doesn’t mean you must hang on to everything, just in case. Too much paper can make your business far less efficient, and make
it harder to find the information you really need. “A basement full of filing cabinets is no good if you don’t know what’s in them,” says Jim Roopa, operations manager of the Massachusettsbased Records Improvement Institute, a records management consulting firm.

Shred it

Once you’ve decided what to keep, get rid of the rest. Use a shredder for any document that contains client information, employee information, account numbers, or financial details. “I can’t imagine a business not using a shredder,” say Lisa Kanarek, a consultant in Dallas, Texas, who helps home offices and small firms get organized.

Digitizing, shredding, and tossing out the trash are sources of real pleasure for Higgins, who keeps a nearly paperless office.

Shredders come in various shapes and sizes, with pricetags to match. You can spend $30 on a personal shredder. Or you can pay $10,000 for a behemoth that hacks huge quantities of paper into particles tiny enough to meet Department of Defense standards for destroying Top Secret documents.
Most small firms will want a shredder that falls between those extremes.

Here’s what to consider when you’re shopping for a shredder:
• Throat size (the size of the opening
that accepts paper).
• Capacity (the number of pages the
machine can shred at a time).
• Speed (measured in feet per minute).
• Size and shape of the shredded
Some shredders cut paper into narrow strips, but it’s worth spending more for a cross-cut shredder; it will create confettilike pieces that are harder for crooks to piece back together. And get a shredder
that’s big enough for your business; otherwise, it will jam and overheat. If the entire process simply seems like too much of a burden—or you think that too much employee time is being taken up
with the shredding process—you might want to consider a service like Shred-It, an outside vendor who will come to your premises and remove and securely shred your excess documents for you.

Digitize it

Once you’ve cleared away extraneous paper, maximize space and efficiency by digitizing some of the remaining files. Because one CD can hold about 10,000 text pages—or the equivalent of an entire four-drawer filing cabinet—you’ll likely see how quickly digitizing documents can free up valuable space in your office.

You’ll need a scanner, a document management software program, and a storage medium, such as CDs. Avoid buying a flat-bed scanner, which may be fine for scanning photos but will make it difficult to digitize lots of pages. Instead, look for a sheet-fed scanner; that way, you can simply drop a stack of paper in the hopper and step back to watch the machine do its work.

The Rules on RecordsFederal or state laws dictate how long to hang on to certain types of information, but the guidelines are often just minimums. It’s often up to you to decide how long to keep certain documents. For example, the IRS requires all taxpayers to retain supporting documentation for three years after filing a return — but auditors can look back even further if they suspect you’ve been cheating. For that reason, many experts advise keeping such records for at least seven years.There is no clear consensus on how long you should keep other types of paperwork. There are some rules of thumb—described below—but check with an accountant and attorney to ensure compliance with state and local laws. Whatever you decide, write down timeframes for retaining various types of documents, and make sure the appropriate employees know your policy.One year: duplicate deposit slips; job advertisements and employment applications; purchase orders

Three years: cash and credit card receipts; employee attendance
records; expired insurance policies

Seven years: accounts payable and receivable records; bank statements and canceled checks; cash books; expired contracts and leases; employee records (after termination); expense records; payroll and employment tax records; inventory records; invoices to customers and from vendors; sales and use tax records.

Permanently: Accountant audit reports; annual financial statements; canceled checks for important purchases such as property; capital stock and bond records; deeds and mortgages; depreciation schedules; general
ledgers; incorporation records, bylaws and charters; insurance records; legal correspondence; licenses and permits; patents, trademark and copyright registration; property records and outside appraisals; tax returns.

Choose a scanner that comes with document management software such as ScanSoft’s PaperPort Deluxe 10. Such software lets you convert scanned files into Adobe Portable Document Format (PDF) or Microsoft Word and Excel files for easy labeling and searching.

Home offices or very small businesses probably can get away with an all-in-one scanner/fax/printer combo like the Hewlett-Packard OfficeJet 5510 (list price: $185). Such set-ups are cost effective and they save desk space. Small businesses that want a dedicated scanner might want something more robust, like the Xerox DocuMate 262 (List price: $1,195). It can scan 33 sheets of paper a minute and won a PC Magazine Editor’s
Choice award for its performance.

Whatever scanner you buy, be sure to back up all of your digital files. If you’re storing the records on a server, make sure that server is backed up at a remote location. Or, if you are converting old paper files to CDs, create two copies and keep one at another location in case there’s a fire or other disaster at the office.

Insurance agency owner Ed Higgins warns that simply scanning documents does not lead to instant efficiency. Like paper files, digital records have to be clearly labeled and sensibly organized so they can be easily searched and retrieved. Higgins organizes his insurance company files by client name and date of the transaction, claim, or other event; other companies should develop systems that suit their needs.

Many businesses—particularly in professions such as accounting, insurance and medicine—invest in special records management software that can do much more than store data. Dr. Sam Cullison, director of family medicine education for the Swedish Medical Center in Seattle, notes that even small medical offices can use software that links patient data to advice and information about treatment. Thus, a patient’s records might be linked to timely reminders to perform certain blood tests or other exams, based on his or her condition. Similar software advances are on the horizon in other professions.

The old adage—garbage in, garbage out—is worth bearing in mind as you develop your system for electronic record keeping. Keep tabs on employees responsible for entering new information, and make sure that they understand what’s required—and what’s at stake: the long-term health of your business.


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