Record Retention Made Easy for Microsoft Dynamics: Stricter Regulations Guide Which Files to Keep

By David Guilbault, Director, Customer and ISV Development, ImageTag

Read this article at MSDynamicsWorld.com

Of all the important tasks associated with managing our business, we rarely focus on business records. Despite all the published guidelines or programs, we tend to keep every invoice, PO and sales order. Over time, the file cabinets fill and the off-site storage grows. We want to throw something away, but we're hesitant or more likely too busy to even consider what to throw away. And for those businesses that haven't initiated a records retention program, they could experience unnecessary costs, compliance issues or worse.

So let's start with some basics. What is a record? A record can be defined as any information that is generated or communicated as part of conducting business. This includes paper invoices, emails, and even faxes. For defining a records retention program, I will lean on John McAdams, who wrote an article for ShredNations (appropriate name, huh?), "A records retention program provides for the systematic review, retention and destruction of documents received or created in the course of business. A records retention program will identify documents that need to be maintained and contain guidelines for how long certain documents should be kept and how they should be destroyed." These programs also classify records, define the process for maintaining them, and determine regulatory and legal requirements.

What's pushing me to implement a records retention program?

In a word, it's regulation. Federal, state and industry requirements drive the guidelines for records keeping and retention. The core reason your business has a Microsoft Dynamics GP, NAV or AX System is the need for record keeping. Like your ERP system, there are many benefits to a records retention program, which I come to later.

If you haven't developed a program, you'll need to do some homework to determine how your company will comply with all these regulations. Familiarize yourself with local, state and federal law. There is a greater need for documented procedures, and the more comprehensive the plan, the better protected you are against future litigation. Can you say, "Sarbanes-Oxley"?

Most rules stem from IRS record-keeping requirements: "You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means you must keep records that support an item of income or deduction on a return until the period of limitations for that return runs out" (from IRS Publication 583, Starting a Business and Keeping Records, revised January 2007).

A more detailed look at why your business needs a records retention program is found in: "Leaving a Paper Trail" by Sheryl Nance-Nash published at www.insight-mag.com. Sheryl points out, "Despite suddenly becoming a front-burner issue, 'Many companies don't have a document retention program in place,' admits Fort Lauderdale-based Karen Unger, president of American Document Management, and an expert on document retention policies, programs and procedures."

Why the disconnect? "The problem is filing. People work so hard getting and servicing clients, and dealing with employees, that they don't have the energy or time for a task that's not sexy, not fun," says Unger. "They just save everything. Records retention sits quietly until someone gets into trouble."

The easiest document retention program in the world - an imaging system

If you are using Microsoft Dynamics GP, NAV or AX, the easiest way to develop and implement a foolproof, readily accessible retention program is to take advantage of technology. There‘s no better place for document imaging than in the accounting department, where it can support any retention program (or become one where your current policy is "keep everything"). Technology makes document retention simpler and cost-effective. There is a significant advantage for records that must be kept permanently, too. These important documents can be referenced digitally with their paper version stored safely off-site.

Because of the capacity of digital storage, an imaging system obviates the need for large amounts of off-site storage, without the high cost of maintenance or time spent retrieving documents.

In addition, most experts believe that centralizing records is essential for maintaining an effective system, and document imaging makes centralization practical. As an added benefit, it also serves as a built-in back-up and disaster recovery system.

Since filing is the fundamental problem, a system that makes it easy (or transparent) to file documents, using your accounting system to accomplish this would be ideal. Your imaging solution should provide its own document repository (remember many only perform document capture), or it should support SharePoint or other in-place repositories. More importantly, the system should enable you to define retention periods for classes of documents, i.e. invoices and what to do with them when the period ends.

The benefits of an imaging-based records retention program

Laurie Shufeldt writing for the Arizona Society of Certified Public Accountants (ASCPA) points out that "According to IT Compliance Institute research, 65 percent of enterprises have no records management policy (www.t2pa.com)." In that light, a record retention program can provide your business with a competitive edge through improved efficiency and productivity over those firms that manually manage documents.

Laurie goes on to say, "There are complementary benefits to having an automated records retention policy that is intermingled with operations, such as business continuity and disaster recovery. A company operates more efficiently when a retention policy is documented and automated and allows for consistency among different departments or offices within the organization. Managing records helps reduce storage costs by deleting unnecessary data."

Lastly, remember "regulation." Compliance to these rules is a big benefit to protection against litigation, audits and the overall reputation of your company.

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About the Author:
David Guilbault is Director, Customer and ISV Development for ImageTag, where he is responsible for managing customer and partner relationships, as well as insuring their success with their KwikTag solution. Previously, David headed Product Management at ImageTag, where he was instrumental in transforming a patented idea into a software platform that is applicable to every document, user and business. Prior to joining ImageTag, David spent eight years with Xerox. This tenure gave him an inherent knowledge of documents and their importance to an organization. With more than two decades in technical sales, systems engineering and product management, David has invaluable expertise in helping customers streamline their business processes using technology. David is a U.S. patent holder with a degree in Computer Science from University of Southern Maine.