Dealing with disciplinary records
There are many different types of record that businesses and non-profit organisations need to retain – chief amongst them are, arguably, financial records. Amongst other things, these records help to keep track of the organisation’s financial health and where money is (and isn’t) going.
Many organisations will retain their financial records because it simply makes good business sense – however, what many aren’t aware of are the specific legal requirements when it comes to financial record keeping
This short guide will highlight some of the key things you need to know about financial records retention for your business.
Why do documents need to be retained?
There are several important reasons to retain financial documents, including:
- Keeping track of cash flow and expenditure;
- The need to access important documents at short notice; and
- Historical value
But the most important are statutory records retention periods, as defined by UK law.
Risks of non-compliance
Financial records retention laws apply to nearly all the financial information you have associated with your business. These laws are set in place for a reason, and can save you from getting rid of documents too quickly or, indeed, holding on to them for too long.
There can also be a hefty penalty for not following the rules – whether they apply to financial record keeping or other types of business record keeping. Businesses and organisations found to be in breach of the Data Protection Act 1998, for example, can face a financial penalty of up to half a million pounds.
Not following records management best practices leaves you at risk of damaging your organisation’s reputation, losing or destroying important data, and an increased administrative burden.
What types of records need to be retained?
There are three key types of financial document that need to be retained by all businesses:
- Documents related to income
These include bank statements, sales ledgers, receipts books, and more. According to the Companies Act, you need to retain these records for six years from the end of the financial year in which the transaction was made.
- Payroll documents
These include P45s, expenses and benefits documentation, pension deduction records for employees, and more. According to The Taxes Management Act 1970 and Pensions Act, you need to retain these records for six years plus the current year.
- Insurance documents
These include policies and claims correspondence and should be retained for three years after lapse.
Please note that these are just a few examples of financial records that have specific guidelines on retention periods. If you need advice on a specific document or record, please speak to an expert.
The benefits of working with a financial records management service
If you work with a records management service, you don’t need to know the ins and outs of the rules and regulations. A dedicated third-party provider can take on the burden of financial records retention for you, you can focus on your business – rather than the rules that bind it.
You can be safe in the knowledge that experts in the field of data retention and destruction regulations are on hand to determine how long you need to keep any type of financial document you might have.
You won’t be cut off from your documents completely, either – any records management company worth its salt will make it possible to easily retrieve and collect them. At Access Records Management, we use state-of-the-art RS-SQL O’Neill software in conjunction with a location bar-coding system – allowing us to rapidly identify and retrieve files. Documents can be delivered within three hours of making a request, if necessary.
A records management company will ensure that your documents are kept safe, kept for the period of time that you need them, and available only to those who require access.
To learn more about outsourcing your document storage, retention, and destruction strategy, contact Access Records Management today.
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