Ledger archiving is the process of preserving financial records by securely storing them for future reference.
In the digital era, businesses accumulate extensive financial data, often stored in ledgers. Over time, these ledgers can become cluttered and difficult to manage, hampering efficiency and risking compliance.
Archiving older ledger data helps to resolve these problems and many more.
In this article, we will delve into the benefits and best practices of ledger archiving in financial accounting.
Let’s jump right in!
Benefits of Ledger Archiving
Here are some benefits of ledger archiving:
Space and Cost Savings
As businesses grow, so does their financial data. Archiving older ledger data helps free up valuable storage space and reduces the costs associated with maintaining extensive physical or digital infrastructure.
By transferring older records to an archiving system, businesses can optimise their storage resources and allocate them more efficiently.
Enhanced Data Accessibility
Efficient retrieval of archived data supports audits, reporting, analysis, and decision-making.
Rather than sifting through cluttered and disorganised ledgers, financial professionals can access relevant information in a timely manner.
Data Security and Integrity
Preserving the integrity of financial records is paramount. Ledger archiving safeguards against data loss, corruption, or unauthorised access.
By implementing appropriate security measures, businesses can ensure that archived data remains protected and tamper-proof.
This not only fulfils compliance obligations but also instils trust in stakeholders regarding the accuracy and reliability of financial information.
Best Practices for Ledger Archiving
To maximise the benefits of ledger archiving, businesses should follow these best practices:
Define Retention Policies
Establish retention policies that align with legal and regulatory requirements, industry standards, and your organisation’s specific needs.
Clearly define the duration for which ledger data should be archived, taking into account relevant laws and regulations.
Data Categorisation and Indexing
Categorise and index archived ledgers systematically. This practice enables easy retrieval and searchability, ensuring financial professionals can quickly locate specific records.
By organising data based on relevant categories such as dates, accounts, or transactions, businesses can streamline their archiving process and minimise the time spent searching for specific information.
Regular Data Validation
Periodically validate archived ledger data to ensure its accuracy and completeness. This practice reduces the risk of errors or discrepancies, providing assurance that the archived information remains reliable over time.
Regular data validation should be part of an ongoing data management strategy.
Backup and Disaster Recovery
Implement backup and disaster recovery strategies to safeguard archived ledgers from potential data loss due to hardware failure, natural disasters, or cyber threats.
Maintain redundant copies of archived data in secure locations, whether it be physical backups or cloud-based solutions. Regularly test the backup and recovery processes to ensure their effectiveness.
Choosing the Right Archiving Solution
When selecting an archiving solution, consider the following factors:
On-Premises vs Cloud Archiving
Evaluate the pros and cons of on-premises and cloud-based archiving solutions. On-premises solutions offer complete control over data but require infrastructure maintenance.
Cloud solutions provide scalability, accessibility, and reduced hardware costs, but organisations must ensure data security and compliance with relevant regulations.
Automation and Integration
Choose an archiving solution that offers automation features and seamless integration with existing financial systems. Automated archiving simplifies the process by efficiently capturing and storing data, reducing manual effort.
Integration ensures smooth data transfer and archival processes, enhancing operational efficiency and accuracy.
SunSystems’ Ledger Archiving Solution
Infor SunSystems, a powerful financial management system, comes with an archiving solution that is designed to help organisations maintain efficient and optimised financial databases by moving older or inactive data from the live production database to an archive database.
This process helps improve system performance, reduces the size of the live database, and ensures that critical financial information is still accessible for reporting and analysis purposes.
The length of time transactions are maintained on a ledger in SunSystems depends solely on your own requirements. Transactions can remain on the ledger indefinitely.
To archive in SunSystems, the original details of transactions that have been summarised during Ledger Cleardown (LCL) is copied to an archive file.
You may opt to retain transactions on individual accounts for a longer period of time than for other accounts. For example, profit & loss and balance sheet transactions may be retained for a year, whereas debtor/receivables or creditor/payables transactions can be maintained for as long as they remain unmatched.
You should keep a record of the frequency for clearing down each group of accounts. You might sign and date the records each time you perform a cleardown. This ensures you have adequate records of what has been cleared from the ledger.
Archiving is switched on by setting the Ledger Archiving field in Ledger Setup (LES).
Archived transactions can be viewed with current transactions using Ledger Inquiry (LAQ), with the filter type code SALQA (Ledger Inquiry – Archive) and printed using a report based on the FTAL1.srdl example report.
Compliance and Legal Considerations
When archiving financial records, businesses must address compliance and legal considerations, including:
Data Privacy and Protection
Adhere to data privacy regulations, such as the General Data Protection Regulation (GDPR) or the Data Protection Act.
Ensure that the archiving solution complies with these regulations and implements appropriate security measures to protect sensitive financial information.
Audit Trails and Chain of Custody
Maintain comprehensive audit trails and establish a clear chain of custody for archived ledgers. This practice ensures transparency, accountability, and the ability to trace any modifications or access to archived data.
Well-documented audit trails facilitate compliance audits and support legal requirements.
In accounting and financial management, ledger archiving plays a vital role in maintaining accurate and reliable historical financial information.
By implementing best practices and choosing the right archiving solution, businesses can streamline their operations, reduce costs, enhance data accessibility, improve data security, and simplify compliance processes.
Embracing ledger archiving allows financial records to transform into valuable assets for informed decision-making, ultimately contributing to the success and growth of the organisation.