What is document security? Why is document security important to me? What are the best methods in company can use to enhance document security? Is it expensive to do? These are some of the questions you may have about document security.

In this article, We will explain more about document security and why it is important that your business implement some sort of policy or plan to improve the way your employees and you handle documents.

Almost every business has documents that they have to process on a daily basis. Contracts, Invoices, Receipts, Purchase Orders, In-house Memos, and documents related to sensitive information are some of the examples of documents you may use.

Document security includes how those documents are stored, backed up, processed, delivered, and disposed of. First we will talk about storage and backup of your documents. This involves a lot more than just which type of filing cabinet you want to buy.

Even in this electronic age, paper documents are a necessity. The storage of these documents safely and securely is often ignored. For sensitive documents, you do need locked file cabinets. You need to be aware of who in your company will have keys to those file cabinets and they need to be stored in a secure location. Fireproof filing cabinets are also a good idea.

This might seem to be inconvenient, expensive, and time-consuming, but the loss of your documents is going to cost you a lot more time and money than having security in place for them.

Transferring all of your documents into electronic format is essential to document security. Either through data entry or through scanning of documents you can back them up in electronic format to help ensure their safety and recovery if you lose all the paper.

Many of your documents today are already in electronic format. Those and the electronic backups of the paper documents you make also need to be backed up besides just on your computer. There are electronic data storage services you can use online that will give you storage space on secure servers.

Some of these can be relatively inexpensive, others charge too much. I suggest you research several of them to find the solution that is right for you. You can burn those documents to CD, but then must find a secure way, off of your business premises to store those CDs.

You can store the data on other computers you have at home or elsewhere, but need to keep in mind who might be able to access them. The companies that provide secure storage for electronic documents and data are usually a much more secure method.

You need to implement a specific security policy in regards to every type of document your company uses. Your employees need to follow these specific document security guidelines at all times.

Document and data delivery is also an important consideration. Do you use encrypted email when sending and receiving documents? Do you require a receipt from the receiver of your emails to show they have gotten the data you sent them? These are easy to implement. PGP for email is one of the best methods. Do a search for PGP and you will find more information about it.

When you mail sensitive documents, do you use registered mail? Do you insure it? These are important pieces to your document security policy. Your employees should know which specific types of outgoing mail are to receive special attention.

Who opens the mail your company receives? Is it ever left out in the open where just anyone can pick it up? Your employees should be aware that document security extends to incoming mail as well. There needs to be specific instructions as to what happens to all incoming mail.

Now we can move on to document disposal. Do you have an office shredder? You may want to have one in each employee’s work area who might be handling or creating sensitive company documents. Have a policy of shredding the documents they throw away. Better to be safe than sorry. Thieves and others will go through your trash to find any information they can use to their advantage.

If you have a lot of sensitive documents or wish to be more careful, there are services that come to your office to shred and destroy documents then remove them to be incinerated. These companies guarantee the safe disposal of your documents.

We hope this article has helped answer any questions you may have had about document security. Further hope that it has made you aware of the need for you to have a document security policy at your business.

Search terms:

Many types of business valuation methods are appropriate when estimating or defining a business value for certain kinds of business evaluations and appraisals. The reason for the evaluation determines which measure will be used. For example, if the purpose is to borrow money, asset values will be key because lenders will be interested in collateral. If the value is based on the selling price of the business, then what the business owns, what it earns, and what makes it unique will be important. The following is a list of many different types of business valuations that can be performed.

* Insurable value
* Book value
* Liquidation value
* Fair market / stock market value
* Replacement value
* Reproduction value
* Asset value
* Discounted future earnings value
* Capitalized earnings value
* Goodwill value
* Going concern value
* Cost savings value
* Expected return value
* Conditional value
* Market data value

This article discusses six of the more popular business valuation methods: 1) Value based on assets, 2) Value based on cash flow or net income, 3) Value based on the integrated method, 4) Value based on net present value of future earnings, 5) Value based on the market data approach, and 6) Value based on the replacement cost approach.

1. Value Based on Assets

Uses: Used most often as a minimum value because a business should be worth at least the value of its assets. Exceptions might occur when a company is losing money.

Steps: Determine the market value of the assets being sold. If business is being sold, deduct the value of any liabilities being assumed by the buyer.

2. Value Based on Cash Flow or Net Income

Uses: Used when a business has few assets, the cash flow being the important thing considered here. The value is based on the return on investment the cash flow represents.

Steps: Adjust the income statement to reflect the true expenses of the business (for example, subtract personal items being paid for by the business). Calculate the appropriate, adjusted type of income to be capitalized: cash flow, net income before or after taxes, etc.. Decide, based on risk and yields of other, “comparable” investments, the desired rate of return or the capitalization (cap) rate. Divide the income to be capitalized (example, cash flow) by the cap rate.

3. Value Based on the Integrated Method

Uses: Used when a company has both assets and cash flow. This method accounts for the value of the assets and then capitalizes the cash flow, but only after reducing the cash flow by the cost of carrying the assets.

Steps: Determine the market value of the assets. Multiply the value of the assets by the interest rate the company pays to borrow money to get the cost of carrying the assets. Adjust the income statement to reflect the true expenses of the business. Calculate the appropriate, adjusted type of income to be capitalized: cash flow, net income before or after taxes, etc.. Subtract the cost of carrying the assets to get the excess earnings. Decide, based on risk and yields of other, “comparable” investments, the desired rate of return (the cap rate). Divide the excess earnings by the cap rate to get the value of the excess earnings. Add the value of the excess earnings to the value of the assets and subtract the value of any liabilities being assumed by the buyer if business is being purchased.

4. Value Based on Net Present Value of Future Earnings

Uses: Used as a method to sell the value of a projected future stream of earnings at a discount. Used mainly with larger, well-documented companies for which the future is somewhat more predictable.

Steps: Adjust the profit-and-loss statement to reflect the true expenses of the business. Calculate the adjusted actual cash flow. Based on supportable plans, project financial statements for 5 years. Forecasting techniques could use moving averages, trending, percentage increases/decreases, or multiple regression. External factors such as industry outlook, technological developments, and government regulation should be considered. Determine cumulative cash flow for the 5 years and discount it to establish the net present value. Each year may be discounted separately to give a more precise value.

5. Value Based on the Market Data Approach

Uses: Value of the business (or other property) is estimated from information on prices actually paid for other, similar, businesses or properties. This the most direct valuation approach and it is easily understood by laymen. However, it requires a reasonably active market, the necessity of making adjustment to actual selling prices in an attempt to compensate for differences and it is generally not applicable to estimating values of intangibles.

Steps: Identify other businesses or properties generally similar to the one being appraised, that have actually been sold. Determine the selling price, then compare each comparable sale with the property/business being appraised, and adjust actual selling price of each comparable property/business to compensate for the significant differences between it and the subject property/business. Use these adjusted selling prices of the comparable properties/businesses as a basis for estimating, by inference, the market value of the subject property/business.

6. Value Based on the Replacement Cost Approach

Uses: Value of the business is determined from the estimated cost of replacing (duplicating) the business asset by asset and liability by liability. Very accurate in valuing tangible assets and reflects actual economic value. Used with asset-heavy businesses such as hotels/motels and natural resources (mining) businesses. Does not take into account the earning power of the business which contributes to total value.

Steps: List all assets to be included in the valuation of the business. Omit any surplus or idle assets that do not contribute to the economic performance of the business. Also, list liabilities, if applicable to appraisal. Estimate the current cost to replace each asset with functionally equivalent substitute; also estimate current value of each liability to be included. Add the estimated costs to replace the individual assets, thus determining the total estimated cost of replacing all assets in aggregate. Subtract estimated current values of liabilities, if applicable. Add the values (liquidation value, wholesale market value, etc.) of any non-contributing assets omitted in the first step.

Reconciling the Value Estimates & Determining the Final Estimate of Value

* Compare the value of estimates resulting from the use of different approaches

* Rank each by the relative degree of confidence

* Use judgment

* Test the final value estimate

* Round the final value

* No useful purpose is served by taking an average

Search terms: