Ever see that one Farside cartoon by Gary Larson? The hapless woman looking into the sideview mirror of her car where the words “OBJECTS IN MIRROR ARE CLOSER THAN THEY APPEAR” are prominently visible in front of a rather disconcerting image?
The same scary image could be lurking in your records storage agreement and many folks are not aware of it. And now is the time to look, people.
Unbeknownst to many businesses that utilize offsite records storage, there is likely a clause that stipulates the vendor must be contacted x number of days prior to the end of the term of the agreement if the business would like to discontinue services. Many times the period of time is 90 days, but it could be all over the board. I’ve seen/heard of as few as 30 days and as many as 180 days.
Yes, 6 months. You must decide 6 months in advance as to whether or not you would like to discontinue storage services.
‘So what?’ you ask. Why does this matter? It matters because of a few reasons.
Reason 1. Cost increases. Agreements that have aged have typically been subject to incremental cost increases. Storage companies will unilaterally increase your storage cost on an annual basis. I talked with one prominent law firm that had more than 5,000 boxes of records in storage where fees had escalated over the years and our fees were MORE than 50% lower than their current vendor. All in favor of saving thousands of dollars a year please say “Aye.”
Reason 2. Renewal term. Most of the time the term for renewal is a single year, but every now and then we find that someone thought it would be prudent to allow for a FIVE year renewal period – every time it renews. This is a problem because of Reason 1 and the potential contractual obligations associated with those increased costs.
Reason 3. Considering change. Whether it be considering how your business operations have changed in relation to the need for records storage or what services you may want from your vendor it is good to have the time to think it through a bit. The digital age certainly changes how we look at documents and the past few years have accelerated that rate of change.
OK, so you are going to look, but why now?
Many records storage agreements have an end of term date of December 31. Subtract that 90-day notification requirement and that puts you on September 30. That is only 45 days away (give or take). And, unfortunately, many folks need to locate their records storage agreement so a little time is needed to track it down. If you get it on your calendar now, it gives you the time to delegate, plan, review, and research before deciding on how to proceed.
At the end of the day, your records storage vendor should be your business partner. Trusted vendors and advisors are just that – partners. We understand your needs may ebb and flow, but we’re here when you need us. If you don’t, then we’re not here to be a burden on your budget. That’s not good business.
If your current vendor is not working with you in this capacity, perhaps it is worth your consideration. In a past blog entry, I share some reasons for this to be worth your time to work with a vendor that helps you manage your records retention.
So, go ahead. Take a look at the agreement. Hopefully, I’ve prepared you for what could be there and what you might see, but at least now you’re ready for it.