The Hidden Costs of Missing Documents
Everything costs money, including missing documents. When an important record is lost, the company also loses money in the form of down time, payroll, compliance, and trust. And every organization, regardless of size, handles thousands of documents annually. Losing even a small fraction translates into a large financial burden.
However, there is light at the end of the tunnel. Once you understand how burdensome the cost of missing documents can be, then you’ll be able to demonstrate to leadership how effective records management and information governance practices are invaluable to the organization.
It’s easy to think, “oh, we don’t lose documents very often,” but the research shows otherwise. According to AIIM, 7.5% of all documents become lost and 3% of the remainder get misfiled. In a company managing 50,000 documents per year, that’s 3,750 files gone completely and another ~1,380 documents misplaced in the wrong folder or location.
It’s like trying to cook dinner when one out of every ten ingredients in your kitchen have either gone missing or been placed in the wrong spot. You can either take a trip to the grocery store, and the meal will take much longer than expected to make, or you can just order take-out. Either way costs you time and money. That’s exactly how lost or misfiled documents derail business operations.
When managing physical records, the labor costs can easily pile up. It’s estimated that the labor costs associated with filing one document is $20, tracking down a misfiled document is $120, and reproducing a lost document is $220.
Let’s go back to the company we cited above that manages 50,000 documents per year. If 3,750 files are lost at $220 each, that’s $825,000 annually spent on recreating documents. If 1,380 are misfiled at $120 each, that’s another $165,600 annually. In total, this company would be wasting nearly $1 million every year on finding or reproducing lost and misplaced records.
Let’s look at the labor costs associated with missing documents from a different angle.
The average knowledge worker spends approximately 1.8 hours per day searching for information. That adds up to 9 hours a week—more than an entire workday lost.
If the average knowledge worker is paid an annual salary of $50,000 per year and works 40 hours per week, for example, then here’s how that time translates into labor costs:
Multiply that by 50 employees and that’s over $560,000 lost every year! It’s like paying one out of every ten employees to do nothing but wander the office looking through filing cabinets.
Missing or misplacing documents isn’t just an inconvenience—it can lead to major compliance failures across industries. Regulations require businesses to maintain and produce records quickly during audits or investigations. Failure to do so can result in significant fines, legal liability, and reputational harm. Here are a few examples:
Across industries, missing records are treated as compliance violations. These fines are structured to be painful enough that prevention (via proper records management) is always less costly than penalties.
In addition to labor costs and non-compliance fines, missing documents create plenty of hidden “soft costs” that often go unnoticed and accumulate over time. These costs may not directly correlate to dollars like the previous examples do, but that doesn’t make them any less impactful to the organization’s bottom line.
If your organization struggles to locate documents quickly—or worse, loses them entirely, this challenge presents an opportunity to demonstrate the tangible value of investing in records management or information governance. Communicating the true costs of missing or misfiled documents to leadership provides a compelling argument for change.
By translating these issues into potential savings, you can quantify the expected outcomes of a digitization, indexing, or governance project. For example, showing how much time employees spend searching for lost files, the potential fines avoided through compliance, or the reduction in duplicated work creates a clear picture of the return on investment. You can even calculate how long it will take for the project to fund itself, turning what may seem like an upfront expense into a cost-saving initiative.
Moreover, framing the project as a solution that addresses both efficiency and risk helps leadership understand its strategic value. By presenting the costs of inaction alongside the benefits of a structured solution, you make a persuasive case that these initiatives are not optional, but essential, and that the organization stands to gain far more than it spends.
For additional examples of how missing documents can quickly become a compliance nightmare, and what you can do to achieve compliance harmony, read “The Butterfly Effect in Paper Records: The Silent Power of Knowing Your Archives.”
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