Virtual Data Room: It’s Not Only Security but a Compliance ToolAuthor: Lauren Hawells
When running any type of business there are a number of internal and external regulations that must be adhered to. These could include legal, governmental or company standards. It is important that your documents are in order as it will make the due diligence process run more smoothly. Virtual data rooms (VDRs) are useful tools that help you organize and update your documents as well as allow you to track the progress made on different tasks. They offer cloud-based data storage which is secure and easy to use. VDRs are known for their superior safety features, such as encryption and “fence view” options, but this article discusses how they make compliance more efficient and more successful.
The first advantage that comes to mind when considering moving your data from a physical data room to a virtual one is the organizational features. During an audit or due diligence process thousands of documents may exchange hands between the involved parties. If these records are not organized it could slow the process down significantly. In the case of mergers and acquisitions it could even cost you a deal. VDRs make organization easy, with features such as dragging numerous documents into folders ate once, creating links from one document to another and automated indexes, creating user-friendly data storage has never been easier. These features also make the virtual data rooms accessible to people with all levels of technological skills.
VDRs also simplify compliance procedures within multi regional companies because they can be accessed from anywhere with an internet connection. So, if your business is undergoing a companywide audit, for example, physical documents would not have to be sent to the head office saving time and money on transport. With a virtual data room set up, your company can be audited from any of your offices and all the necessary data will be but a touch of a button away. VDRs are also superior to email in this regard because large numbers of documents can be uploaded at once while email requires documents to be sent in much smaller increments.
During a merger and acquisition or audit it is essential that all the necessary files are available. It is a well-known fact that missing information could lead to the loss of a deal or problems during legal processes. When physical data storage is used, it is not uncommon for important files to be misplaced when being exchanged between people. With the features mentioned before, virtual data rooms ensure that all your important data will never be lost. Another feature that protects your data being lost is the physical security of the data storage. The servers are guarded 24/7 and backups are kept in a remote location in the event of a fire or flood.
It is often necessary for documents to be in the hands of multiple parties at once. The use of physical data storage makes distributing these documents a tedious and time-consuming process. Virtual data rooms on the other hand allow anyone with an access code to view the necessary documents at any time. This is particularly useful in mergers and acquisitions as numerous buyers can access the data room at once without being aware of one another. It can also make an audit or legal process move faster as multiple people can work with the same documents at once.
Another advantage of VDRs during is the access control feature. During an audit or merger, you may want third parties to have access to certain information but may not want them to view other unrelated records. Access control functions mean you can restrict certain people or groups to certain files within your VDR. This saves you the time and money of setting up various data rooms for the various parties involved, so everyone can access the data they need without delay.
An audit feature is particularly useful during deals as they can help you monitor where potential client’s interests lie so you can increase the information in that sector. This feature also allows you to track the progress of a deal or audit and ensure that everything is running smoothly.