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Be sure to "square" the folders using the appropriate crease (along the bottom edge) for the thickness of the folder.
Flagging of individual materials may occur during sorting/arranging, during refoldering, or during description. Each collection may lend itself to a different set of procedures, depending on how the collection material arrived at the library and what kinds of actions you plan to take to it. Flagging conventions must be consistent across the department so that end-processors can easily work with collections from different archivists.