Hello there Thea,
How long do we have to keep inactive customer credit applications in our files?
— Itching for some Spring Cleaning
Dear Spring Cleaner,
Credit files are like your closet. How long do you keep your old prom dresses, jeans that will never get past your knees, concert t-shirts, and other assorted wearable memorabilia? It depends on who you are. Some people toss all that stuff the minute it becomes apparent it no longer is an active part of their existence. Others keep items they’ve had since the sixth grade because you never know when you may need to bust out a SpongeBob sweatshirt.
There is no law that requires you to keep an inactive customer’s credit application. But let’s be clear—by inactive, I mean they do not owe you any money or are in some other legal entanglement with your company.
Let’s go a step further. There is inactivating an account for lack of purchasing and then there is purging your files. What is your company’s view on non-purchasing accounts? Do you leave them open indefinitely? They may be back and bless you with an order (usually once they are cut off from their current favorite supplier). Do you mark the account inactive at six months, a year, two years? It comes down to your policy and comfort level.
If they haven’t purchased from me in six months, I want to know where they have been all those months. I may not make them fill out a new credit application, but I sure am going to pull a credit report and ask my sales rep where they have been getting their materials and how did the magical reconnection occur? Are they needing a product line only we have? Did they reach their limit at our competitor? Ran into them at church and now they feel beholden to you? Where have they been purchasing and how did we catch their eye again?
Once those questions have been addressed, we can backtrack to the purging I mentioned. One of the many benefits of tech has been scanning customer credit files and eliminating all those lovely metal filing cabinets. Credit files are the catchall of random bits of information that are no longer useful, but our paranoid—for good reason—credit hearts can’t seem to let go. Interesting in a “saw it in a museum” kind of way, but useless. No one is looking for a trade reference or credit report from 1946. Purge all those useless bits but keep what has historical value: The credit application.
I’ll repeat: dump the useless bits and keep the application. If you haven’t already, scan them and attach it to the customer’s account or however your company stores that data. If your lost little sheep comes back, require a new credit application and process it like a brand spanking new account. The old app provides you valuable insight: you can compare the ownership and other details to see what has changed, if anything.
Inactive accounts that pass the two-year mark can be archived, complete with any and all credit applications. All you lose is a little storage space. If the customer is completely out of business, it’s your call on hitting the delete button.
That is the longer answer to your simple question. You don’t have to keep them. Just like any fashion trend, customers come and go and while they may look the same, the devil is in the details. That old app may provide some great insight and make you look great by comparison—SpongeBob sweatshirt optional.
