It’s time to convert to a virtual filing cabinet

Dear Thea,

I work for a retail building materials company and we have several locations. We are curious how others handle their credit application process. What are the most secure ways to store credit applications and information, and also make the application information available for officers to access when determining credit worthiness? Looking for suggestions.

Thanks, Possession Obsession in Pocatello

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Dear Obsession,

Remember when you were a little kid and would get scared in the middle of the night and run down the hall to your parents’ room to jump into bed between them? You would snuggle in feeling super safe in the knowledge that none of your imaginary fears could get you? That was the best feeling in the world back in the day. That is the kind of security you want for your customers confidential information.

But since snuggling those files in your parents’ bed would be not only impractical but super weird, let’s go with a more practical alternative: the virtual filing cabinet.

To use a Southernism: I love me a virtual filing cabinet. They are accessible anywhere, any time by anyone (who you give access to) and provide the security you are looking for. They’re the trifecta of answers to your credit question.

Virtual filing cabinets are easy to set up. Select a place where they will “live” at your company, such as your shared drive, then password protect it and POOF! You’ve got your wish. You have a secure place to put your customers’ data and it is accessible by the people who need it, whenever, wherever. Problem solved.

Warning label: That is the easy part. Of course, dear Possession, it will not be quite that easy to implement. You will encounter some pitfalls, roadblocks and speed bumps along the way that will make you question why you started this project. I do promise if you stick with it, the results will be worth it.

People tend to skew to the negative and fear change, looking for reasons your plan will not work. Fear not, dear Possession. Help is just a few short pointers below.

First, set up the filing cabinet on shared drive. Set the “filing cabinet” up the same way you would your physical cabinets except in this scenario you will be making sub-folders of the alphabet under the main file. Then password protect it.

Now comes the hard part: rolling it out to your team and beyond. The key to the virtual filing cabinet program is to eliminate the physical one. That means getting rid of them. You will need to go through the credit files you have, and edit the old, useless bits of data that we credit people love to hang onto. All you need is the current credit application, latest financials (if you have them) and any current credit reports. I advise a summary sheet, then you can have the key elements on it and update it every time you review the file. That’s it. Take that credit file from the four-inch nightmare it is to a streamlined version.

Scan the items into the virtual cabinet, under its corresponding letter in the alphabet with a sub folder make just for that customer. Easy peasy. Depending on what your files look like, this process will take a coordinated effort from your team. The challenge increases if you have multiple locations that have maintained (with or without your knowledge or consent) credit files.

This is where the real challenges come into play. The biggest challenges are with people. The process itself is easy, the people part of it…let’s just say it is the equivalent of explaining to Nana why are not at church every week. No explanation of why you are doing this will seem like it is enough. The pushback is plentiful:

  1. But I NEED to have a hard copy file.
    No you don’t. Print the financials if you need to and shred them when you’re done. I have told credit managers if they really need a hard copy file while reviewing in virtual mode, make a placebo to snuggle up to whenever they are reviewing. I thought it was a fab solution. I got Nana worthy side eye.
  2. I can’t access the file.
    That’s right, sweetie. Unless you have the password, you’re not welcome. Keep a list of who has access, why do they need it to do their job, and change the password with some frequency. It’s like a super-secret handshake to be in the club.
  3. What if we get hacked?
    This is a legit concern, but not insurmountable. Hackers usually go for easy money. That means credit card numbers. Applications usually ask for bank account numbers and you may get a social security number. It takes much more effort to commit crime and havoc (and yields little fast cash) with those items then it does with credit cards. You stand a higher risk of a disgruntled employee jacking your hard files then a threat from a hacker or dark web assault.

Still not convinced? Add a rider to your insurance policy to cover storage of sensitive information and issues that might arise if you do find yourself the victim of a hacking assault.

But wait, there’s more. Outsource the virtual filing cabinet storage to a third party. Check out the errors, omission and compliance policy they have and outsource the stress. What you spend for peace of mind will also bring the benefits of convenience and streamlining your process.

Ask yourself, how secure is your data now? My bet is that the files are currently stored in cabinets in either your office or a central location. Unless they are locked and the key has to be checked out, the air of susceptibility is already swirling around them. You have a false sense of security that comes with decades of “doing it the way we always have.”

Eventually, we all have to find ways to get over our fears, real or imagined, and live in the now. The now is technology. Embrace it.

With more than 30 years of credit management experience in the LBM industry, Thea Dudley consults with companies on a wide range of credit and financial management issues. Contact Thea at theadudley@charter.net.

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