This past week, the major credit reporting agencies announced sweeping changes to the way they will be reporting and handling many aspects of their daily business. These changes are generally for the benefit of consumers, which is great for all of us personally, but how does it affect your accounts receivables and unpaid balances?

First of all, what are the basics to these changes? They revolve around the way bureaus handle disputes concerning unpaid bills, and will make it easier and faster to correct mistakes on a consumer’s credit report. It will also provide a longer window for medical charges to affect credit score, and will change what types of charges show up on a report. Overall, it gives customers some relief and expediency in the way their credit scores are handled, which can affect their ability to get a loan, a cell phone contract, or in some cases even a job.

Let’s look into this a little further:

·Disputes: In the past, if an alleged delinquency showed up on a customer report, the burden of proof fell to the customer, while the bureau was more likely to take cues from the creditor. Now, credit bureaus will be staffing up to better investigate disputes, and creditors will be held to more rigorous documentation standards.

·Medical Debt: Credit Reporting agencies will now be extending the waiting period for reporting medical delinquencies to 180 days. The extra time will allow for insurance companies to apply payments to the total bill, a process where delays often cause creditors to issue a credit hit prior to receiving insurance funding.

·Retroactive Medical: The bureaus have also agreed to expunge previously reported medical balances that have since been paid or will be paid by insurance, rather than allowing them to sit on a customer’s report for the standard 7 years.

·Charge Types on Reports: Items such as parking tickets or payday/check cashing loans will no longer show up on credit reports.

·Greater Transparency and Education: If a customer has a dispute, they will have access to more educational content and information about their case, and will be entitled to an additional free credit report upon completion of their dispute if a change in credit takes place.

·Timeline: Changes will begin to take effect over the next few months, with some of the more involved changes being implemented over the next year.

What does that mean for your business and your customer? It makes documentation and pursuit of unpaid income more important than ever. If your records are not fully in order, it’s time to take a ‘state of the union’ on your internal processes and make a plan in preparation for disputes as they arise.

If a customer feels less of a threat from taking a credit hit, they may be less likely to pay an outstanding balance without continuous prompting. You can rest easy if you are already a current client of TekCollect - you already experience industry-leading documentation, reporting, and effective pursuit as part of our standard services. We pride ourselves on exceeding the new credit bureau requirements, and are always looking ahead of the curve.

Article Sources: Los Angeles Times, Fox Business, Chicago Tribune

TekCollect provides the most advanced accounts receivable, collections, and client retention services available. To learn more about us, visit our website and follow us on Facebook and Twitter.

How is your business affected when a customer doesn’t pay? It may just start as an annoyance, sending out a letter or an extra phone call in your day. You may think, “It’s just common courtesy to pay your bills.” As more time passes, you realize your customer has no intention to pay despite your internal efforts. What are your options?

Continue Trying to Collect Internally:

• Pros: Perceived cost savings and staff knowing customers personally
  
• Cons: With strain on staff and customer rapport, your chances of recapturing receivables has very small rate of success and often result in all-out customer loss!
  

Attorney:

• Pros: An attorney-written letter can often scare the toughest of debtors into paying.
  
• Cons: It comes at a high up front cost, with alienation almost inevitable. Most corporate attorneys are not experts in collection law.
  

Contingency Agency:

• Pros: Time-tested tactics, often with a full team at your disposal.
  
• Cons: Rates between 33-50% per account collected, with a recovery rate of just over 15% on average.
  

Flat, Fixed Fee Philosophy:

• Pros: A low price, typically less than 10%, with non-alienating contacts and consistent professional follow through. This method promotes healthy A/R and customer retention, and boasts most of the pros from the other methods.
  
• Cons: None from our perspective :) 
  

We’re obviously a little biased as to what works best, but as experts, we’ve seen it all. There are definitely options for re-capturing that income, with advantages to each. The best way to make the choice for your business is to think about what pillars are important to you: Recovery, Cost, and Alienation. Don’t wait for the reality to set in on your outstanding accounts!

TekCollect provides the most advanced accounts receivable, collections, and client retention services available. To learn more about us, visit our website and follow us on Facebook and Twitter.

The first half of the year is when everyone is thinking healthy. Working out, eating better, being more active, and getting outside. We start the year as optimists! The same goes for your customer’s financial health. They want to start saving, spend more wisely and get out of debt.

Getting in your customer’s head is priority one for understanding how to best relate to them, both in getting them to buy into your product as well as getting them to pay for it! The customer’s openness for improvement at the beginning of the year is a good time to start setting some financial initiatives in motion that will improve both parties’ cash flow and relationship. Here’s some tips:

·         Start Sooner: Get in touch with your customers before their bills go overdue, with a friendly reminder of their obligation. This helps both of you stay on top of your finances.

·         Change Your Mindset: Don’t think of your slow-pay clients as debtors. They are your customers first! Give yourself some space and perspective from the anger your cash flow issues may be causing.

·         Give Options: Approaching your customers with payment options may relieve a great amount of stress in some cases. Remember, most of your customers do want to pay, but lack the mode to do so. Providing a roadmap for honoring their financial commitment to you can be the catalyst to jumpstarting payment today.

·         Separate Yourself: Is it weird servicing the customer with one breath, and then reminding them of their debt in the next? It’s weird for them, too. That’s why third party services like TekCollect are a great resource. By removing yourself from the equation and letting your customer work things out with TekCollect, it actually removes the awkwardness altogether. They can retain their feelings of privacy and self-respect by working with our solutions-focused team, while keeping your connection free and clear.

You are a member of a business that provides goods and services, but you are also a consumer in your everyday life. Think of how you would want to be approached for your own financial obligations. Think of how much value you’d perceive if you were given a chance to better your personal financial health by the businesses you deal with. That is how TekCollect can become a trusted partner in your accounts receivable management, by providing solutions and preserving customer goodwill that will extend far beyond the burn-off of New Year’s resolutions.

TekCollect provides the most advanced accounts receivable, collections, and client retention services available. To learn more about us, visit our website and follow us on Facebook and Twitter.