Your accounts receivable is a constantly changing ledger that should be in the black most of the time. When accounts are behind in payments, however, you face a dilemma. Putting the account into collections is a natural step forward, but it also creates strain between the consumer and business. There’s another option in reporting collections to the bureaus. In many ways, your bottom line improves with this business alternative.
Reporting Collections to the Bureaus Jump Starts the Communication Process
According to Equifax, collection amounts remain on a consumer’s credit report for seven years. This time frame is considerable. It limits the consumers’ abilities to borrow money.
From the moment you begin reporting collections to the bureaus, the consumer might be on the phone. This person may have been almost impossible to find otherwise. Between voicemail and email, consumers have several ways of avoiding talks with an AR representative. The consumer wants good credit so clearing up the collection situation is key. They’re reminded that paying the account off only helps them with a better quality of life with regard to finances.
Collection Times Shorten
Improve your profits and report collections to bureaus because your efforts will be rewarded with less wasted time. In the business world, time equates to money. Your employees take time out of their day to collect on the delinquent accounts. The accounts might be sent to an outside entity that charges you for the services.
Without the bureaus being involved, the accounts can sit in collections for months. Consumers see that their credit scores and history can be better by just paying off the account. They pay off the funds, and you save money on the collection process.
News Spreads
When you know how to report collections to the respective bureaus, you create a long-term benefit for your company. Be consistent with reporting, and the news will spread among consumers. Potential clients with spotty records will be wary about working with you. They’ll seek out other businesses for their needs.
Consumers with good credit won’t care that you report collections because they don’t plan on being delinquent. They see your business as a way to improve their score and finances with a fair interest rate.
Improves Relations With Other Borrowers
Many consumers are aware that businesses must cover some of their costs, including collections, with fees and other charges. Your bottom line improves with collection reporting to the credit bureaus because of fewer internal fees. Over time, you’ll have fewer delinquent accounts with the bureau-reporting process. Your costs drop, which means that the savings can be passed onto the consumers.
Consumers react to this business plan by sticking with your company. Loyal clients will only bring in more, reliable funds.
Strengthens Employee Morale
There are very few employees who enjoy calling on collections. It’s difficult and stressful. An indirect way that your business improves with collections is with increased employee morale. Consumers whose accounts enter collections will slowly dwindle in number with the bureaus being involved. Your employees can focus on revenue generation instead of collecting on past debts.
Happy employees are generally more productive. This simple fact may be enough encouragement to turn to the credit bureaus in the future. You’ll see your bottom line improve from several angles.
When you know how to report collections to the credit bureaus, it’s a good idea to wield the power with care. Examine each account as they enter delinquency. Mistakes can happen at times. It’s your job to work with the consumer so that your company remains financially viable while remaining fair during collections.
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