Using the “stick” method of reporting commercial credit to get clients to make regular on time payments is highly effective as well. Contrary to the reward method, a negative report on a business’ credit score can be just as effective.
The truth is that you’re not going to have many who will default on their payments, but there will be a small percentage of businesses that will. It can happen for a variety of reasons. During a recession, the chances of it happening increase drastically. A failure to pay by a couple of businesses can affect your business, and you can’t afford that.
Fear Is a Factor
The simple fact is that many people will make choices based upon fear whether that’s good or bad. If they fear that their business’ credit score can negatively impact them, they will try their hardest to make regular payments. This is especially true for smaller businesses because one wrong move can spell disaster. A negative credit score can affect how a business operates, whether it can secure credit, whether it’ll incur higher interest rates and the risk of going out of business. No one establishes a business only to close it a short time later. Business owners want to see their businesses thrive.
Both the Carrot and the Stick Work
You can benefit by reporting other businesses both positively and negatively. However, you may not have the staff to meet those needs or know how to report commercial credit. Many businesses do not. There is more involved in reporting commercial credit than you might expect. It takes time to perform reports. You need the approved file formats like Metro 2 format. You also have to be familiar with different major reporting companies.
While this may not be exhaustive at first, you will need to hire more staff or pay overtime to existing staff. Securing an outside source to handle your commercial credit reporting can significantly improve your efforts in securing payments on a variety of accounts.
Reporting Commercial Credit Helps to Secure Payments in a Few Ways
Hiring a company to handle business credit reporting helps to free up your team for other duties. In addition to not having to add staff or pay overtime, you stand to significantly benefit in other ways. For starters, you are more likely to collect payments from other businesses.
A business credit reporting company can ensure accurate reports and can follow-up on them because they know how to report commercial credit. Collecting on funds sooner rather than later helps you to keep your business and payments up to speed.
Also, you can prevent the necessity of needing to contact a collection agency, which can decrease the amount you recover by 50%. If a collection agency isn’t the course you want to follow, your only solution at that moment is recovering your payments through small claims. This takes a large amount of time.
Hiring a business credit reporting company helps you to provide the carrot and the stick. If you have to use the stick, a credit reporting service company like Datalinx, LLC ensures better chances of recovery. For more information on becoming a data furnisher, please contact us through the form on this page, or call us at 425-780-4530.
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