The Credit Department’s primary function is to maximize credit sales with a minimum of risk. Managing bad debt expense is a tightrope that all credit professionals walk every day. Too little bad debt expense might be indicative that not enough reasonable risk is being taken and selling opportunities are being left on the table. Excessive bad debt exposure can bring your company to its knees.
If you’re not reporting you may have an SBA guarantee issue! The updated Standard Operating Procedure 50 57 effective March 1, 2013 says, “Lenders are required to report information to the appropriate credit reporting agencies whenever they extend credit via an SBA loan. Thereafter, they should continue to routinely report information concerning servicing, liquidation, and charge-off activities throughout the life-cycle of the loan.”