The True Cost of Bad Debt Expense

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.

A company that reports 5% net income that incurs a $100,000 bad debt hit would need to generate an additional $2,000,000 in additional sales to recoup the lost income on this exposure. 

When doing a post mortem on a customer that is uncollectable and being expensed to the bad debt reserve, the single most overriding factor that is always mentioned is that the credit information on the customer was either lacking in content or was out of date.  By not watching the early warning signs that may have been available through mercantile reports or trade associations, a golden opportunity to minimize or eliminate the damage has been missed.

Business Credit Reports prides itself on offering a full suite of products and reports at a variety of price points so that the credit professional can choose the most cost-effective solution commensurate with the exposure and the risk.  Our blended reports that pull real time data elements from all four of the main bureaus ensure that you are receiving more pertinent, timely data upon which to make informed credit decisions that impact your business.  BCR’s free alert monitoring will make you aware of changes in your customer’s financial condition that may impact your ability to get paid.

We offer the tools available to help you avoid that long walk into the corner office to tell management about that $100,000 hit.  Contact us today and we will work up a customized, low-cost solution for all of your business’ credit reporting needs.