Receivables Reporting: Not Just a Collections Tool
By Jeff Dobbins
Reporting your data to the major credit bureaus and letting your customers know about it should be a company policy, not just a collections tool. It is a proven fact that companies who report to multiple bureaus and tell their customers so reduce their DSO by an average of 27%. Delinquent accounts are reduced by 40% or more.
When a customer knows their payment is going to show up on their credit report, they are much more likely to pay you first. At the end of the month when they are robbing Peter to pay Paul, you have a much better chance of being Paul. Also, this makes it less likely they can just go to one of your competitors when you cut them off.
On average, about 78% of B2B businesses pull business credit reports from at least one of the major bureaus and rely on the data in them to approve customers. Where does that data come from? Other businesses that take the time to report, both the good and the bad. Every credit manager has a favorite bureau, and it may not be the one you are reporting to. For your data to carry substantial weight, it needs display on multiple reports. Any business can report their receivables to the bureaus, and it helps everyone if they do.
Business data reporting should include all accounts and must be done monthly, not just whenever you want to. You can’t just send in the bad ones every now and then. By reporting all accounts monthly, you are helping your good-paying customers build their credit while giving yourself leverage with the slow ones. All you need to do is put a notice on your invoices that you report to the bureaus. That way you inform customers before they get behind, and they are reminded every month when they get their invoice. That will quell any adversarial relationship with your slow payers. Your good customers will appreciate that you’re doing them a favor.
That is why Business Credit Reports provides receivables reporting to all three bureaus for FREE. We have thousands of companies who report through us, including collection agencies, banks, distributors and leasing companies.
Some people think that reporting is hard and a lot of extra work. If you go straight to the bureaus it can be. The major bureaus have all kinds of restrictions on reporting and make it difficult, so many companies don't do it. BCR makes it as simple as sending in a single monthly aging report. We allow even a company who only has a few customers to report to all three major bureaus. This lets a small company have the same leverage as the big companies who report.
Business credit reports are one of the most important tools in helping companies approve more good customers. We all rely on them, why not help make them better? All businesses benefit in the end.