Dear CashFlo,I am really mad at some customers who have not paid me. I want to send them to a debt collection agency and I want their credit trashed! That will help me get paid, right?
Mad in Milford
Dear Mad,
I certainly understand how you feel. But I ask you, what is the number one thing you want? I hope the answer to that question is that you want to recover bad debt. With bad debt recovery as your goal, it does make sense to send the debt to a collection agency.
Credit bureau reporting can be a valuable tool for a collection agency. However, it is not always appropriate and there are some risks as well.
Reporting one item on someone’s credit report will not “trash their credit”. The impact of reporting one item depends on many factors including the size and type of debt. For example, new credit scoring will lessen the impact of delinquent medical debts reported to credit bureaus.
If you want your collection agency to report bad debts simply because you want to punish your non-paying customers, you may be cutting off your nose to spite your face.
The best collection agencies use credit reporting as only one of the tools and work hard to make contact with your customers and work out payment arrangements with them. A collection agency that simply slaps a mark on someone’s credit report and waits for the debtor to call to pay is not going to get you the results you deserve.
As I always say, “Don’t Get Mad, Get Paid!”
Yours truly,
CashFlo
P.S. Are you looking to hire a collection agency but not sure what to look for? Download our free guide today!
