Experian’s quarterly Business Benchmarking Report released numbers for Q3 showing the percentage of dollars severely delinquent (91+ days past due) has increased by 15.8 percent compared to September 2010. This goes to show why businesses are struggling with their debt collection efforts. 

 How do you know if you are getting the most out of your collections strategy? 

Wouldn’t it be nice if you knew exactly when one of your uncollectable accounts freed up some capital?

In my previous blog, I discussed the traditional use of commercial triggers for portfolio management purposes. However, many businesses are using triggers with their collections teams to get paid sooner.

 Commercial triggers offer notifications on balance change decreases, which from a collections standpoint means your delinquent customer is paying other vendors. Why aren’t they paying you? A new inquiry or a new tradeline trigger also indicates that the business is actively establishing new credit relationships which is an indication that they remain credit active.

Additionally, some traditional triggers used for portfolio management can also be used for collections.  Score change triggers as well as days beyond terms triggers can track positive payment performance indicating your customer is in a better position to pay you.

So while the business landscape may not be changing anytime soon – this doesn’t mean your collections strategy shouldn’t change either.  Work smarter not harder and get paid sooner!

Since fluctuations within the market or unexpected disasters can drastically impact your portfolio’s risk, it’s generally good practice to regularly review the level of exposure within your portfolio. Here are few evaluative questions you may want to consider:

• What is your exposure roll up by parent company?
• Do you have a high concentration of accounts by specific geographic locations that may be affected by common natural disasters?
• What is your estimated potential loss by industry if there is a downward turn in the market?
• Is there any noticeable credit limit or credit utilization trend within your portfolio?
• What is your average level of risk relative to the number of delinquencies and your aged accounts?

Evaluating your portfolio and answering the questions posed above can help you find unexpected risk as well as find ways to grow your customer base in more diverse industries or locations.

As a parent of two youngsters, it has dawned on me that managing the credit lifecycle is very similar to being a parent. In the beginning, whether it’s children or prospects, you’re doing everything you possibly can to research, learn, take care of and keep them out of harm’s way. As children age, similar to accounts, we tend to be more hands-off (teenagers and bad accounts prefer this approach), but both need managing/supervision. If things really go south, then there is the need for Collections or maybe boarding school, just kidding about the boarding school, but you get the picture. I don’t typically give parenting advice, but I am here to help you with your credit lifecycle needs.

1. Stay involved – regularly monitor and analyze your portfolio
2. Show some love to both your good and bad accounts – bad accounts need to be adjusted to reduce risk and good accounts might need more incentives to help them grow
3. Send the really bad accounts to Collections – it’s for everyone’s good

Learn more about our offerings – you’re on your own with the teenagers.

I just returned from our annual Vision conference, and it was a great success.  This was the 30^th annual event, and we played host to over 400 financial services professionals from around the globe.  The program was excellent…education sessions highlighting best practices for managing credit risk, informative “hot topics” sessions around important economic trends, and guest speakers including Condoleezza Rice; former Director of the Congressional Budget Office Doug Holtz-Eakin;  and Tom Brokaw.  Ms. Rice was our keynote speaker, and talk about timing!  She spoke on Monday morning, right after we had just heard the night before about Osama Bin Laden! 

The biggest highlight was the opportunity to meet with our clients in a very informal setting.  I had several conversations, gaining clients’ feedback on the products and services they use.  We also brainstormed other ways Experian could help them achieve greater success in managing business credit risk.  We had several networking activities designed to give our clients the opportunity to interact with their peers.   There were an ongoing stream of opportunities to share information, learn how others were addressing similar problems, and head back home better prepared to face the day-to-day challenges in their businesses.  Looking forward to next year’s conference scheduled for May 6^th – 9^th, 2012, in Phoenix.  Hope to see you there!