Credit Reports CreditorWatch Debt Collection Due Diligence Payment Defaults Risk Management
2 mins read

Payment Defaults: The Provocative Tool That Works

How to get debtors to pay faster

Over 50% of businesses that incur a payment default go into administration within 18 months.

Payment defaults not only help you get debtors to pay you faster, they warn you and other companies of slow-paying debtors that might be in more financial trouble than you realise.

What is a payment default and how does it work?

A payment default is a notification on a credit report, flagging a debt that has not been paid. Once a default is lodged, it can affect a company’s credit score for up to 5 years.  If a default is paid, its status can be updated.

While lodging a default can help you get an overdue debt paid, it also assists other businesses to avoid their own bad debt. Once a default has been registered, anyone else dealing with the debtor will receive an email alert that the default has been lodged.

Further, anyone that runs a credit report on that company will see the default present on the credit file. And this carries a lot of weight for our customers.

In fact, 91% of CreditorWatch customers said that they would not engage with a company that had a default lodged by another customer.

Warning debtors can sometimes be enough

Payment defaults should be used as a last resort. Encouraging a customer to pay up by issuing a final notice letter which threatens a default is often enough to prompt payment. Learn how CreditorWatch customer Ward Packaging used a letter of demand to collect their outstanding debts in this case study.

There are other debt collection strategies to try before lodging a payment default. Staying proactive and on top of your debtor management is the best way to avoid bad debt.

It’s never too late to lodge a payment default

You can still lodge defaults against debt that has been written off. In 2018, a construction company who uses CreditorWatch uploaded defaults against their bad debt write-offs from the previous three years. 

They were contacted by one of the debtors who settled a debt in order to clear their credit file. The amount exceeded $50,000!

Try CreditorWatch for free

If you loved this article, you will also love CreditorWatch’s Unique Data and How to Reduce the Risk of Bad Debt.

debt collection NewsHub payment defaults
Author placeholder
Author
Contributor to the CreditorWatch News Hub
14-Day Free Trial

Get started with CreditorWatch today

Take your credit management to the next level with a 14-day free trial.

You might also like

Credit ReportsCredit Risk

Credit risks associated with cross directorships

Credit ManagementCredit Reports

Not all business credit checks are equal

Hey, Wait…

Subscribe to our newsletter

You’ll never miss our lat news, webinars, podcasts etc. Our newsletter is sent our regularly so don’t miss out.