Credit Reports Debt Collection Due Diligence Payment Defaults
3 mins read

Payment Defaults: The Provocative Tool That Works

How to get debtors to pay faster

Over 50% of businesses in Australia 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 five 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. This holds significant importance 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 is never too late to lodge a payment default

 You can still lodge defaults against debt that has been written off. In the year 2018, a construction company that 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!

Start today!

Lodging payment defaults can be a strategic move to recover outstanding debts and protect your cash flow from potential disruptions caused by slow-paying debtors. Try CreditorWatch for free and start today!

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

cash flow credit management debt collection Payment payment defaults risk management
CW_Author
CreditorWatch
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

women in shop looking at computer
Credit ratingCredit Reports

How to check a business credit score

ocean with an iceberg. The iceberg can be seen above the water and underneath
Credit ReportsDue Diligence

Deep due diligence for savvy businesses

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.