No One to Blame but Yourself for Customers Paying Late?

icon Blog on Collections, International  •  posted 02/18/12

AR and Credit Pros Fail to Take Steps Vs. Late Payers

Companies ignore publicly available data that could protect them from late payers, according to new data from the Institute of Credit Management (ICM, www.icm.org.uk), Europe’s largest credit management organization. An ICM member survey reveals that 24.7 percent of respondents fail to utilize payment performance data provided in B2B credit reference reports.

About two-thirds (63 percent) fail to share payment performance data on their B2B clients with Credit Reference Agencies—despite the fact that 75.3 percent rely on such agencies to make informed credit decisions.

Notes Philip King, Chief Executive of the ICM: “You would expect both positive and negative information to be passed on so other businesses can benefit from the agencies reports. Instead, it just builds up a confused picture of many businesses finances and can result in more companies not getting paid.”

While credit pros understand the importance of monitoring their credit risk exposure, their checks often only make use of annually filed data—which can be significantly out of date. Monthly payments data provides far better insight into negative payment trends over a sustained period.

The survey also reveals a mixed response to the usefulness of payment performance data in assessing commercial credit risk. While 35 percent of respondents find such data to be “of limited or no use,” 32 percent report it is “useful.” A mere 16 percent see the information as “invaluable.”