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customer credit reporting.. no payers

Discussion in 'Business Operations' started by causalitist, May 2, 2007.

  1. causalitist

    causalitist LawnSite Senior Member
    Messages: 610

    thought u guys may find this usefull.

    you can report a customer to all 3 credit Bureaus for ten bucks. u guys may not care, but this took me alot of searching to find this cheap.

    its nice to be able to have that as leverage ... or maybe to include in fine print on bills that you report credit info... why not? just like any other business would. that would prolly prevent late payments quite a bit.. the only people who would not pay, knowing it'll go on their credit are the most complete deadbeats.
  2. Richard Martin

    Richard Martin LawnSite Fanatic
    Messages: 14,699

    Before you go that route you need to be 100% positive that you can prove that a customer owes you money and your word against his/hers isn't good enough. You can be sued for ruining a customer's credit and you better be able to back it up or you may loose.
  3. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    I've been using that service for a little over a year now, whether I get paid or not is one thing but I tell you, ever since I put in place a collections system my deadbeats have gone way down.

    It's not so much about chasing the deadbeats with an effective method (that too), but it's as much about cutting down future instances, and I feel having an effective method in place helps considerably. My non-payment % went down from 10% my first and 2nd year to just under 1% now, tell me all about word of mouth.

    That stuff used to drive me nuts, then talk about going to court that was a big waste of time, I like that little $10 solution a lot, thou I have my own set of letters I send out before I use olddebts (same thing), by the time it gets sent to them it's last resort and to this day I have never collected once it goes there, but the peace of mind that it's over and I've done all I can do is worth it to me. And it REALLY cuts down on the scammers in the first place.

    I patiently await the day, 4-5 maybe 6 years from now, some former deadbeat calling talk about if they pay their bill will I remove the mark from their credit record, I am waiting for that day.
  4. bullethead

    bullethead LawnSite Senior Member
    from Texas
    Messages: 273

    Why mess with it at all - go credit card, hit it after each service, if it gets kicked back - stop mowing until you get a good number. You will never get burned for more than the cost of one mowing and you don't have all the admin time associated with sending out invoices.
  5. lawn

    lawn LawnSite Senior Member
    Messages: 344

    I would be ideal if we can look up a customer "before" we do any job for them, that way we know if they will pay us or not.

    I do not think olddebts.com has a debtors list
  6. causalitist

    causalitist LawnSite Senior Member
    Messages: 610

    they do actually have a option to order a persons credit report.

    so there you go..

    what credit score would people need to have in order to service them?

    im thinking 640 or else its prepay only.

    topsites: i can definitely see that working. thats what i was thinking, that it really wont help them pay, but it will help for the future.

    so what do you think of putting some very non threatening fine print on invoices to help prevent it right off the bat???
  7. causalitist

    causalitist LawnSite Senior Member
    Messages: 610

    so... let me ask, do you ONLY accept credit/debt cards?

    i suppose it would be a pain to have some on cards and some off.

    im going to switch pretty darn soon.
  8. bullethead

    bullethead LawnSite Senior Member
    from Texas
    Messages: 273

    All new customers are cc only, and a large percentage of our existing customers made the switch. We still have some invoicing to do monthly (about 60-70 customers) but I definitely think we made the right move going to cc only.
  9. Stillwater

    Stillwater LawnSite Platinum Member
    Messages: 4,889

    In Ma. this is not entirely true,
  10. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    Idk, maybe something about a 45-day late fee of $30... But see, I find trying to prevent the issue tends to scare off as many or more good customers, too, hate that fact but I find it best to deal with the aftermath and those who don't pay WHEN they don't pay only.

    As for Ficos, I have a chart but it's on my other hdd and I'm on Windows right now and can't switch to Linux, but...
    Experian had (and may still have) some interesting facts concerning non-payment issues. Historical charts, a Fico-Experian cross-reference, and how many pay and not, here's what I recall from memory:

    Fico 800-850 = Experian A+++ = 0.1% default
    Fico 720+? = Experian A+ = 0.3% default
    680? = A = 0.9% default
    650? = B = 1.8% default
    C = 3% default not sure thou
    D = 9%?
    E = 18%? (not sure, I forget...
    And F or HR is real bad, like 30%

    The numbers may not be quite right and this is just for credit cards, but I am fairly convinced there exists a cross here to other bills as well. But to pull a credit record you need the customer's social security number, basically you'd need their approval, so you'd want to integrate a credit record check as standard procedure in all your estimates, not sure how that would work out but if it did, I would be all for accepting B ratings and above only, because it does make a difference.

    I'll post the chart later when I can gain access to the Linux part of the pc, the exact figures really are an eye opener, but what I recall the most is that the % default about triples from one letter grade to the next, and really the only way to prevent most people from not paying is to accept only those with the highest credit ratings (which, you'll still get a few oddballs who have great credit but a higher % default as well, but)...

    The thing is, too, those with high credit scores tend to have available cash, not to say there don't exist the few with good scores who are constantly in debt up to their eyeballs, but as a rule those with good scores have less debt and more money to spend.

    I would personally like to see how my own pre-screening methods work when compared to the customer's actual credit score, that I think I would find interesting. Because I would willingly bet that most of my customers do have good scores, that's what I'd like to see is a confirmation that a good pre-screening system is, in effect, like a credit record check. Again I'm sure there exists the exception, but I would think that, as a rule, those with good scores also tend to give a rat's in an overall way.

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