With the exception of “cash-and-carry” operations, virtually all businesses extend credit in some form to retail customers or to other businesses. Inevitably, some of these customers don’t pay their bills on time. There are several reasons to report a delinquent account to a credit reporting agency. It protects you and other businesses, and it strengthens your position if legal action becomes necessary. Also, when you open accounts with credit reporting agencies you may check the credit ratings of prospective customers. That can save you far more than the modest fees you’ll pay for the accounts.
Select the credit reporting agencies that fit your business needs. Credit reporting for businesses is similar to that used for consumers, but is handled separately. The three major consumer credit reporting agencies are Equifax, Experian, and TransUnion (links below). The leading business credit reporting agency is Dun & Bradstreet. However, Experian Business and Equifax Business are important business credit reporting companies as well (links below).
Open accounts with the major credit reporting agencies in the category you need (consumer or business). It’s advisable to have accounts with each of the major companies in either category since each company keeps independent records. If you report a delinquent account to each, it puts you in a stronger legal position. All credit reporting agencies have online facilities where you can open an account, make reports, and check customer credit. You need to provide the name and type of your business, your location, and similar information. Make payment arrangements, much as you do for any account you open online, and you’re ready to go.
Prepare the necessary information to report a delinquent consumer account to a credit reporting agency. All consumer credit reporting agencies need the same information. In addition to the person’s name and address you should provide his or her Social Security number and last known employer (if available). The report of a delinquent account to a credit reporting agency also includes a description of the problem, the amount and date(s) of the transactions, due dates, and what was sold.
Report delinquent business accounts to business credit reporting agencies online. The process of reporting delinquent business customers is similar to that used for consumers, but with somewhat different information. You’ll need the legal name of the business, its “doing business as” name (if different from the legal name), location, and the business’s EIN (federal Employer Identification Number). Provide the details of the transaction(s): date, amount, due dates, the terms of the transaction, and what goods or services were sold. Again, it’s best to file this information with each of the major credit reporting agencies to give yourself the best legal position.
Be prudent about contracting with third-party providers who make reports to multiple credit agencies for you. These services sometimes save you time and money. However, you should check the terms carefully. Depending on the fee structure it can end up costing more than if you open your own accounts.
- Be prudent about contracting with third-party providers who make reports to multiple credit agencies for you. These services sometimes save you time and money. However, you should check the terms carefully. Depending on the fee structure it can end up costing more than if you open your own accounts.
Based in Atlanta, Georgia, William Adkins has been writing professionally since 2008. He writes about small business, finance and economics issues for publishers like Chron Small Business and Bizfluent.com. Adkins holds master's degrees in history of business and labor and in sociology from Georgia State University. He became a member of the Society of Professional Journalists in 2009.