Debt Scoring:
And Why You Need It In Your Business

Credit scoring is used by credit granters and financial institutions to measure and evaluate the creditworthiness of an applicant desiring credit. Based on probabilities, and using mathematical algorithms and formulas, they're used to assess potential risk exposure from a lending situation.

However, when it comes to your receivables and delinquent accounts, debt scoring serves a different function. You've already extended credit to these customers, and as a result, a portion of your receivables goes unpaid.

Imagine though if you had the ability to predict, with reasonable accuracy and precision, which of your debtors are likely to pay you, and which ones aren't? If you had access to this valuable information, you would certainly spend the lion share of your activities in going after the accounts with a greater probability of paying.

Why Debt Scoring Of Your Delinquent Receivables?

By having the ability to take a "birds eye" look at their debt portfolios, and being able to reasonably predict the accounts likely to pay from the difficult accounts, can help them to focus on the accounts with the greatest potential.

It should be noted that for any given portfolio of business debt, about 90% of successful debt recovery is garnered from 50% of those delinquent accounts. Knowing which 50% to go after is very valuable information to have!

Some collection agencies offer this, either as an add-on service for a small fee. Depending on the organization and the size of the debt portfolio, the fees for debt scoring can be negotiated, or there could be no additional costs at all.

In researching a debt collection agency, having this additional debt scoring ability can mean substantial costs savings to your business.

Advantages To Scoring Your Debt Portfolio

• Score your debt portfolio according to the probability of debt recovery by assessing individual accounts
• You can focus your internal collection efforts on the accounts with the ability to pay, thereby reducing internal staffing costs and requirements
• You can know immediately the "problem", more difficult accounts to outsource to a third party debt collection agency
• You can often do debt scoring of accounts on a batch basis, with results returned quickly
• Debt scoring can usually be done pre- and post-default. For instance, with banking and credit union loan and/or checking and share draft accounts, scoring can predict which accounts to work internally, before they default. The others can be outsourced to debt collection agencies quickly, before these accounts depreciate even more in recovery probability.
• Reduced collection costs by customizing collection strategies based on level of difficulty.
• No costly software purchases required as results are downloaded via secure online access

If your business or organization is interested in getting a scoring analysis of your debt portfolio, fill out the quote form below, and notate it in the "Notes" section, that you're interested in debt scoring your portfolio. One of our consultants will contact you within 24 to 48 hours.