When we launched the Cortera Credit Exchange our primary goal (it still is) was to drastically augment the amount of information available on private companies by expanding the information sharing between credit grantors of all forms. I’m happy to report that we are seeing that exact behavior every day. Another intriguing trend is one that mirrors what we, as consumers, have seen since the introduction of reviews and ratings features across product and service sites: Enthusiastic participation when it comes to their worst experiences. In our case, we’re seeing a lot of activity around the reporting of businesses worst payers—their deadbeats. In the traditional world of business credit reporting, a credit bureau should achieve the same goal, but it can take weeks for the deadbeat tradeline to show up on a credit report.

Obviously in this economy, as I have reported in the past, there continues to be a large and growing group of companies well beyond their terms. Collectors are turning to the Exchange to report their deadbeats and notify the debtor that they have been publicly reported online. It seems simple, but in a world where everyone is online and reputations are everything, this technique could be just the approach that will get your money in the door. Here is a sample of some of the more colorful ones we’ve seen over the last few weeks:

• “Pays a fraction of balance. Watch this company they must bounce from provider to provider.”
• “This company does not pay subcontractors on commercial projects. They have numerous lien and foreclosure actions in the state of Colorado.”
• “Still working with Owner to settle this account. I am hopeful since we started at $70,000 and are down to $13,500.00. Will not do business with them again.”
• “The A/P dept and Office Mgr. refuse to talk to me or return emails and Voice mails. The owner/Pres. also refuses to reply to emails and voice mail.”
• “Sitting in a receivership right now. These clowns do not pay anyone promptly. Have successfully fought off a mechanics lien against the company in July 09. Currently 91 days past due, and an active litigation, every single payment has required collections activity to get paid.”

Have a few deadbeats in your customer portfolio? Report them here – it will feel good (trust me).

Last week I received an email from a customer asking a simple question.

“How do we go about contributing credit information about companies? If we run into problems with a customer, we would want the market to know what problems with payment we had.”

The standard and historic answer that most credit bureaus like Cortera would give is this:

“Please send us a cut of your monthly accounts receivables information according to our standard format and we’ll incorporate it into our database.”

This is the way it has always been. Sounds simple enough – right? Well, it is not. For most companies this task requires some kind of technical expertise to get that information out of their accounting system and into a format that a bureau can ingest and then report back on a credit report. Plus, this can take weeks by the time the request has been made to IT and then the information actually shows up on a credit report. In the mean time the debtor could continue to be granted credit without the greater market having any knowledge of their payment problems. Obviously we are talking about reporting on customers that are well past due and are not likely to be a customer again – in common terms we are talking about deadbeats.

Of course my answer is different now.

My response back:

“We just launched a new free website that makes reporting on a specific company and telling the market about them very easy. You can go to Cortera’s community ratings website and from there you can search for the business that is giving you trouble and use the “Rate Company” tab to provide your payment experience and comments.”

Within 5 minutes he was able to report on the two customers that were giving him trouble.

Have a few customer (or should I say ex-customer) deadbeats in your portfolio? Tell the world about yours and who knows you must just catch one reported by another member before you get in too deep.

The good news: The vast majority of your customers and partners are paying their bills on time. The bad news: The delinquent minority is only getting worse.

Having access to the A/R activities of millions of businesses provides us with a unique view into the nation’s cash flow. And since the beginning of the year, we’ve been seeing a steadily improving trend in the amount of corporate accounts receivable debt that is current (see chart 1 below). In fact the vast majority of debt tends to be current – most companies simply pay their bills on time. Even at its worst in February of this year, on a national basis 81% of debt was current. Today that number stands at approximately 83%.

However, companies still must deal with the other 17% of businesses that fail to pay on time. While this number is not dramatically out of line, we’re seeing unsettling growth in the amount of debt over 90 days past due (see chart 2 below). This is not surprising given the well reported growth in amount accounts sent to collections agencies since the recession started, but it is causing finance staff and business owners to be more diligent and get more creative when it comes to dealing with a deadbeat drag.

Have you seen your 90+ days aging bucket growing? Please share a story or two on how you are dealing with this growing problem.

Chart 1: Percent of Current Commercial Account Receivable (US National Average)

Chart 2: Percent of Over 90 Days Past Due (US National Average)