Will a company’s credit rating be adversely affected if a debt collection agency was called in?

Will a company’s credit rating be adversely affected if a debt collection agency was called in to recover outstanding money?

It depends on the company to whom the debt is owed and how overdue the debt is.

To be listed on a company’s credit file, a debt must be at least 60 days overdue, however not all company’s list collection activities with a credit bureau. So although a debt may be more than 60 days overdue and a collection agency may have been called in to chase the outstanding account, the collections activity may not appear on a company’s credit report.

However, if the company to which the debt is owed opts to proceed with legal action, this event will automatically be listed on the company’s credit report.

 

For more Cashflow Advice columns, click here.

Christine Christian was appointed CEO of D&B Australia and New Zealand in 2001 after leading the management buy-out of these operations from D&B global company. In this role, Christine has more than doubled the market value of D&B. In 2007 Christine managed the competitive sale process of D&B Australasia from AMP Capital to Lazard Carnegie Wylie.

D&B’s new book, Dun & Bradstreet’s Guide to Cash Flow and Credit Risk, provides expert advice for SMEs on improving cash flow and reducing bad debt. It provides hints and tips on a range of issues including: developing and implementing a credit policy; managing receivables; credit management for overseas customers; and using credit data in your marketing.

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