Counting Down – 5 Reasons for Consumer Delinquency

By Judy  |   |  Industry Insights

At Equiant Financial Services, the No. 1 goal for our receivables managed clients is to ensure they receive every dollar they are due on the day that dollar is due. To that end, we have invested in industry-leading technology, implemented proven best practices and hired highly trained professional representatives. As a result, our clients have entrusted us with a portfolio that exceeds $1 billion and includes more than 155,000 individual consumer loans and 400,000 homeowners’ association receivables accounts.

Even with the best technology, systems, and personnel, however, there are challenges that can affect nearly every portfolio. Maintaining strong portfolio performance year over year requires tools and strategies designed with an understanding of challenges that are likely to occur. To help you take your company’s receivables performance to the next level, here we’ll discuss five common reasons (in no particular order) that customers fall past due, along with tips on how to handle these situations.

Each post tackles just one reason, so keep coming back to learn about all five.

No. 5Buyer Under Qualified

To provide your product to the most consumers while remaining profitable, you must evaluate potential buyers in terms of risk. Delinquency and receivables management would be a thing of the past if only the most over qualified borrowers were approved and everyone else had to pay cash up front. Unfortunately, that leaves out a huge portion of any business’ potential customer base. Each developer must decide their own standards for qualification and thresholds for portfolio delinquency. Using Equiant’s integrated reporting tools, developers can determine the ideal buyer profile for their product and the size of purchase they should be offering to that buyer. It’s better to have a smaller sale that performs well than a larger loan that ends up in default. These beginner buyers can then become ideal prospects for upgrades as their incomes rise and excellent life-long customers.

No. 4 True Hardship

Sometimes bad things happen to good people. Job loss, illness, emergency expense or natural disaster are all perfectly legitimate reasons consumers fall behind on their payments. Our agents are trained to engage with these customers to seek long term permanent solutions to the hardships they are facing. We use tools supplied by the clients to create repayment plans and modify loans as necessary to retain every customer. That’s why Equiant prefers to call borrowers as soon as a payment is missed. Sometimes when a customer feels like staying current is hopeless, one simple conversation can turn the relationship around before they fall too far past due to recover.

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