[Editor’s Note: This is a guest post from Brian W. Tuite. Brian is Chief Business Development Officer for SquareTwo Financial, a leader in the $100 billion asset recovery and management industry.]
Anyone who runs a business runs the risk of not being paid for the products or services the company provides. In the FinTech space, this comes in the form of delinquency and, ultimately, charge-offs.
Delinquency begins when customers miss their first payment. Most companies have an in-house collection operation designed to help customers become current again, but some customers are unable or unwilling to make the necessary payments to become current. After a period of time (usually 120 days for personal loans, 180 days for credit card loans) the company is required to move the account from delinquency to charge-off status. This article focuses on management options for charged-off accounts.
Although charge-offs are relatively low in the FinTech space today, defaulted accounts are always a top concern, and as the industry continues to grow, so too will the number of defaults.
There are several things for companies that find themselves with charged-off accounts to consider. First, they need a solid understanding of charge-offs. Second, they need to put in place a strategy for handling them. [Read more…]