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  • PRACTICES TO CONSIDER FOR UNCOLLECTIBLE RECEIVABLES

    PRACTICES TO CONSIDER FOR UNCOLLECTIBLE RECEIVABLES

    Uncollectible receivable means payment that is not yet received. In other words, the corporation must have offered its clients some credit line.

    Normally, a corporation often sells both credits as well as cash for both goods and services. When any firm gives credit to its consumer, the sale is accomplished with the invoice generation, but the company can offer some additional period for clearing the balance. This duration might range from 30 days to a few months. But when it is overdue, it becomes difficult.

    What are Trade Receivables?

    According to Investopedia, accounts receivable (AR) is the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers.

    In simple words, these are the financial assets that come under “loans and receivables”. They are measured at an amortized cost by using the efficient rate of interest technique as per the requirements.

    They are carried at a fair value during recognition during the initial period, which is then the invoice amount for trade receivables or debtors.

    Suppose you want to calculate the loss amount. In that case, you can do it by comparing the trade carrying value of the trade receivable or debtor with the current value of the predictable cash flow discounted at an efficient interest rate. Trade receivables are not discounted in general and do not possess an efficient interest rate.

    For top firms, the collection of debt is a difficult reality. Sometimes, the financial consequences are shattering when clients cannot pay for purchases. Sometimes this takes a very long time and becomes pricey.

    When businesses, especially small businesses, fail to collect the unpaid account receivables, it leads to catastrophic outcomes. There are various approaches that businesses can use for collecting past due invoices, such as phone calls, letters, site visits, etc. With data-driven collection prioritization, you can decrease involved risk and save your money.

    When the matter is about commercial debt collection and account receivable management, efficiency is important no matter which approach is utilized. The faster the businesses are paid for all kinds of goods and services, the better.

    Are you thinking about what strategies you should use to stay away from bad debt that guarantees that outstanding debt is collected in a rapid and cost-efficient manner? Let us discuss some of the best practices for corporate debt collection, how they are operating and why they might or might not be suitable for you.

    Best practices for accounts receivable collections

    In businesses, the A/R department mainly handles debt collection. Consumers might challenge the invoice and decline to make a payment when they are not happy with the products or services they have received. Billing issues and pricing concerns like unapplied discounts and promotions are also the main cause of disagreements. Some of the other departments, like sales and consumer service, can also assess the whole scenario and recognize the best action.

    The aberrant account might get turned to collections when disagreement is not addressed. The whole process proceeds in the following manner:

    • It is often recommended to check that the customer received an invoice before taking action.
    • The consumer is then given notification that their account has dues to be cleared through automated call or email. They are informed that they are charged with late fees and high interest when they are not paid right away.
    • A service member can call a customer when they do not react within 24 – 72hours. A letter is even mailed.
    • Based on the company’s grace period, the whole process might be repeated a lot of times. The average collection time for account receivable is about 30 days, while those payments that are due for more than 90 days are considered aberrant. The account is then referred to any third-party collecting agency when the payment reaches a 120 day threshold period.

    When should you look for a collections agency?

    It is quite pricey to hire a collection agency. Debt collectors are allowed compensation after recovering the outstanding amount, and when they do it, it can cost anything, starting from 25% to 45% of the total owed amount. Despite this, collection agencies often offer a relevant service to all businesses that cannot afford to keep wasting resources chasing down customers who cannot pay off their debts.

    So, how can businesses collect all unpaid amounts without putting them in jeopardy of losing money?

    How to make use of data for prioritizing business debt collections?

    Most businesses give priority to debt collection depending on who owes more money and who is more delinquent. For instance, consumers owing $20,000 with 6 months past due are prioritized more than those owing $10,000 and 3 months past due.

    The purpose of this strategy is the more money you can recover at a time, the faster it is possible to put cash into use. This strategy might look reasonable, but it is not free from risks. The whole strategy is risky because no longer account is aberrant, it is less likely the account holder will pay off the bill. Specifically, when an account is 90 days past due, it is a 70% chance to get paid. As per the collection agency, after six months of negligence, collecting the payment decreases to 52.1%, and after one year of delinquency, the chance of collection decreases to 22.8%.

    Giving priority to collections without considering important consumer data such as business credit sources, trade payment history, and financial records can be risky.

    According to data-based predictive collection prioritization, clients are most likely to pay the collection employees. It saves your money and time by preventing spending and resources while attempting to collect money that you will not get.

    Prioritization methods for receivable of new accounts

    For demonstrating the differentiation between a standard collections prioritization strategy and any risk-based strategy, think of your team focusing on recovering $10,000 debt. In contrast, the $5,000 debt holder is at risk of moving out of the business.

    The team may pivot their efforts immediately if they can obtain notifications when consumers’ commercial credit scores change unexpectedly. This signifies when any of them are at risk of insolvency or bankruptcy. In such a scenario, moving the $5,000 account to the top position of the list is more effective, and an attempt must be made before the financial situation worsens.

    Wrapping Up

    Wasting time is wasting money. So, when you waste pursuing delinquent bills, you are simply wasting your time to spend better on operations. A collection firm often employs trained experts whose main purpose is the collection of your debt.

    An agency can assist you in enhancing the flow of cash, decreasing the number of days past due, and reducing the cost of retaining collections in-house. A renowned collection agency can assist you in maintaining a strong consumer relationship by prohibiting all difficult talks with consumers that might lead to changing to a rival.

  • PROVEN WAYS TO BUILD AND INCREASE YOUR CIBIL SCORE

    PROVEN WAYS TO BUILD AND INCREASE YOUR CIBIL SCORE

    A credit score plays a vital role when applying for a credit card or loan. It is a three-digit number that reflects an individual’s creditworthiness to financial organizations or banks. To calculate your credit score, your credit history is analyzed, consisting of information like your payment history, the number of credit cards in use, and your total number of loans. In India, there are four main credit information companies: CIBIL, Experian, Highmark, and Equifax.

    A good credit score enhances your chances of securing a credit card or a loan, while a low score can hinder your financial progress. Banks often avoid lending to individuals with low scores due to the perceived risk. Even if you do secure a loan with a low score, you may face lower credit limits or significantly higher interest rates. Therefore, it is essential to focus on credit report repair to enhance your standing.

     Ways to Improve Your Credit Score

    There are various ways through which you can improve your credit score. Have a look at them:

    1. Go through your credit report

    One of the most vital things you must do is regularly review your personal credit report. This allows you to recognize errors, such as incorrect personal details or accounts you never opened. If there are mistakes, you should contact credit report fixing companies or use professional credit report repair services to rectify them quickly. Since your score is derived from this data, ensuring your report is error-free is the first step toward a better score.

    1. Make a payment on your outstanding bills.

    When you have any outstanding credit bills or loans, you should pay them off as fast as possible to enhance your credit score. While calculating your credit score, your payment history is taken into consideration. When you have a history of delayed payments, your score becomes low.

    One of the best ideas is activating payment alerts or an auto-debit facility to make sure that you always pay off your outstanding credit bills or EMIs on time. Also, never make the mistake of paying off only the minimum amount, as it will enhance your card’s outstanding balance. Instead, try to pay off the full bill to keep the outstanding bill low.

    1. Use of credit

    It is another big factor that is considered during the calculation of a credit score. The amount of credit available to you and how much you are using narrates your dependency on credit money.

    Therefore, it is recommended that people keep their credit usage below 30%. So, when you have varied credit cards, check how much money you are utilizing on your credit cards. Also, try to look for a credit card issuer that accepts various payments in one month.

    1. Never eradicate old accounts from the report.

    Some people tend to remove their old accounts or deactivate their accounts with negative history from their credit report to make the report look good. Some people even remove their old debts after clearing them. But it would help if you kept in mind that this is not a smart move; rather, it can harm your credit score.

    So after paying off your debts, please keep them in your credit report, as it shows your creditworthiness, enhancing your credit score.

    1. Plan your credit

    Most people whose credit scores have fallen radically have not planned their finances properly. For instance, if you have applied for a lot of credit cards just to enhance your credit limit but cannot pay your bills on time, you end up increasing your outstanding bill, along with a delayed payment history and reduced credit score.

    Also, when you apply for any unplanned loan, it leaves you in a bad financial state when you cannot repay it. Thus, you need to plan your credit well and apply for a credit card or loan only when required, and make sure you will be able to pay the money that you borrow on time.

    1. Debt consolidation

    If you have a lot of debts, you can use this for your benefit. You can take a debt consolidation loan from the bank or credit union. It would help if you kept in mind that you can pay your debt fast to lower your rate of interest.

    Another way for consolidating credit card balance is through the transfer of balance. Some credit cards possess a promotional period where they charge 0% interest on your card balance. But the fee for the balance transfer will cost you between 3% to 5% of the whole amount.

    Wrapping Up

    When the matter is about enhancing your credit score, there is no one single solution that fits all. It is vital to remember that each person’s credit journey is different. While several factors apply to many consumers, they will not always affect everybody’s credit score in the same way.

    While personal scores are well-known, a business credit report (also known as a company credit report or corporate credit report) is equally vital for entrepreneurs. It tracks the financial health of a registered entity rather than an individual.

    If you are a business owner, you should regularly check business credit report details to ensure your company remains eligible for expansion capital. There are several reasons to check company credit report data, including monitoring for identity theft, ensuring supplier trust, and preparing for large-scale credit reports for business audits by lenders. If your enterprise is based in South India, seeking a specialized provider for a business credit report in Bangalore can help you navigate local commercial lending requirements.

    Frequently Asked Questions (FAQs)

    1. What are the typical credit report charges in India?

    The credit report charges vary by bureau. While individuals are entitled to one free basic report per year from bureaus like CIBIL or Experian, detailed monthly subscriptions or one-time “Premium” reports can range from ₹160 to ₹1,200 depending on the depth of the data and the frequency of updates.

    2. How long does it take for credit report repair to show results?

    Most updates take 30 to 45 days to reflect on your report after a dispute is resolved. However, building a significantly higher score through better habits typically takes 3 to 6 months of consistent on-time payments.

    3. Does my personal credit score affect my business?

    For startups and small businesses, lenders often check both the personal credit report of the founder and the corporate credit report of the firm. As the company grows, the business credit report becomes the primary document used for securing higher credit limits.

    4. Can I fix my credit report myself?

    Yes, you can raise disputes directly with credit bureaus for free. However, many people prefer credit report repair services or credit report fixing companies for complex issues, such as resolving “suit filed” statuses or correcting cross-account errors.

  • Top Skills of Successful Accounts Receivable Specialists 

    Top Skills of Successful Accounts Receivable Specialists 

    Accounts receivable specialists are crucial members of an organization’s accounting or finance teams because they process, monitor, and record incoming payments to control the flow of cash. These professionals must adhere to all rules and laws and be updated on accounting standards for financial reporting.

    Why hire an accounts receivable specialist?

    You could hire an accounts receivable expert to:

    • Collect unpaid invoices by contacting clients directly.
    • Gather, process, record, and verify invoices;
    • Carry out regular cash management duties, such as making bank deposits and posting cash deposits to an accounts receivable subledger.
    • Simplify and enhance the accounts receivable process.
    • Maintain department records to ensure uncollectible invoices are logged and credits and collections are applied.

    There are some common abilities that many recruiters and hiring managers look for in accounts receivable applicants, despite the fact that every firm has its own unique needs. You may choose the people who are the best fits by knowing which abilities and qualifications are required and which are desired. Let’s look at the top skills that effective accounts receivable professionals should possess:

    1. Problem-Solving

    Accounts receivable management includes finding solutions for outstanding invoices, slow cash flow, and insufficient working capital. Problem-solving demands persistence, critical thought, and resolve in order to get things back to working properly.

    2. Detail-Oriented & Accurate

    One of the most crucial responsibilities of an accounts receivable specialist position is record-keeping. In addition to improving the company’s bottom line, its records must be precise and unambiguous for reasons including finances, taxes, and other matters.

    3. Communication

    Accounts receivable specialists must work with your clients to ensure the timely payment of invoices. When attempting to recover money from clients who are unwilling or unable to pay, caution must be taken.

    4. Accounting, Calculations, and Math

    Obviously, it’s essential to recruit someone with strong arithmetic and accounting skills because the position deals with money and finances. To guarantee that the financials of your company are precise and proper, a solid understanding of general accounting principles is also required.

    5. Persistence

    Persistence, or the ability to persevere with a task until it is finished, is necessary for success in accounts receivable or collections. They will continue to work toward their goals despite client objections. They will be persistent, which will inspire creative problem-solving and allow the expert to move quickly to collect money from overdue accounts.

    6. Listening Skills

    An A/R or collections specialist who listens well will try to comprehend the complicated issues that can cause a client to pay late or not at all. An expert can speak without assigning blame and present payment solutions that benefit both parties with empathy and attention. The business-to-business connection can be respected while the contract responsibilities are met via interacting and negotiating.

    7. Confidence

    Talking to clients about money is a significant component of the collections or A/R specialist work; thus, this requires a strong personality. These experts need to be sufficiently self-assured to deal with customer financial issues and objections. The subject of money is frequently one that is sensitive and emotional. An assured collections agent will be relaxed enough to empathize yet firm enough to guarantee that a payment plan is established.

    8. Training

    Training goes beyond comprehension of accounting and credit policies for the accounts receivable and collections specialists. Understanding the market and commercial expectations of their employer and clients is another aspect of training that is necessary to become an efficient and successful collector. They’ll understand how to investigate their client’s industry, educate themselves on the contracts, and analyse any negotiations that result in the client refusing to pay. Every day of their work involves ongoing learning.

    Frequently Asked Questions

    1. What is the difference between Accounts Receivable and Accounts Payable?

    While both are essential to a company’s balance sheet, they represent opposite sides of the cash flow. Accounts Receivable refers to the money owed to the company by its customers for goods or services delivered on credit. Accounts Payable refers to the money the company owes to its suppliers or vendors. An A/R specialist focuses on bringing money in, while an A/P specialist manages money going out.

    2. What are the typical daily tasks of an A/R Specialist?

    A typical day involves a mix of administrative and interpersonal tasks, including:

    • Generating and sending out invoices to clients.

    • Reconciling bank statements against the general ledger.

    • Making “courtesy calls” or sending emails to follow up on overdue payments.

    • Researching and resolving discrepancies in billing or payment amounts.

    • Processing credit memos or adjustments when necessary.

    3. How does an A/R Specialist impact a company’s cash flow?

    They are the primary gatekeepers of liquid capital. By ensuring invoices are sent promptly and followed up on diligently, they reduce the Days Sales Outstanding (DSO), the average number of days it takes to collect payment. A lower DSO means the company has more cash on hand to pay its own bills, invest in growth, and meet payroll.

    4. What software tools should an A/R Specialist be familiar with?

    Most modern firms look for proficiency in:

    • ERP Systems: Such as NetSuite, SAP, or Oracle.

    • Accounting Software: Like QuickBooks, Sage, or Xero.

    • Spreadsheets: Advanced Excel skills (VLOOKUPs and Pivot Tables) are often non-negotiable for data reconciliation.

    • Payment Gateways: Familiarity with digital payment platforms and automated billing systems.

    5. Why is “soft skills” training important for this role?

    Because A/R specialists deal directly with clients regarding money, a sensitive topic, they act as brand ambassadors. If a specialist is too aggressive, they might damage a long-term client relationship. If they are too passive, the company doesn’t get paid. Training in negotiation and empathy allows them to secure payments while maintaining a positive rapport with the customer.

  • 5 Green Flags That Reveal that Your Client Will Pay On Time

    5 Green Flags That Reveal that Your Client Will Pay On Time

    There are a lot of warning signs or red flags that your clients may be paying you late. However, warning signs could be readily disregarded. On the other side, green flags provide a sense of security and reliability. The more green flags you see, the more confident you can be that your company is dealing with the appropriate clients—clients who value your collaboration and respect your time—and that you are handling accounts receivable correctly.

    Let’s take a closer look at five signs that your client will make their payments on time.

    1. Appropriate Move from Sales

    The transfer of responsibility to accounts receivable is crucial if the sales department closed the contract. This indicates that prior to gaining the client’s business, account receivables and the credit department were involved in assessing the client’s credit application and/or their payment history. At the very least, sales and accounts receivable are working together to make sure the client is aware of what they owe and when, even if the credit department isn’t involved.

    2. Regular Communication

    You can gasp with relief if your client contact or accounts payable department is easily reachable by phone or email. Consistent communication is an excellent indicator that you can get in touch with someone if you have any queries, issues, or need to check up on an invoice. It also implies that your client is most likely trustworthy and will honour their commitment to make payments on schedule.

    3. Proper Invoicing

    Clients will usually pay on time if they know about description of goods or services provided, how much to pay, when to pay, who to pay and how to pay. If you include all of this information on your invoices along with any other necessary information (contract details, account number, etc.), your client won’t have many reasons not to pay you on time.

    4. Accounting History

    Although this appears obvious, it shouldn’t be disregarded. When a client has a solid payment history with you or another party, they are more likely to make payments on schedule to your company. It’s a given that customers will continue to support your business if they have been paying you on time. Otherwise, a company credit check could show that they have a history of making their payments on time for other accounts they owe, giving you peace of mind.

    5. Simple Ways to Pay

    Your client is more likely to pay on time if you offer simple payment options like direct deposit, ACH, or credit card. Even better is when the accounts payable division informs you or your accounts receivable division that payment has been completed and when you might anticipate it showing up in your bank account. They trust you and want to continue paying you if they’re prepared to set up these simple payment choices for your company.

    Final Thoughts

    Green flags do not guarantee that your client will never make a late payment. They are therefore less prone to make a late payment. Your accounts receivable department can set up several of these items to safeguard your interests. In other words, your cash flow will appreciate you for the work you put into properly invoicing and communicating.

    If you value the overall health of your company, you must take debtor management seriously and consistently. On contracts, quotes, and invoices, include a clear statement of your payment terms. Don’t continue to supply someone who doesn’t intend to pay, and don’t give credit to anyone.

    Last but not least, remain prominent in the customer’s mind so that when they plan payments, they think of you first. You’ll be well on your way to successful debtor management and business operations if you observe the above mentioned green flags in your client.

  • How Does Skip Tracing Work For Debt Collection?

    How Does Skip Tracing Work For Debt Collection?

    Tips for Debt Collection Using the Skip Tracing Technique.

    Are you experiencing significant late payments?

    Are these jeopardizing your cash flow?

    Getting paid by customers when invoices are due is vital for any business.

    Debt collection is an activity clearly framed by law, which consists of using various means to obtain from a debtor the payment of the debt due. There are many types of debts.

    In the context of the company, we speak of trade receivables. Creditor means the natural or legal person to whom the debtor owes something. Debt collection often applies to the payment of a sum of money.

    What is Skip Tracing?

    Locating a person’s whereabouts is called skip tracing. A skip tracer is a person who finds the individual (the debtor). The methods used by a skip tracer are used to identify witnesses, lawyers, and process servers, as well as to assist in debt collection.

    A skip tracer gathers information about the target people and examines them to ascertain their current location. We might use many databases to obtain this data, including Facebook, phone number databases, social security numbers, and credit report databases. Skip Tracers will start making calls to find, and some might visit the area to verify. We can see the case using online information (mine social media and databases).

    When Do You Need Skip Tracing?

    When the defendant cannot be located

    Finding someone might be difficult, even if you know their email address. He will probably move to another location if he learns he has an open case. A trustworthy skip tracer is aware of where to start his search. He is aware of the most effective methods for finding the person.

    When you believe the person resides in a particular place

    You must ensure that a defendant or respondent receives the documents in accordance with the norms of processing to serve them successfully. However, you must consider a skip trace search if you are unable to find the defendants but have reason to believe they are residing at a particular place. Hire a skip tracer to carry out a quick or thorough skip trace to find out if your suspicions are true.

    When you want to make sure the suspect is alive or in jail

    Sometimes, the defendant may be shielded by friends and family who say he is dead or in jail. A trustworthy skip tracer should be your best choice in this situation. He will assist in obtaining the truth.

    Traditional Skip Tracing Techniques

    A skip tracer can gather information from a variety of sources. The more conventional information sources are listed below:

    1. Acquaintances

    Any of a person’s friends, family members, coworkers, or neighbours could be aware of their precise whereabouts. It could be challenging to pull information out of this group, but it might also help you find the target without needing additional skip tracing.

    2. Caller ID

    Send a letter to every place where the person might reside, letting people know you need to get in touch with them and leave a phone number. Your caller ID can record the phone number if the person ever contacts the number out of curiosity, which can subsequently be entered as a reverse phone search to disclose the individual’s present address.

    3. Corporate Documents

    Corporate filings that identify the locations of business officers may be available at the Secretary of State.

    4. Crime Stopper

    A criminal search may reveal information about the person’s incarceration or parole status.

    5. Directory Support

    Contact directory helps even if a phone line has been disconnected and gets phone numbers for nearby listings with the same last name.

    6. The Fraternal Orders

    If a person has been a longtime member of a fraternal organization, he or she might not be willing to end the affiliation. Instead, he or she will continue to give the group current contact information.

    7. Postal Service Address Change

    Send a blank envelope with the following stamp on the exterior to the target’s last-known address: “Do Not Forward – Address Correction Requested.” The postal service will eventually deliver the envelope back to the sender along with a label providing the target’s forwarding address. Of course, this strategy only functions if the person gives the postal service a forwarding address.

    8. Professional Permits

    If a person is certified by a state body, the organization that certified them ought to be aware of their contact information if they intend to keep using their certification.

    9. Telephone Reverse Directories

    When a phone number is entered in these directories, the address associated with the number is returned. Unfortunately, the information about unlisted numbers is not available in these directories.

    10. Search Engine

    Use quotation marks around the person’s name when entering it in a search engine to check whether any information about them comes up. Suppose the person has recently left town. In that case, it is less likely that you will get valuable information because general searches of this kind typically turn up somewhat older material.

    11. Telephone Directory

    Phone numbers and addresses may be found in printed and online telephone directories, but it’s more likely that only landlines will have access to this information.

    12. Track a third party

    Conduct a trace on the other person if the person has recently shared housing with someone else. The target might have returned to live with the third party.

    Boat and car registration information can be used to determine the owner’s address. However, the information may be a little outdated depending on how regularly the data are updated.

    13. Registration of voters

    An official voter registration list with names, residences, and birthdates is kept on file by the city government in the area. Therefore, it could be essential to have access to this data.

    Conclusion

    Skip tracing is a service many collection agencies provide, but you must choose carefully. Kenstone Capital has highly qualified staff, frequently audits its operations to ensure that laws and moral principles are upheld, and has ample financial resources. When a long-lost customer is eventually located, and their past-due payment is collected, you can be sure that we followed the correct procedures, which will reflect favorably on you.

    Frequently Asked Questions (FAQs)

    1) What is the primary goal of skip tracing in debt collection?

    The primary goal of skip tracing is to locate a debtor who has “skipped” out on their financial obligations and can no longer be reached at their last known address or phone number. By using advanced databases and investigative techniques, a skip tracer finds the individual’s current whereabouts so that the debt collection process can proceed legally.

    2) Is skip tracing legal for collecting trade receivables?

    Yes, skip tracing is a legal activity clearly framed by law. Professional agencies like Kenstone Capital use ethical methods to gather information from public records, corporate filings, and social media to assist in obtaining payment for a debt due, ensuring all actions reflect favorably on the creditor.

    3) When should a business consider hiring a skip tracer?

    We should consider a skip trace search when a defendant cannot be located, when you suspect they are hiding at a specific location to avoid legal documents, or when you need to verify if a debtor is currently incarcerated or deceased. It is a vital tool when traditional contact methods fail to protect your cash flow.

    4) Can skip tracing find someone if they only have an email address?

    While having only an email address makes the search more difficult, a trustworthy skip tracer knows exactly where to start. By examining digital footprints and using telephone reverse directories or social media mining, they can often uncover a physical address or a current phone number linked to that digital identity.

  • HOW DOES DEBT SETTLEMENTS WORKS? IS IT WORTH IT?

    HOW DOES DEBT SETTLEMENTS WORKS? IS IT WORTH IT?

    An Overview of Debt Settlement

    Debt settlement is a kind of agreement where your creditors accept an amount less than what you owe. In simple words, they will not harass you for the money after you have settled down for an amount. Many people consider debt settlement as one of the best solutions to become free from debt. But debt settlement can sometimes be a risky option.

    In some cases, it affects your credit score negatively, such as the creditor might not agree to debt settlement or might take a long time for accomplishment.

    How does it work?

    Debt settlement comes into the picture when you miss your due payments or any heavy EMI amount that has been left unpaid. It is an intimidating task to make creditors agree on debt settlement until there is some good reason to believe.

    Here, a debt settlement company helps negotiate with creditors to reduce the amount you owe, primarily on indiscreet loans. But you should know that debt settlement is always limited to some of the debts, and it can’t be acquired on safe loans such as a home loan.

    For people struggling to pay debts on your unsafe loan, debt settlement is always a dependable way for settling down. In India, debt settlement works when you cannot pay at all, which implies you have no money left for repaying all your debts.

    But in a debt relief program, you should have some cash for making payments through debt settlement. When the debt settlement company trusts that you have enough to make a heavy offer, it starts negotiating with the creditor to accept a small amount.

     Also read:  4 Proven ways that can help build your credit score fast.

    Risks involved with Debt Settlement

    Selecting the right debt settlement company is essential before settling down your debt with the creditors. If the company does not offer a certified legal process and is not affiliated with any bank for settlement, then the company is undoubtedly a fraud. Debt settlement is not as straightforward as it sounds to be, and it is the ultimate resort for resolving all your debts.

    Here are some of the risks that are linked with debt settlement:

    Your credit takes a hit:

    • If you are a person whose account is felonious, you will be in default while diverting your payments towards any settlement. A debt settlement can affect your credit score and your credit reports negatively. When your account shows a lousy credit score, it will be difficult for you to apply for a new loan. Your loan application might not be accepted, and you will be considered a non-payer.
    • Your penalties and interest get accumulated: You might get charged with a high-interest rate if you have chosen debt settlement with lenders. Your interest consistently rises on your debt amount.
    • You have to make a payment after your debt settles down: A large number of companies charge a large number of fees for paying down your debts with your creditors and might even be subject to fraud and scams. Based on your debt balance, you can settle down with a debt settlement company where the legal team will negotiate with the creditors, and after your debt is settled, you have to pay your fees.
    • You might have to pay extra fees: Other than the basic fees that you will pay for the debt settlement, consumers can also face some of the other costs like setting up and additional monthly fees for maintaining a debt settlement under the program.
    • Irrespective of all the risks involved with the debt settlement option, if you decide to go with that option, look for the best debt settlement company in India. Here are a few things you need to keep in mind while searching for a good debt Settlement Company:- Go through the company reviews to know if they are trustworthy or not.
      – Keep yourself away from the company that asks for money in advance without giving any settlement letter from the creditors.
      – Ensure the fees you will pay are planned as a debt percentage eliminated instead of the debit balance at enrollment.

    So, in this way, you can opt for debt settlement with your creditors.

    The Bottom line

    If you wish to go ahead with the debt settlement even after knowing all the risks stated above, it is important that you choose the best and most relevant debt settlement company in India.

    Before you sign for a debt settlement program with any debt settlement company, here are some of the things that you need to keep in mind:

    • Opt for the company that has earned excellent business ratings and customer reviews.
    • Ensure that the company does not charge any upfront fees.
    • Check with the company background including the company’s experience.
    • Find the best debt settlement company that is supportive and hassle-free services.
  • WHAT IS DEBT COUNSELING? IMPORTANT THINGS THAT YOU NEED TO KNOW

    WHAT IS DEBT COUNSELING? IMPORTANT THINGS THAT YOU NEED TO KNOW

    Are you feeling ashamed that you’re overburdened with a mountain of debt or credit bills, don’t worry having debt on your head doesn’t make you a bad person.

    People going through a debt crisis can receive financial literacy along with freedom with the help of debt counseling. Yes, considering a debt counselor might work for you.

    About Debt Counseling

    Debt counseling is a financial service provided and crafted for educating people. People will cram and know how to pay off all debts and prevent evasions on their responsibilities.

    Debt counseling offers a good understanding of what you are spending versus what you are earning every month and how much you pay in every budget category. You are advised on where to lower your spending for meeting all monthly commitments, thereby making the debt plan attainable and offering you a well-structured strategy for becoming free from debt.

    What does a Debt Counselor do?

    Here, the debt management team will provide a session involving a proper analysis of the customer’s financial situation. This analysis includes evaluating strategies for debt reduction, either for paying off or debt management, and educating people on budget management.

    Debt counseling assists customers besieged with enormous debt but wish to make some changes and control their financial lives. A debt counseling session also evaluates and completes the analysis of the total expenses rate of interest and the outstanding balance.

    After determining the economic circumstances, a debt management plan is put together, and when you are content with the whole proceeding, it is executed. The pending amount is paid off in small installments but through an extended period.

    Steps To Follow While Considering Debt Counseling

    • Contacting a counselor:
      The first step in debt counseling is getting a debt counselor from a renowned credit counseling agency.
    • Finance reviewing:
      Debt counseling will result in two main things. First, it might end up finishing the call for visiting another counselor for a better understanding of financial health. The second goal is leaving with a plan of action. To achieve these goals, debt counseling sessions start with a complete review of debt finances, incomes, and other things.
    • Getting recommendations from debt counselor:
      Everybody’s financial situation is diverse. Due to that, your debt counselor offers you personalized advice depending on your financial review.
    • Decide and Begin your Journey:
      After receiving recommendations, it is your time to decide if you want to board on your journey towards freedom from debt. After accepting the plan, your journey starts.
    • Several non-profit debt managing agencies provide you with some extra services for addressing your specific goals, which involves programs to assist you in repaying debt, rehabilitating delinquent mortgages, proper management of loan payments, and many more services.

    Outcomes and benefits of debt counseling

    Once you are done with your budget assessment, the debt counselor explains the debt management plan for reaching your financial goals.

    A good debt counseling agency offers a service that helps you live a stress-free life by managing all your outstanding amounts on your behalf. Many of them provide free counseling sessions for those searching for debt-free solutions.

    A good debt counseling agency offers complete information as an extra resource. If you require an explanation of any of the questions you might have, you can attend a free counseling session. In big words, financial education helps you to manage your money better and stay out of debt in the coming days.

    What are the different benefits of debt counseling?

    • Your money habits improve: This is one of the significant benefits of applying for debt counseling. It teaches you to use cash carefully and spend less. Once you have mastered it, you can easily create wealth without any debt.
    • Debt reviewing becomes flexible.
    • Your assets remain protected when you are under debt review: When someone applies for debt counseling, the counselor approaches the court to obtain an order to bind the restructuring plan negotiated with the credit providers. This stops recovery activity from the credit provider, debt collectors, and lawyers.
    • Reduction of interest rates while under debt review: The whole restructuring plan includes relooking and decreasing interest rates with the credit providers.
    • You have to pay a decreased affordable monthly amount that pays off all your accounts: While under debt counseling, the customer can pay one reasonable installment amount.

    In simple words, a debt counseling session with a good
    agency allows you to;

    • Get a complete review of your financial situation.
    • Reviewing creditor harassment you might be receiving and discussing how to reduce it.
    • Know about various advantages and disadvantages of bankruptcy.
    • Know about different spending habits and how to spend very wisely.
    • How to prepare a better budget.
    • Discussing the execution of the debt plan and making payment of an amount that you can afford.

     Know how your debt plan reduces harassment from
    collecting agents and creditors.

    So, if you are struggling with yourself for debt, it is often recommended to go for a debt counseling session. A good debt counselor listens to you for understanding all of your financial circumstances and offers you the best advice possible.

    When you are happy to proceed with the debt management plan to pay an amount that you can afford, your creditor stops the harassment.

  • TAKING A LOAN AGAINST CREDIT CARD: 5 THINGS YOU MUST KNOW

    TAKING A LOAN AGAINST CREDIT CARD: 5 THINGS YOU MUST KNOW

    Money is the call of the day. It is impossible to run our day-to-day activities without considering money. A scarcity of money is the worst situation one would never be one to face. But such conditions do come around, where you might have a requirement to fulfil or execute and you need financial strength in that regard. That’s when you give yourself the thought of borrowing a loan. This instant monetary help will provide you with a significant boost in your prospects.

    A credit card happens to be a tool with which you can gather these kinds of loans. You can use it for buying something or other necessary transactions. The money that you spend gets added to your credit balance. You have to pay back this money to the bank or other financial lending institution you are using the credit card of, with a stipulated interest. There is a specified period within which you have to pay back the loan. The part varies from banks to financial institutions, with natural interests ranging from 35 to 40%

    However, have you ever thought about the various intricacies concerning taking loans via credit cards? If not, then this article is what you need to read. We will tell you all the necessary points, and you cannot overlook them while taking a loan via a credit card.

    1. SIDE EFFECTS OF LATE PAYMENTS:

    Let us say that you have applied for a loan. If you are inconsistent with paying back the loans, that can adversely affect your application. Or if you are using your credit card frequently without having any concern about repaying the money, that will harm your prospects. Indulging in late payments can adversely affect your chances of getting a top-up loan.

    Though many banks and financial institutions provide a top-up loan to their credit cardholders, it is necessary to have a clean credit card history of making things smooth. Late payments of credit card bills will hamper your wishes for a loan in the future. That’s why even experts emphasize this aspect.

    2. EFFECTS OF MAKING DEFAULT IN YOUR PAYMENT:

    A default in your payment refers to your loan default and not your credit card default. A significant difference lies between defaults on credit card repayments and that of defaults in loan repayments.

    A credit card default will have a significant impact on your credit score. However, a default on loan against your credit card is under the purview of loan defaults, and that will harm your future loan prospects.

    3. CHARGES FOR PROCESSING:

    While taking a loan against your credit card, there will be a processing charge attached to this particular function. It depends on the loan amount approved. Usually, the processing charge ranges from 1 to 5%.

    4. THE INTEREST LEVIED ON TRANSACTIONS VIA CREDIT CARDS:

    There is an associated amount which is the interest for your loan amount against the credit cards. When you repay your loan, this interest is an added amount that you will have to repay.

    Let us say you have applied for a loan of around 70% of your credit card amount. Then the remaining amount becomes the interest you will have to bear. If you forget to or are unable to repay the loan within the stipulated time, a claim of around 35% per annum is applicable.

    5. THE OPTION OF PRE-CLOSING YOUR LOAN:

    Any individual can pre-close their loan before the expiry period of the card. You can do it in your case as well. As the experts say, if you pre-close your loan, it is unnecessary to inform the bank or the financial institution you are lending. But there are some pre-closure charges that the lender organization levies.

    We hope that we could give you insightful information concerning credit card loans. Next time, you apply for a loan or go for a top-up, then make sure that you keep the above points in mind. It will help you prevent unfavorable circumstances.

    • The number of credit cardholders in India amounted to 57.4 million as of April 2020.
    • There are 5715 credit card defaulters in India.
    • India saw nearly Rs. 25,000 crore wilful defaulter cases as of 14th July 2020.

    Are you looking to consult CIBIL Score Repair Agency? Contact us.

  • EXPELLING TOP 6 DEBT COLLECTION MYTHS

    EXPELLING TOP 6 DEBT COLLECTION MYTHS

    Yes, there exist myths in debt collection as well specifically, when you use a third-party for collection of debts you tend to hear a lot of such myths. They can even make you hesitate in your decision to hire a third-party. Collecting debts can tire you to focus on while in the middle of business. Debt-collecting agencies come to your aid at this point. They can help you get back your money smoothly.

    DEBT COLLECTION:

    Almost 56% of businesses have known to write off more than 1% of their turnover and lent capital as uncollectible. This percentage has continued to rise since 2013. Though it’s an alarming fact, you can still sort out the problem. Hiring debt collection agencies can help you a great deal with this. Debt collectors turn out as inhumane rather than the fact that they are demanding what belongs to them in the first place!

    So hiring people who can handle it in the right seems logical. Read further to understand some of the myths associated with debt collection. You can get to know the reality that prevails as well.

    Myths and reality about debt collection:

    We have discussed the top 6 debt collection myths below, for you to stay cautious from them jeopardising your decision.

    1. MYTH: YOU WILL FIND DEBT COLLECTION EXPENSIVE

    Reality:

    You will find that most debt-collectors do not ask for payment unless they succeed. They work on a success only basis. You will also find that the price they commission is very minimal. When you compare it to the money, you would have lost if you had written off the debt as uncollectible.

    2. MYTH: YOUR CUSTOMERS FIND IT UNFAVORABLE

    Reality:

    When you hire an excellent debt collecting agency, they prioritise your customer relationships as much as you do. They also take your brand very seriously and importantly, also just like you. At Kenstone Capital you will find the same. We aim and work towards a peaceful mediation when collecting debts, and we keep reminding and reaffirming them to pay.

    Yes, they can shun at the fact that you hired a debt collection agency, but you have done it only to get back what they owe. The capital entirely belongs to you, and you have the most exclusive rights to ask for it. They also have a duty towards you and your debt.

    3. MYTH: ONLY BIG COMPANIES HIRE DEBT COLLECTION AGENCIES

    Reality:  

    More than thousands of small companies today, hire debt-collecting agencies. They do not get time to focus on debt-collections as their primary focus is on the business. They work towards improving it and marketing their brand, also they have a small team when it comes to small businesses. Thus everyone plays multiple roles, and they can’t form a team debt-collection team too! So when you hire a debt collection agency, you can focus more on your business improvement.

    4. MYTH: DEBT COLLECTION AGENCIES ONLY WORK FOR ANCIENT DEBTS

    Reality:

    Research studies conducted on debt-collection portray that time of old debt reference, and the chances of collecting the debt are directly proportional. When you refer to the debt as early as possible the chances of you recovering goes up. So you can refer to debts in their early stages instead of waiting for it to become old or bad debt. Thus refer to agencies faster than chasing debts for months in-house.

    5. MYTH: YOU FIND SOLICITOR MORE EFFECTIVE

    Reality:

    Though there exists time and place for the legal system, you will find it very costly and time consuming. Instead, you can benefit from a good debt-collector and also avoid unnecessary problems.

    6. MYTH: YOU CAN DAMAGE YOUR BRAND WITH DEBT COLLECTION

    Reality:

    When it comes to reality, you only need to find a top-notch debt collector. The person respects your brand and smoothly gets the process done. You introduce a debt collection agency as part of your standard credit control process. When you do this, the agency complements your in-house collection efforts while simultaneously putting pressure on your debtors. This way, you get paid, and also your brand continues to reign.

  • 3 CRUCIAL STEPS MSMES SHOULD CONSIDER TO BE LOAN-READY

    3 CRUCIAL STEPS MSMES SHOULD CONSIDER TO BE LOAN-READY

    With MSME introduced in 2006 in India, it has become a pillar of the Indian economy, contributing a significant share of over 40 percent in its GDP and employment. MSMEs are vital in India and are also crucial for the global economy, where they have made substantial contributions over the decades.

    While MSMEs are still investigating how loans can help unleash their full potential, they may require quick and carefully guided access to funds to support their enterprises to reach their full potential.

    MSMEs stands for “micro, small, or medium enterprises.” Still, these smaller players are progressively ceding ground to larger companies because of the advancement in technology, and its adoption, which will help them scale up and stay competitive. The Indian government plays a significant role in its quickly growing status by assisting them to get their businesses started with inclusive initiatives and offerings.

    See What Statistics Says….

    According to the Union Budget 2021 – 22, Budget Allocation for FY 2021-22 for the MSME more than doubled to Rs.15700 crore vis a vis Rs.7572 crore in 2020-21.

    A recent report published by Reserve Bank of India also suggested that the MSME sector can get INR. 5,000 crore stressed asset fund as better access to credit.

    With these initiatives offered by the Indian government, MSMEs can focus on forging a bigger and better identity for themselves. MSMEs need faster, cheaper, and carefully guided access to funds, especially when they are still learning how loans and credits can help them and the enterprises unleash their full potential.

    IMPORTANCE OF CIBIL RANK FOR THE MSMES BUSINESSES

    In the last few years, the CIBIL score has helped MSMEs gain a better insight on loans and loan options that have helped them achieve faster and cheaper access to business loans. How? The CIBIL Rank allows us to understand the company’s future repayment capability, and it is a numeric summary of a company’s credit report and its past repayment trends.

    This score helps lenders decide whether to approve their business loan applications or not. It also helps them decide how much loan they should sanction. Once MSMEs get a better hold of how the formal credit landscape works, they can be better prepared to boost their loan-eligibility criteria and thus can leverage business loan opportunities when they require it the most.

    Below mentioned are three critical points that MSMEs should be aware of to build a high CIBIL Rank and become loan-readiness:

    1. PAYING LENDERS TIMELY, EVERY SINGLE TIME

    The relationship between a lender and a borrower is essential, as lenders play a vital role in reporting a borrowing company’s repayment patterns back to CIBIL.

    It is also a critical factor that helps determine the CIBIL rank, which is why MSMEs should focus on paying back their lenders on time and within the credit period and avoid defaulted or late payments—making all the costs timely will contribute to building a good and higher CIBIL score.

    So, next time they apply for a loan, a high CIBIL score will help them in their loan approval process.

    2. Apply Vigilantly

    While planning their growth strategies, MSMEs should look for a formal lending landscape while applying for credit. One should not resort to alternative lending sources to get faster and easier access to funds.

    These alternative funding sources may demand various collaterals as a guarantee and cause MSMEs to put their valuables (even property) on the mortgage. Such types of loans usually attract higher rates of interest.

    Thus, MSMEs should look for lenders with a formal credit landscape to get better offers and avoid the debt trap. Most importantly, they should choose their lenders depending on their company’s credit history and repayment capability. Also, to avoid getting into a debt trap, MSMEs should ensure applying for only as much credit as they truly need.

    3. Examine the CIBIL Rank and Company Credit Report (CCR) regularly

    A good/higher CIBIL score and a lower CIBIL Rank of an MSME represent its financial well-being and repayment capability. So, it’s crucial to constantly monitor the CIBIL rank and CCR of the company, which will, in turn, help them monitor their credit transactions and identify any errors. The lower the company’s rank is, the better the chances of their loan approval.

    Monitoring the CIBIL rank of the company is a crucial step, as some banks offer MSMEs business loans at a better, discounted rate of interest based on their CIBIL rank. Also, regular monitoring can keep them loan-ready and help leverage attractive offers when the opportunities arise.

    Final Thoughts

    It’s never too late to strengthen your credit rank and unleash your full potential. Starting today, MSMEs should focus on actively boosting their business’ loan-eligibility criteria and credit health by achieving a high CIBIL Rank- which is also a critical factor in determining your credit access in the future.