Wouldn’t it be great if all customers paid immediately and exactly what they owed? No strange deductions for bogus reasons. No chasing deadbeat customers. Unfortunately our world is not perfect and extending credit can be risky. Most businesses understand that to grow they will eventually have to extend credit and not all credit decisions will lead to the goal of being paid 100% of the time.
Extending credit means a business also has to become savvy at collections especially for customers who seem to disappear when payment is due. Finding a rogue customer can be a daunting task but through a process called skip tracing, collectors can find the evasive customer and get him to pay what he owes.
Skip tracing in essence means gathering of public information to find someone. In today’s world where information flows readily and is quite accessible, skip tracing is not exclusive to credit and collections professionals. The difficult part to figure out is where to search and how to search efficiently. A good skip tracer is just a really good detective who uses databases, previous addresses, relationships and social media to find those who wish to remain lost.
Skip tracing has been used for years in business-to-consumer companies but business-to-business companies can use the same techniques to keep bad debt write offs down.
First line of defense is a good credit application
A good credit application is built on strong credit policies and procedures because you can’t have one without the other. Credit applications are used to extend credit and are used to underwrite a potential customer’s financial history and ability to pay for the goods or services purchased. A good credit application is also going to give a collector a great starting point to find a debtor. Here are some key items to have on a credit application to help skip trace:
• Social security number or Tax ID
• Current address and previous addresses
• Professional references
• Banking information and reference
• Home phone, cell phone, and email address
By gathering the information above at the beginning of a customer relationship, skip tracing will be significantly easier. The information above can allow access to valuable skip tracing information found in databases and online resources. Information gathered from a credit application and credit reports can also help you profile the skip. Profiling will help build assumptions and help bridge information.
Skip tracing is a means to an end
A direct path to finding the skip would be ideal, but that is almost never the case. Instead, skip tracing is like a puzzle and putting more pieces together leads to a better chance of finding the skip. Subscription based databases such LexisNexis Accruint and Microbilt are great places to start and are a one stop shop for gathering public information.
While the public databases give a great start, skip tracers have to employ a number of tools to obtain more information about the skip. New information could come from a neighboring business, vendor relationships, a new phone number or website. Here are a few examples of useful tools a skip tracer can use to find the skip.
Mail and Phone
Address Unknown: Once you have thoroughly searched the public databases, the next step is to employ various data-collecting tools, starting with mailings. Send a letter to the old address and for a nominal fee you can write “Address Service Requested” on the postcard, and the post office will return the card to you with the skip’s forwarding address attached.
Surprise Postcard: Another idea is to send a postcard telling the recipient there is important information for the skip and list a number to call. Curiosity killed the cat and it can bag a deadbeat debtor too.
Blocked Phone: Skips will often block their phone number, believing they are fully secure from potential collectors. This is untrue. Trap line services use toll free technology to provide users with the name, phone number, and possibly the address of the person calling, even if the call is blocked. Trap lines are cheap for the service they provide and should be an essential tool in any skip tracer’s toolbox.
The goal of collecting at this point is to locate current address and phone number. Even if you only get a phone number this can be run through the search database and could lead to more information such as an address and business ownership information.
Social Media – A world of current, public information
Popular social media outlets, like Facebook, LinkedIn and Twitter, encourage users to share their addresses, phone numbers, work histories, and minute-to-minute updates of what they are up to.
Social media platforms generally have privacy settings, but not everyone uses them or even knows how to use them. Privacy policies change frequently and many changes can lead to personal and professional information to be posted for the whole world to see which makes it easy to find skips
There are several ways to use social media to find a skip. The most obvious is to use an internet search engine to search for a skip by entering a name and general location into the search. Try it on yourself and see what pops up. It is amazing how much information is public. If you have obtained a current phone number enter it in the search bar. If the skip was associated with a particular business, try looking up the business to see if the skip’s profile is associated with it.
If you gain access to the skip’s Facebook profile, go to the “About” section. The “About” section is a wealth of information which can include place of employment, relationships, current city of residence and personal contact information.
Also reading the skip’s status updates can uncover a world of information – favorite restaurants, gym, friends and hobbies.
Playing by the Book
It is important to note that there are state and federal laws and regulations that govern collection methods for business-to-business and business-to-consumer transactions. Make sure you and your collectors are familiar with all state laws and regulations regarding collections in their jurisdiction. What is completely legal in one state may be against the law in another and could cause you to lose the debt and suffer fines.