Customer Agreements vs. Credit Applications

Sometimes credit applications aren’t always appropriate for the way you do business. If you get a call in the middle of the night to fix a widget in the middle of nowhere – asking your customer to complete a credit application first just isn’t practical. Yet, because you don’t use credit applications, shouldn’t mean you can’t use some form of documentation to protect yourself. 

Items like charging interest on overdue accounts or holding someone personally liable for a corporate debt can be accomplished through a well worded work order or Customer Agreement. Don’t let profits slip through your fingers. Call us today for a free consultation. 1-866-266-0117 ext. 350

Accounts Receivable Management

Proper accounts receivable management is ½ science and ½ artwork. Customers must be contacted on a consistent basis with exact calendar follow-up to ensure that your invoices make it to the top of the pile. To do this requires a proper CRM (Customer Relationship Management) system or robust accounting package with a calendar/time function.

 

This is only ½ the equation

The “artwork” portion happens when your accounts receivable clerk calls your customer. How your staff interacts with your customer – how your customers perceives the call – what extraneous information your staff does (or doesn’t) collect, all combines to give you an advantage or disadvantage in collecting your money. It’s been our experience that this function is usually delegated to credit assistants or accounts payable staff that dislike the job. It’s like handing over your entire investment portfolio to someone who is either just learning or would rather be doing something else.

Our parent company, Credit Process Advisors, provides all forms of accounts receivable management – from onsite client locations, to fully remote accounts receivable outsourcing.

For more information, click here.

TransUnion: Personal Debt Levels Shifting Back to Growth Mode

Auto Delinquencies Lowest in 2 Years

Toronto, Aug. 23, 2012 – TransUnion’s quarterly analysis of Canadian credit trends found that the average consumer’s total debt (excluding mortgage) rose modestly, increasing by $192 in Q2 2012 to $26,221. Although this continues the trend of inflationary growth seen in the past five quarters, Q2 2012 is still the highest debt level per person seen to-date.  The nation has now experienced consecutive quarters of accelerated growth when comparing both quarter over quarter (0.74%) and year over year (2.41%) numbers, possibly marking yet another turning point in the directionality trend for consumer debt.
“We are in a unique situation because while it is somewhat disconcerting to see average consumer total debt reach its highest level since we’ve been tracking this variable, Canadian consumers appear to be able to manage this debt as delinquency levels have dropped across all of the major credit vehicles,” said Thomas Higgins, TransUnion’s vice president of analytics and decision services.  “It’s quite possible that this is a trend that will continue as consumers take advantage of the low interest environment.  However, if there are any sudden economic shifts such as a significant rise in unemployment, then it’s quite conceivable that delinquencies will rise with debt levels.”
The increase in average debt was consistent throughout Canada.  All provinces experienced increases during the quarter except Saskatchewan.  On a year-over-year basis, only Alberta posted a decreased annual growth rate in Q2 2012 versus Q2 2011, which constituted the third consecutive quarter where debt levels decreased from the prior year.

Avg Consumer Debt	Q2 2011	Q3 2011	Q4 2011	Q1 2012	Q2 2012	Q/Q Chg	Y/Y Chg
British Columbia	$36,820	$36,588	$37,276	$37,433	$37,879	0.2%	2.9%
Alberta	$34,081	$33,182	$33,613	$33,515	$33,564	1.2%	-1.5%
Ontario	$24,721	$24,540	$25,135	$25,235	$25,447	0.8%	2.9%
Quebec	$18,269	$18,751	$18,376	$18,475	$18,580	0.6%	1.7%
Saskatchewan	$26,902	$27,287	$27,755	$27,811	$27,699	-0.4%	3.0%

Consumer Debt – Quarterly/YearlyDespite year-over-year growth on total consumer debt, directional changes in debt levels varied for several credit instruments.

• Canadian average credit card borrower debt (defined as the aggregate balance on all credit cards for an individual bankcard borrower) declined 0.93% year over year, but increased 2.70% on a quarter-over-quarter basis.
• Canadian lines of credit (LOC) borrower debt (defined as the aggregate balance on all LOC for an individual LOC borrower) decreased 0.40% year over year, with a 1.13% drop quarter over quarter.
• Canadian installment loan borrower debt (defined as the aggregate balance on all installment loans for an individual installment loan borrower) increased 0.95% year over year and 2.37% quarter over quarter.
• Canadian auto borrower debt (defined as the aggregate balance on all auto captive loans for an individual auto captive borrower) increased more than 13.25% year over year and 3.67% quarter over quarter.

	Q1 2011	Q2 2011	Q3 2011	Q4 2011	Q1 2012	Q2 2012
Credit Cards	$3,539	$3,590	$3,611	$3,633	$3,462	$3,556
Lines of Credit	$33,762	$33,855	$34,122	$34,340	$34,107	$33,721
Installment Loans	$22,431	$22,281	$22,340	$21,764	$21,974	$22,493
Auto Captives	$16,181	$16,671	$17,283	$17,759	$18,212	$18,881

Consumer Delinquencies – Quarterly/Yearly
Delinquency levels continue to remain low across all major product categories.
“Across the board, we saw delinquencies drop on an annual basis,” said Higgins.  “Auto loan delinquencies stand out most as they are traditionally among the lowest of the major credit types, yet they’ve continued a downward trajectory even while auto debt experienced significant increases.”

	Q2 2011	Q3 2011	Q4 2011	Q1 2012	Q2 2012	Q/Q Chg	Y/Y Chg
Credit Cards	0.33%	0.32%	0.31%	0.32%	0.29%	-9.23%	-11.76%
Lines of Credit	0.20%	0.20%	0.21%	0.20%	0.19%	-6.80%	-7.22%
Installment Loans	1.27%	1.32%	1.27%	1.24%	1.24%	0.00%	-2.36%
Auto Captives	0.10%	0.11%	0.10%	0.09%	0.08%	-10.99%	-15.52%

 Three Highest Delinquency Provinces

Credit Cards	Lines of Credit	Installment Loans	Auto Captives
PEI  0.50%	BC  0.25%	ON  1.98%	MB  0.22%
NS  0.45%	PEI  0.24%	NS  1.65%	NS 0.14%
NB  0.43%	AB  0.22%	PEI  1.58%	NB  0.13%

 Three Lowest Delinquency Provinces

Credit Cards	Lines of Credit	Installment Loans	Auto Captives
QC  0.19%	NL  0.10%	QC  0.46%	NL  0.04%
SK  0.26%	QC  0.12%	NL  0.99%	QC  0.05%
AB/BC/MB 0.29%	NB  0.14%	SK  1.10%	BC/PEI  0.06%

Consumer Bankruptcies – Quarterly/Yearly

Consumer bankruptcies in Canada continue to fall back to historical levels after the record year in 2009, though for the first time in eight quarters the rate of decline was below double digits. 

	2005	2006	2007	2008	2009	2010	2011	2012
Q1	-3.24%	-1.83%	-3.74%	2.88%	34.63%	-15.08%	-14.37%	-8.9%
Q2	3.13%	-10.35%	2.23%	7.39%	41.25%	-21.69%	-16.52%
Q3	1.43%	-11.08%	7.89%	16.78%	41.10%	-31.30%	-15.70%
Q4	-0.39%	-6.05%	1.60%	27.40%	0.34%	-10.41%	-16.80%

Based on tracking from the Office of the Superintendent of Bankruptcy, year over year reported bankruptcies continue to be down significantly the past two years across all regions. Ontario showed the largest decreases in both 2010 and 2011, while the East has been one of the lowest each year. Quebec was the only province that saw a single-digit decrease in 2011.

Annual	2004	2005	2006	2007	2008	2009	2010	2011
Canada	-0.35%	0.31%	-7.15%	2.22%	10.44%	34.22%	-22.02%	-15.86%
West	-7.83%	-5.21%	-20.18%	-8.76%	8.16%	57.00%	-15.91%	-16.30%
Ontario	1.46%	1.93%	-7.28%	8.40%	12.18%	35.06%	-30.17%	-22.64%
Quebec	2.46%	0.07%	5.10%	3.78%	10.68%	24.68%	-19.61%	-8.80%
East	6.77%	8.96%	-8.27%	-1.82%	7.46%	19.94%	-8.91%	-12.45%

On a year to-date basis through March 2012, the strong downward trend continued, but at a decelerating rate except for the West.

YTD March	2005	2006	2007	2008	2009	2010	2011	2012
Canada	-3.24%	-1.83%	-3.74%	2.88%	34.63%	-15.08%	-14.37%	-8.94%
West	-9.18%	-13.85%	-14.07%	-3.71%	57.62%	-8.33%	-11.19%	-14.94%
Ontario	-1.25%	-1.86%	1.36%	4.05%	37.70%	-21.37%	-25.20%	-9.14%
Quebec	-3.60%	9.57%	-1.49%	7.54%	24.53%	-17.47%	-5.94%	-4.57%
East	6.67%	-3.21%	-5.67%	-2.87%	14.96%	4.27%	-9.18%	-8.36%

TransUnion’s Market TrendsTransUnion’s Market Trends is an in-depth, full sample solution that provides statistical information every quarter from TransUnion’s national consumer credit database, culled from anonymous credit files. Each Canadian consumer record contains hundreds of credit variables that illustrate consumer credit usage and performance. By leveraging Market Trends, customers from a variety of industries can analyze industry trends over an entire business cycle, helping to understand consumer behaviour in different geographic locations throughout Canada.
About TransUnionAs a global leader in information and risk management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering high quality data, and integrating advanced analytics and enhanced decision-making capabilities. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Based in Burlington, Ontario, with global headquarters located in Chicago, Illinois, TransUnion provides local service and support throughout Canada.  Visit www.transunion.ca to learn more.