In a statistical analysis based on 10 years of representative Realty Management Client, we have obtained some clear and obvious relationships between how a Client checks out a prospect and how much the Client gets back from the Debt Collection effort. Today, I will show the differences between the best and worst screening and how it effects your bottom line.
The average Realty Management Client using what I consider the best screening procedures collects 32.1% on Debt Collection. The worst group collect only 12.6%. The best group collected almost three times as much money.
It amounts to $19.50 for every $100.00 of debt collection claims. It is common for Realty Management Clients to produce hundreds of thousands in claims each year. The extra profit would be enough to hire an extra employee or purchase a new luxury car. The best procedures actually cost less than most Realty management Clients consider reasonable expenses. Let’s take a look at the major factors.
Worst practices trust the Prospect and don’t verify employment. About 5% of these applicants aren’t telling the truth and others are exaggerating. All it takes is a quick call, fax or email to the employer to make sure the Prospect has the ability to pay the rent. This is big. It accounts for over one third of the difference in collections.
Worst practices allow empty, scribbled or irrelevant information on their applications. This is usually not an accident but an effort to avoid providing negative information. It accounts for about one sixth of the problem and takes no work to correct.
Worst case procedures base credit approval entirely on a credit score. Best procedures consider other reported factors such as available credit and number of negative accounts. I have written other articles explaining why this is important. Here, let me say it accounts for about one forth of the difference.
EVICTION AND CRIMINAL REPORTS
The rest of the difference is in how Realty Management Clients check Criminal or Eviction reports. National Criminal reports are much more effective than local reports. No Criminal checking is common in worst procedure Clients. This is not a big factor but it really hurts when you have police visiting your building on a regular basis.
Eviction reports, contrary to common belief, have almost no predictive value of the ability for a prospect to pay future rent. They have no significant effect on debt collection results for Clients that check Credit and Employment. You might consider saving the money and not bother with this check.
Those who sell reports make money based on the number of reports they get you to buy. Your best interest is not always the same as theirs. You can actually save money while getting much better results.
The figures are actual. The results are real. It’s your move.
ABOUT EXECUTIVE CREDIT MANAGEMENT, INC.
Executive Credit Management is a full-service Debt Collection and Applicant Screening agency with over 20 years experience located in Central New Jersey. We provide excellent service in the following areas: Employment Screening, Business Screening, and Tenant Screening. Executive Credit Management belongs to a number of Skip Tracing databases and offers services to help locate and confirm the current address of missing debtors. Other services provided are: litigation evaluation on all lawsuit decisions, improvement of the quality of the applicant data, Lawsuit Monitoring, Handling of Debtor Disputes. Executive Credit Management features the best Call Monitoring System in the Debt Collection industry.