Best Practices for Handling Missed Payments and Defaults

This is the sixth installment in our series, "Establishing Best Practices for Extending Credit in Today's Economy." In our previous blog posts, we discussed getting organized to offer credit to your customers, best practices for processing credit applications and creating credit agreements, and ensuring payment. In this blog post, we will focus on best practices for handling missed payments and defaults. Strategies for Handling Missed Payments and Defaults While automating the payment process using electronic debit to a borrower's bank account greatly reduces the risk of payment default, missed payments still occur and can lead to loan defaults. So given that we followed best practices during the application process and are using automated payment processing, what steps are recommended for handling missed payments? Automated payments fail for a variety of reasons. Assuming payments are made via ACH, a payment may fail due to insufficient account funds a closed account . Generally, sending a payment reminder to the borrower prior to each payment due date will ward off these issues before they occur; but when they still happen, it is best to immediately contact the borrower to discuss the missed payment and agree upon corrective action such as an immediate payment to get back on track. Taking manual payments to correct a missed payment forces the issue with the borrower. They have to respond to your request by either coming into your office with a payment, authorizing an immediate debit of their bank account, or providing you with a credit card for payment. If they decline to correct the situation immediately by seeking a delay in payment or declining to honor the payment agreement, you know that you have a more serious potential default situation. Even in [...]

2016-10-29T16:36:45+00:008:13 am|

Creating New Payment Plans – Part 2

This is the fourth installment in our series, "Establishing Best Practices for Extending Credit in Today's Economy." In our previous blog post, we discussed strategies to consider in developing your customer credit program. One of these is deciding which procedures or types of transactions to include in the program and what types of customers will be eligible for credit. In this blog post, we will focus on the second part: deciding which types of customers will be eligible for credit. Strategies for Assessing Credit Risk When it comes to deciding who is eligible for extended payment terms and who is not, the decision should be based on a defined business strategy for offering credit and then on criteria that is consistently applied to all applicants. First, let’s discuss strategies for offering credit. A properly designed credit program serves a business purpose. This may be to stimulate sales, provide a financing option to customers, or supplement an outside financing program. Within the context of the business purpose, a decision should be made regarding how much credit risk is acceptable. For example, if the business purpose is to stimulate sales of a service, but stringent criteria are set for credit approval, the business may find a higher than desired percentage of applicants is declined. On the other hand, setting more lenient credit criteria may result in higher missed payments and bad debt situations. That said, it may be acceptable if the service is highly leveraged in terms of cost of sale, and the increased business volume generates additional profits that justify the bad debt dollar risk. Credit risk should be assessed based on the business purpose and should be well understood prior to commencing the program. The business [...]

2016-10-29T16:36:45+00:008:30 am|

Creating New Payment Plans – Part 1

This is the third in our series, "Establishing Best Practices for Extending Credit in Today's Economy". In our previous Best Practices’ blog post, we discussed the value of developing a written plan for extending credit and formalizing the credit process. As part of developing an overall strategy behind offering credit to your customers, you should decide which procedures or types of transactions to include in the program and what types of customers will be eligible for credit. In this blog post, we will focus on the first part: deciding which procedures or types of transactions to include in the program. Leveraged Transactions Leveraged transactions or procedures of all sizes are good candidates for selling on credit terms. Why? Because the fee you charge is high compared to the hard cost you incur to provide the service or procedure. Couple this with requiring a down payment and/or charging interest over the term of the payment plan, and lending risk can be minimized or eliminated, while growing the business and generating a high level of wealth creation for the owner(s). Let’s look at an example from the dental market and also compare this to the results you obtain using outside of third-party financing. To start, outside financing may seem attractive on the surface because the dentist gets paid immediately. If the need for immediate cash flow is critical to the dentist, an outside financing program is an option that should be considered. However, the dentist does take a discount on their fees and the lender will only approve certain patients. Also, only certain procedures are eligible for financing often at less than 100 percent financing. As a result, the dentist's revenue potential from the highly leveraged procedure is [...]

2016-10-29T16:36:45+00:008:15 am|

$20 billion spent on veterinary bills in 2010

I was reading an interesting article in Smart Money titled, "The $20,000 Pet" today. As quoted in the article, a report by market-research company Packaged Facts stated that Americans spent $20 billion on veterinary bills in 2010 — an 8.5% increase from a year earlier and more than double the amount spent just a decade ago. It went on to say that pet owners often don't argue when a vet recommends treatment for a beloved pet. Stating that a recent survey by the Associated Press and found that 35% of pet owners said they were very likely to pick up $2,000 in vet costs to treat a sick dog or cat, while 22% said they'd pick up $5,000 in vet costs. Much of that money is being spent on new medical technology. The article goes on to point out that pet insurance is benefiting from this trend and becoming more popular with pet owners which is driving up premiums more than 20% annually. Still, pet insurance is used by a small percentage of pet owners and the benefits offered are limited in many cases. So all this begs the question, "how do pet owners afford these new high cost services?" Conversely, "what should veterinary practices do to promote these high tech procedures and attract these more valuable customers?" Pet care financing is the solution. Veterinary practices and Animal Hospitals that are on the leading edge of offering these procedures based on new medical technology understand the need to offer financing to their customers.

2016-10-29T16:36:45+00:008:27 am|

Getting Organized to Extend Credit

This is the second in our series, "Establishing Best Practices for Extending Credit in Today's Economy". According to a 2008 survey conducted by GfK Roper Public Affairs and Media, when faced with a medical expense over $1,000, one out of 10 people surveyed stated that they would seek a payment plan/monthly payments from the service provider to help in paying the expense. This was before the impact of the credit crisis was really felt by the general population. Today, one can assume, if asked the same question again, that a higher percentage of people would seek payment assistance in the form of a payment plan. If your business recognizes the need to extend credit terms to your customers, you probably also realize that it would be a good idea to have a plan in order to execute successfully and avoid unnecessary repayment risk. There are several areas to consider when getting organized to extend credit. In this blog post, we will highlight "best practices" to assist you in successfully extending credit to your customers. Develop a Written Plan A plan defines the goal behind offering credit terms, a roadmap for everyone to follow in executing the plan, as well as the metrics to measure its success. Putting it down on paper forces you to really think about what is involved, offers you the ability to get valuable feedback before implementing, and the ability to share it with everyone on your team. This ensure that it is properly executed. Understand Lending and Privacy Compliance Requirements Extending credit terms is lending and is, therefore, subject to a number of state and federal consumer lending and privacy laws and regulations. It is a best practice to seek out professional [...]

2016-10-29T16:36:45+00:008:32 am|

The Need for Extending Credit is More Important Than Ever

This is the first in our series, "Establishing Best Practices for Extending Credit in Today's Economy". Successful businesses in elective healthcare, dental care, and veterinary services use customer financing to maintain and grow their sales. Like accepting different forms of payment, such as credit cards, extending credit is becoming more popular as another method to help close a sale, while enabling customers to financially secure services they would otherwise not be able to afford. Unfortunately, given the current tighter credit standards and the increase in consumers with FICO scores under 650, access to consumer financing has become significantly limited making the financing that is available more expensive for these businesses. For example, approval rates for traditional financing through credit cards or lending institutions have seen a significant double-digit decline causing many consumers to forego non-essential elective healthcare services and creating a significant revenue decline for elective healthcare providers. The credit crisis has also impacted many other B2C industries, such as education, legal, home improvement, luxury goods & services, and others that suffer from the lack of effective third party financing. DIY - extend your own credit The choice for many businesses is between offering their own payment terms or doing nothing, forgoing the much-needed revenue and crossing their fingers that the economy will improve soon. As a result, many businesses are now turning to extending credit via internally funded payment plans as a way to close the gap and create a "win-win" for their business and their customers. Extending credit through payment plans is hardly a new concept. For many types of businesses this is an accepted and well-understood practice that has helped them grow their sales and maintain customer loyalty. And, importantly, steady cash flow. [...]

2017-01-18T18:02:04+00:008:10 am|

Pet Care Financing During Difficult Times

The credit crisis has severely impacted many industries who rely on customer financing to drive their business and help their customers afford their services. The Animal and Pet Care Industry is one of the industries impacted by the lack of adequate client financing. Pet insurance and conventional third-party financing are not meeting the need today. is filling this void through it's Pet Care Payment Plan program for Veterinarians and Animal Hospitals. To learn more watch our video on YouTube.

2017-01-18T18:03:52+00:008:56 am|

Close the Gap in Your Customer Financing Picture

Businesses across the United States are looking for alternatives for customer financing. Conventional financing programs are not meeting the need. Approval rates are at an all time low as only the most credit-worthy customers qualify for conventional financing. Fewer and fewer services even qualify for conventional financing. All too often, when conventional financing is available, you hear stories about customer complaints that it is really expensive. These are signs of the times. The economic crisis is still with us and the situation will not change any time soon. The harsh reality for businesses that use conventional customer financing is that business and revenues are significantly lower than in the past. So how do you close this gap and build your business and revenues back up in these challenging economic times? Extend your own credit in the form of payment plans to your customers as a complement to conventional financing. This approach provides choices for you and your customers. If conventional financing programs are only approving 15% of customers that apply for financing, then offering your own payment plans can close that gap and increase approvals to more normal levels. If conventional financing programs will not cover certain procedures or types of transactions, then offering your own payment plans can generate sales that would otherwise be lost. As a business owner, you see the benefit of offering your own payment plans, but you do not have the infrastructure, resources or experience to manage them. You may have even tried offering your own payment plans in the past and struggled with juggling spreadsheets and the time consuming and error-prone manual processes involved with this approach. This is where comes into the picture. provides businesses with [...]

2015-06-08T18:57:56+00:008:59 am|

Who knew! Dentists want to offer payment plans

We recently exhibited at the Pacific Northwest Dental Conference in Seattle. While we were a little last minute in deciding to exhibit, the show was a great success for Throughout the show, we had more booth traffic than our hard working team could handle. A lot of follow up appointments with dentists, medical billers, and potential resellers will keep our local sales team in the Seattle area hopping for some time to come. Using payment plans for managing accounts receivable was the hot topic. In today's credit challenged economy, more and more patients are struggling to pay their bills. All too often, medical bills get pushed to the bottom of the pile. Accounts receivable balances at dental practices are getting larger and aging longer. Offering payment plan options to many of these patients with outstanding balances is good business. With, the dental practice decides which accounts qualify for payment plans and how the payment plans should work. The dental practice controls whether credit checks are performed, and what interest rate and payment term to set. ExtendCredit works with the dental practice to design a "best practices" approach to communicate the offer to the patients and get them signed up. Once signed up, ExtendCredit's automated system takes over for collecting payments from the patients and handling any missed payment situations. The dental practice has real-time access to patient payment activity to stay on top of weekly cash flow from the payment plans. Using, offering payment plans as a cash flow strategy for existing accounts receivable is simple, highly automated, and effective. To learn more about how can help you manage your accounts receivable better call us today at 888-364-2808, or email us [...]

2015-06-08T19:21:49+00:008:12 am|

We are exhibiting at the Pacific Northwest Dental Conference June 17-18th – Booth 215

If you are planning on attending PNDC in Seattle this week, make sure to stop by our booth (# 215) to say hi and learn more about the great services offers Dentists and Medical Billers. Sponsored by the Washington State Dental Association (WSDA), the Pacific Northwest Dental Conference (PNDC) offers two days of continuing dental education with over 50 nationally-renowned speakers and a dental trade show of more than 350 exhibits. With almost 9,000 attendees, the PNDC is the largest gathering of dental professionals in Washington. Contact to arrange a time to meet while at the show or to learn more about

2015-06-08T19:27:56+00:008:01 am|