Heads up: The vendors you work with might soon turn up the heat on you when it comes to extending credit. What’s brought this on?

The number of business-to-business accounts being turned over to commercial collection agencies ran 24% higher in the second quarter of 2008, compared with the same time period in 2007.

That number kept pace with the increase in accounts placed over the past year with the members of the Commercial Credit Agency Association (CCAA).

Accounts placed for collections for the 12-month period ending June 2008 went up by 22%, compared with the 12-month period ending June 30, 2007.

The trend isn’t expected to reverse anytime soon.

If referrals to outside collection agencies continue at this pace, 2008 could end up being the busiest year ever.

CCAA members said it’s been getting tougher to negotiate payments from customers who’ve fell short of goals. The increasing cash flow crunch is making it much more difficult for business debtors to catch up on delinquent debt.

One possible side effect: Increased difficulty in obtaining credit.

It’s anticipated the next quarter will see the stats swing in two directions:

• Finance pros expect a significant increase in the number of accounts turned over to outside collectors, and
• There’ll be an accompanying decline in success collecting those accounts.

Tags: collection, debt, payment