Tracking your customer’s trail with skip tracing

It’s easy to get frustrated when a suddenly unreachable customer is not paying what they owe. But before you write off the account, skip tracing is another way credit managers can secure payment and hold debtors responsible.

Why it matters: Skip tracing is the process of tracking a debtor down using public records, social media, credit reports and other resources. Some departments may hire a professional skip tracer while others may take on the task themselves to hold debtors responsible.

By the numbers: About 14% of credit managers handle skip tracing internally while another 14% outsource to external vendors, according to an eNews poll, with an additional 45% employing a mixture of the two approaches.

“Normally, you start skip tracing if someone is not responding to you—the mail is bouncing back to you and the phone is disconnected,” said Michelle Kelly, CCE, CCRA, CICP, senior credit manager at Mansfield Energy (Gainesville, GA). “Those are indicators that they may have skipped town and relocated.”

While having a customer skip town is never ideal, there are lots of resources at the credit department’s disposal that make tracking them down easier. Ron Brown, chief executive officer at CSI Group (Oklahoma City, OK), is a professional skip tracer, recovering assets from those who’ve abruptly relocated to avoid paying their debts. “We all leave some type of trails,” Brown said. “When I got started, it was paper trails, today we leave electronic trails. From cell phones to the GPS systems in cars, it is hard not to leave a trace these days.”

Skip tracing begins with understanding a debtor’s habits, which is where the oft-repeated mantra of credit, “know your customer,” comes in. “To go forward with an investigation, the first thing you have to do is go backwards,” said Brown. “You go back to the very last time that you absolutely knew where the person was, that’s always the starting point. Then you look at contacts, references, employment and habits.”

The best approach to skip tracing is a proactive one. When credit managers take the time to learn about their customer at the start of the relationship, it’s easier to track down that customer should the relationship falter. “When you are onboarding customers, you need to make sure that your credit applications have all the details you might need,” Kelly said. “Make sure to get their name, social security number, current address and any other places they may have lived in the last ten years. You could even ask them to list emergency contacts so that you have people to reach out to if you need.”

As business is increasingly done electronically, the trails left by a debtor may be easily assembled using online resources. “Having the ability to pull a personal credit bureau report with the appropriate permission is extremely helpful,” Kelly said. “From the report, you can see their most recent reported address because if they apply for credit somewhere they’re going to provide it. Even social media can help you figure out what’s going on.”

Skip tracing isn’t always about tracking down the customers missing payments. At times it is a way to get in touch when previous contact methods aren’t working. “When we do run into a customer that has gone silent or the old contacts no longer work there, we skip trace,” said Christian Pedersen, CCE, corporate credit manager for Emcor Services Aircond (Smyrna, GA). “We check different resources, validate the information and then catch up with the customer. They could have simply moved offices, meaning most of the credit information is still valid, and we just weren’t alerted on the move ahead of time.”

The bottom line: Each day in credit brings new challenges. While it’s not every day a credit manager finds themselves scouring the internet for hints on where a customer skipped off to, the best practice is to always be prepared in case it happens and learn as much about your customers as you can.