Delinquency definition

Delinquency has occurred when a scheduled payment on a liability has not been made in a timely manner. A delinquent condition typically triggers collection activities by the seller, though it may not trigger a late fee. If the seller adds a grace period to the normal payment terms, then delinquency is not considered to be present until the grace period has also expired. Delinquency rates tend to increase during an economic downturn, and decrease when the economy is improving. The company credit department usually considers the average number of days delinquent on prior payments when deciding whether to alter the credit made available to a customer.

Related Courses

Credit & Collection Guidebook 
Effective Collections