Fed Chairman Jerome Powell is increasing the interest rates, which has triggered an economic slowdown. People have been losing jobs, the housing market has already slowed down, and we read news about job losses almost daily. Most economists believe that a recession is inevitable.
Impact of Rising Interest rates on Consumer Debt
- Credit Card Debt: Higher monthly payments since they charge a higher interest rate.
- Higher mortgage and car loan payments.
- Everything around you gets expensive, including food and clothing.
- Job losses/layoffs.
- Higher electric and cable costs.
- People lose money in the stock market.
People tend to spend more money on basic essentials over pending bills like medical debt and student debt.
The more you defer working on your overdue bills, the financial situation of your customers/debtors will deteriorate.
Your customer likely has other debts besides yours. Therefore, getting paid at the earliest should be your priority before they use their money on other necessities or decide to make other payments before paying you.
The probability of getting paid will only decrease with each passing day, and your overdue AR should be your number one priority.
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