Help, my client won't pay!

Reporting nonpaying customers to an agency like Equifax is an option - but if you do it for one customer, you have to do it for them all.

Rajendra Hariprashad, Glen Oaks, N.Y.
Can a small business make a negative report on their clients' credit report for not paying their bill? If yes, how can it be done?

By Paul Roberts, Fortune Small Business contributor
Dear Rajendra: The short answer to your question is 'yes,' small businesses absolutely can report the bill-paying habits of their customers to the leading credit rating agencies.

However, if what you really want to do is report on the behavior of one bad actor, there may be better options available to you, such as your local chapter of the Better Business Bureau, which takes complaints about improper business practices of all sorts. The National Association of Credit Management has branches across the country and advises small businesses on issues relating to credit and financial management; they may also be willing to field a compliant.

Warren Beaty, a senior vice president of commercial information systems at Equifax (EFX), says that his company, like other credit reporting agencies, is happy to accept payment histories for your customers. However, that means reporting both good and bad reports for all your customers, and at regular intervals - not just this one account this one time. Companies that wish to report to Equifax can contact the company at 1-888-489-8719. Your company will be vetted by the firm to make sure you are legitimate. Typically, that means you have an active business license and address and that you and your company check out against Equifax's database of 24 million registered businesses.

Equifax will want to collect basic information for all your customer accounts, such as the account name, address, and account number, as well as their payment history – whether they pay on time, within 15 days of the due date, 15 to 30 days, and so on. The company will work with you to streamline data submissions, which are monthly or, occasionally, quarterly. For example, if you use Intuit's (INTU) QuickBooks or Microsoft (MSFT) Office Small Business Accounting software, you may be able to simply upload that data to Equifax, Beaty adds.

Submitting your data won't win you free access to Equifax reports, but Beaty says you can promote your status as a reporter to reward customers that pay you promptly and warn off those that might be tempted to delay. Besides, helping maintain accurate credit information for your business customers helps everyone and is the "right thing to do," he says.

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