Streetwise Credit And Collections: Maximize Your Collections Process to Improve Your Profitability Book

Acknowledgments     ix
Introduction     xi
Why Credit Is a Business Necessity     1
How Credit Creates Leverage     1
The Leverage to Start a Business     2
Cash Is a Timing Issue     3
Turning Assets into Collateral     4
Your Bank as a Source of Credit     5
Securing Loans for Working Capital     6
Selling an Account to a Factor     8
Floor Planning Inventory     9
Securing Credit from Vendors     11
Establish Credibility     12
Negotiating Terms     13
Working with Consignment     14
The Importance of a Track Record     16
What to Do When Cash Is Tight     17
Securing Discounts for Prompt Payment     17
Providing Credit to Business Customers     19
The Difference Between Consumer Credit and Business Credit     20
Using Credit as an Incentive     22
Who Carries the Paper?     22
A Business Credit Application     23
Reading a Business Credit Report     25
Types of Credit: Short-Term and Long-Term     26
Asking for a Deposit     28
Make Sure Your Policy Is Evenhanded     29
Credit Takes You Global     31
Opportunities Through Foreign Trade     32
Buying from a Foreign Firm     33
Letters of Credit: Providing Assurance     34
Standby Letters of Credit     36
How Banks Protect Their Interest     37
What Bank Should You Use?     38
Providing Material to Be Fabricated in a Foreign Country and Shipped to You     38
Your Business Sells Your Goods or Services in Foreign Markets     39
The Export-Import Bank and Your Business     40
Obtaining Credit Information on Foreign Firms     41
Providing Credit to Consumers     45
Understanding Consumer Credit Laws     46
Applications for Consumer Credit     47
Checking Credit Reports     48
The Equal Credit Opportunity Act     50
Can You Use Third-Party Financing?     53
Collecting Through Professional Firms     54
An Effective Credit Policy     56
The Elements of Your Plan     57
How Much Credit Can You Provide?     58
Who Will Handle Credit Checks and Decisions?     59
An Override Policy     61
Personal Guarantees     62
Periodic Recheck and Review     62
When to Raise and When to Lower Limits     65
Assessing Risk     67
Can You Cover Your Costs?     68
The Difference Between Secured and Unsecured Credit     69
The Value of a Personal Guarantee     70
Securing a Confession of Judgment     70
Evaluating Trade Credit References     72
Checking a Bank Reference     73
Out-of-State Credit     73
Asking for Financials     74
Setting a Proactive Credit Limit     77
Allowing Customers to Buy According to Their Need     78
Special Deals Require Special Terms     80
Secondary Protection: Using Outside Credit Resources     81
Growing Customers Need Growing Credit     82
Reducing a Limit or Requiring Cash     83
Communicating Your Policies     87
Put Your Policy in Writing     88
Letters Granting Credit and Stating Terms     92
Print Your Terms on Invoices and Statements     94
Post Credit Terms and Return Policies in Your Place of Business     94
Can You Charge Interest on Past-Due Accounts?     97
Creating the Paper Trail     99
Purchase Orders and Contracts Must Be in Writing      100
A Sample Purchase Order and Confirmation     102
Keep Track of Invoices, Payments, and Credits     104
Change Orders Must Be in Writing     107
Contact Reports on All Billing Inquiries     108
Record All Statements and Letters     108
Putting Policy into Practice     110
The Collection Begins with the Safe     111
Make Sure the Billing Is Accurate     112
Learn What Constitutes an Acceptance     112
Proof of Delivery     114
Make Sure Your Customer Is Satisfied     115
Handle Disputes in Writing and Issue Credit     117
How Much of a Discount Can You Afford?     118
Letters to Confirm the Outstanding Amount Due     119
Dealing with Third-Party Funders     121
Keep Your Source Documents after the Charge     122
With Contract Financing, Proper Documents Must Be Submitted     124
What Happens If Your Client Does Not Pay?     125
Credit Card Disputes Can Result in Charge-Backs     127
Form Alliances with Funders to Access Credit     128
The Fine Art of Reminders     131
Send Regular Statements     132
The First Friendly Request      134
Making a Demand for Payment     134
Making Contact via Phone     136
Having a Salesperson Help to Collect     138
Six Sample Letters     138
Handling a Dispute     143
Take the Time to Research     144
Establish Your Side of the Story     146
Compromise When It Makes Sense     147
Get the Agreement of the New Terms in Writing     148
Some Disputes Are Ploys to Not Pay     149
Dealing with a Bounced Check     150
The First Steps in the Collection Procedure     153
Call the Customer Yourself     154
Ask for a Payment Schedule     155
Send Out Demand Letters via Registered Mail     156
One Final Request Before the Account Is Turned Over     157
A Postdated Check Is Only a Promise to Pay     159
Aggressive Collections     160
Collecting from a Consumer     161
Understanding FDCPA     162
The Collection Call     162
Do Not Violate the Applicable Law     164
What to Do When You Are Told to Cease     165
Staying Polite and Providing Customer Service While Collecting     166
Making a Decision to Turn Over an Account      166
Collecting from a Business     171
FDCPA Does Not Apply     172
Calls Are Now Serious Business     173
Document All of Your Demands     174
Personal Visits Are Allowed and Might Work     175
Can You Take It to Small Claims Court?     176
A State-by-State Review of Small Claims Court     177
Collecting from a Tenant     189
The Terms Are in the Lease     190
Residential Leases     191
Commercial Leases     192
Handling a Dispute     193
Giving Notice to a Past-Due Tenant     194
Negotiating a Settlement     195
Handling an Eviction     196
When to Hire an Agency     199
Check Out Agencies Before You Need One     200
Try One That Reports Credit as Well     203
What Do Agencies Generally Charge?     204
Do Not Hire an Agency That Poses as a Law Firm     204
What Can an Agency Actually Do?     205
When Is It Time to Turn Over the Account?     206
When to Hire a Lawyer     209
Get Something Filed Before It's Too Late     210
An Ounce of Prevention     211
Judgments and Liens      212
When You Have a Confession of Judgment     214
Judgments Are Not Money-They Must Be Collected     215
Your Rights When a Debtor Fails     219
Are You Secured in Any Assets?     220
Three Types of Bankruptcy     220
A Recent Purchase May Be Reclaimed     221
Chapter 7-Get Your Portion of the Distribution     222
Chapter 13-As a Creditor, Get Monthly Payments     223
Chapter 11-Be a Member of the Committee When Possible     224
Should You Do Business Again with the Same Customer?     226
The Art of Credit     228
The Psychology of Money     229
Why Some Creditors Never Make Demands     230
Customers Who Don't Pay Even When They Are Able     232
Tips on Having Discussions about Money     234
Know Whom You Are Dealing with First     235
Discounting to Make a Friend     235
When You Are the Debtor     237
Always Communicate with Your Creditors     238
Do Not Promise What You Cannot Pay     239
Make an Honest Offer and Stick to It     240
Don't Be Frightened by Threats     241
How to Deal with Taxing Authorities     242
When Money Is Tight, Prioritize      243
Creative Credit Techniques     247
Using a Factor     248
Securing Deposits and Retainers Before You Work     250
Floor Planning and Installment Loans     251
Debit Cards, Credit Cards, and Electronic Funds Transfer     251
COD: Cash on Delivery     253
Progress Payments     254
Credit Insurance to Rely On     254
Operating a Financially Sound Company     257
Profit Isn't Real until the Money Is Received     258
Bad Debts Can Undermine a Good Business     260
Your Credit Provides You with Options     261
Credit and Trust Are Twin Values-Use Both     262
If You Have Done the Work, You Are Entitled to the Money     263
Epilogue     265
Appendixes
Glossary     267
Applicable Laws and Statutes of Limitations by State     273
Consumer Credit Laws to Know     297
Index     329