The Sales Rep walks into your Office with a big smile and a brand new application. At this point everybody is happy. That will not last, however, if the information provided does not clearly define the new Client.
We have a tendency to hear what we want to hear and see what we want to see. When these pre-conceived notions conflict with reality we often don’t get paid.
The Sales Rep reported the full legal name of the Company and the name and contact information for the purchasing agent. Do you have everything you need to start granting the new Company credit?
If you supply the new Company $1,000 per month in goods or services the bill might be as high as $4,000 before the Company becomes a serious problem. If the Company says they pay in 60 days you expect payments in 75 days from the receipt of the bill. Add a small grace period and you have gone far over your intended credit limit.
Ultimately, you may need to litigate. The question now becomes who do you litigate? Does the Company have assets? Do you know the bank information? Is a parent company sending you payments? It gets complicated.
Blimpys is a very large franchised food chain. If you do business with a local vendor a Blimpys rep will sign all the contracts and you will feel very comfortable. These contracts, unfortunately, may not be in the name of the Blimpys Corporation, but under the name of Subsidiaries created for each vendor.
What’s the problem? These Subsidiaries are real Corporations but they are empty shells.
Blimpys can close any of them at any time with very little expense, completely cutting off any Vendor from litigating. Blimpys does pay all contracted bills while the Franchise Owner is paying them, but that is all you are getting from your contract.
The bigger the new customer the more you need to check. For large companies like Dunn and Bradstreet offer detailed financial information but most Companies are relatively small and don’t have either significant or accurate information available because there are very few vendors reporting their activities. You need to do your own research.
Here is a list of some of the key elements you need to investigate to increase the security of your relationship with the new customer:
Your level of investigation should be in line with the financial risk from the new Company. Once you have your sources none of these checks are difficult or expensive.
The bottom line is the bottom line. Make yours better with a little extra checking.
ABOUT EXECUTIVE CREDIT MANAGEMENT, INC.
Executive Credit Management is a full-service Debt Collection and Applicant Screening agency with over 20 years experience located in Central New Jersey. We provide excellent service in the following areas: Employment Screening, Business Screening, and Tenant Screening. Executive Credit Management belongs to a number of Skip Tracing databases and offers services to help locate and confirm the current address of missing debtors. Other services provided are: litigation evaluation on all lawsuit decisions, improvement of the quality of the applicant data, Lawsuit Monitoring, Handling of Debtor Disputes. Executive Credit Management features the best Call Monitoring System in the Debt Collection industry.