Remember to Review Credit and Collection Procedures Every Year

I had lunch with a client today–actually, the Chief Financial Officer, the Regional Credit Manager, and my local Credit Manager (yes, it was a fancy lunch, and I was paying)–and, toward the end, the CFO asked a great question: Are we doing anything to hurt ourselves or our ability to collect our debt?

What a simple, effective question to ask yourself, and your attorneys, at least once a year.

My response was what they wanted to hear: they aren’t.

They have solid credit applications, which provide for recovery of attorney’s fees, late charges, and include/require personal guaranties of corporate debt. Their invoices are clear and include due dates and adequate descriptions of the services provided. Internally, they seem to have good practices for prompting action on past due invoices that preserve all applicable lien deadlines.

In other words, they aren’t creating any openings or holes for their borrowers to avoid repayment of debt. At year end, it’s a good idea to review your practices and documents, whether internally or with counsel, with an eye to addressing any issues.

In this economy, people are looking for any reason to avoid repaying their debt. Be proactive in eliminating those reasons.

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