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ASK AN ATTORNEY
Q: WHAT IS THE ONE REQUEST YOU WOULD MAKE OF YOUR CLIENTS IN REGARDS TO GRANTING CREDIT TERMS?
A: After 25 years of practicing law and nearly the entire time in collections, there is one item missing when the account comes to the collection attorney, "source of revenue". You might ask, what does source of revenue mean? The definition is, how and through whom is the debtor getting his income. When a potential customer comes to a credit grantor for an extension of credit, many credit grantors use a credit application. However, the credit application fails to ask where the debtor gets income. Some sources are obvious , but many are not. Further, even for those that are obvious, more specifics are needed to assist collection counsel. Moreover, since the customer is looking for credit, he/she is going to answer these questions truthfully in the hopes of securing credit.
For example, lets say your customer (now debtor) is a contractor. While he/she makes his money from construction, there is more information that could help. Is the income from residential , industrial or commercial? Does the contractor typically get permits? Is the work seasonal? Do they do government work? What communities do they work in? How are they paid (progress payments or at completion)?
This information is critical to the collection attorney and increases the likelihood of collection. So before you grant credit, ask for the source of revenue and ask some follow up questions. By so doing you will greatly enhance your chances of collecting should the customer become a debtor.
Charles L. Litow
Litow & Pech, P.C.
Cedar Rapids IA
A: I would have clients sign a personal guaranty that includes the following information:
- Social Security Number
- Copy of Drivers License
- Personal Banking Relationship
If the debtor refuses to sign the guaranty it is still helpful to have the above three pieces of information to assist in locating the defendant in the event suit is required.
Michael S. Baim, Esq. The CKB Firm Chicago, Illinois A: DOCUMENT! DOCUMENT! DOCUMENT! A well documented account is the key to a successful collection of receivables. A creditor is always generally the plaintiff in all litigation and the plaintiff always has the "burden of proof." In a business receivable matter the documentary proof prepared and maintained in a diligent, systematic order places the plaintiff in a position of being able to present a primae facia case (a clear case in its favor on its face). The documentation should include any and all invoices, monthly statements of account, copies of any and all documentation, correspondence, e-mails, etc. and copies of each and every payment made by the debtor. Debtor's checks contain invaluable information of inestimable value in enforcing judgment, should the matter have to go to go that far. Les Taroff Roe Taroff Taitz & Portman, LLP Bohemia NY | 
