This web page is devoted to providing resources to credit and collection professionals for the purpose of enhancing awareness that serves “informed decisions.”

LESSER-KNOWN IMPORTANT CREDIT COLLECTION TOPICS – In this section we only list the lesser-known important credit and collection topics. A brief description of these topics follows in this web page. If you need more details, just call us. Well-known and frequent topics were explained in detail in the “Tools” section at our Forms & Tools web page.

DEBTOR DIRTY TRICKS (CONTRIVED SCHEMES TO STOP COLLECTION EFFORTS) – There are only two ways a debtor can seek relief from collection, one of which is filing bankruptcy and the other is to devise a way to halt the collection process. Debtors are sophisticated, many of which have already used the same stalling tactics successfully over and over again. The specific “tricks” are referenced in detail and follow later in this web page.

SMALL BUSINESS CREDIT SCORING MODELS – Clients may find this type of scoring model useful in attempting to analyze the needs of a party requesting credit. Every time you extend credit to a new customer, you accept a certain amount of risk. Information gathering may not be enough. A small business credit scoring system may provide you with insight and increase effectiveness of your review process when granting trade credit terms. We devote a detailed lengthy explanation, which can be reached by clicking to SMALL BUSINESS CREDIT SCORING MODELS.



FRAUDULENT ASSET TRANSFERS & PURCHASES – Fraudulent asset purchases and transfers as defined by the Uniform Fraudulent Transfer Act.

UNJUST ENRICHMENT – Did a party receive merchandise or a money order in error, and are they refusing to relinquish or pay for it?

RECEIVERSHIP – A creditor initiated action where the state appoints an overseer to liquidate or preserve assets.

SALES TAX EXEMPTION CERTIFICATES – Under state law, the seller is obligated to pay sales tax unless the buyer has a Tax Exemption Certificate. All sellers are obligated to assess the sale tax from the buyer unless a current Tax Exemption Certificate is provided.

DISPUTE – Legitimate dispute is voiced within days of receiving merchandise. Preliminary steps can be taken to eliminate unfounded disputes by virtue of invoice and acknowledgment wording.

FORBEARANCE – A Promissory Note is an example of forbearance whereby the holder of the note will not exercise a legal remedy, provided the payout terms are in compliance. A schedule tied to a document can be constructed “upon demand” thereby eliminating restrictions associated with forbearance.

RETURNS WITHOUT AUTHORIZATION – Remedies are available to the creditor in those situations where preliminary permission was not obtained to return goods.

IN-HOUSE COLLECTION STRATEGIES – The booklet, “Commercial Collection Guidelines for Credit Grantors” is available upon request. We also provide specific recommendations obtained in our document entitled “In-House Collection Techniques.”

RECLAMATION – This procedure was important enough for us to include at our “Forms & Tools” web page. This is a method of retrieving your merchandise immediately after a debtor who commits an “act of insolvency” receives goods (i.e. announces a GOB sale, declares bankruptcy, is placed in receivership, or proceeds with an Assignment for the Benefit of Creditors).

SPECIAL ORDER CANCELLATIONS – A debtor can be held responsible for an entire amount, regardless of whether or not goods have been completed or shipped.

SUCCESSOR LIABILITY – Look for more information in our “Tools” section. If there is a common connection continuing between the selling entity and the inquiring entity, then liability is inherited by the acquirer.

WHAT IS THE MOST IMPORTANT TRAIT OF A COMMERCIAL COLLECTION AGENCY – This tells you what to look for in an agency and how the Recovery Ratio is tied to profits. Some of this thinking can also be found at the “When to Place” web page.

PROTECTING YOUR COMPANY AGAINST ILLEGITIMATE DEFECTIVE CLAIMS – We have provisions in the credit applications and standalone provisions that can be added to documents to protect you in this area. Also see “Customer Disputes – Real or Bogus” at the “Forms & Tools” web page.

CURRENT CREDITOR/DEBTOR, BUYER, and SELLER TRENDS – These are current credit and collection trends subject to rapid change, which touch upon cram downs, offsets, oversees partnering, etc.

CREDIT CRITERIA/EVALUATIONS FOR OLD AND NEW CUSTOMERS – This stresses the examination of the 30, 60, 90 past due columns and also what to look for concerning new customers and the proportionality of “weight” as it pertains to “risk.”

BEFORE AND AFTER STEPS OF CREDIT GRANTING – These aspects of a customer should be evaluated periodically at any time a new order is submitted.

CREDIT DEPARTMENT COSTS AND FACTORING EXPENSE COMPARISONS – This is an analysis of the cost of an efficiently run credit department compared to the cost of factoring.

CHARACTERISTICS OF A GOOD COLLECTION AGENCY – These are the characteristics that all collection agencies should possess but seldom do.

ASSUMED NAMES – Debtors are obligated to register assumed or fictitious names or otherwise become liable based on what a creditor or normal person would be led to believe as to the entity requesting credit.

MILLER ACT – If your product was delivered at a federal construction project site, you have bond rights.

BOND RIGHTS, STATE PROJECTS – If you provided product, materials, or services to a state project, you have rights under a bond.

MECHANIC LIEN RIGHTS – If the product or service was provided to a job site, you may have lien rights, which generally leads to payout 100% of the time.

PRE-JUDGMENT ATTACHMENTS – In certain situations, especially if a debtor commits an act of insolvency, this procedure is available to tie up debtor assets. It is especially effective if your claim is against a debtor that has assets in another state.

CORPORATE STATUS BURDEN – If a creditor receives no prior notice of incorporation from a debtor, the corporate officer or employee contracting on behalf of an undisclosed corporation may be held liable for subsequent bad debt. This would be especially true for a belated incorporation.

The burden is upon the corporate officers to prove the creditor had sufficient notice of corporate status.

SUBROGATION OF DEBT – When principals of businesses must pay off unsecured debt before addressing the payback of shareholder loans.

INSURANCE CLAIMS – State Insurance Commissioners require all claims to be handled expeditiously. All insurance companies endeavor to satisfy non-suspicious claims within 30 days of loss. “Waiting on the insurance company to settle” is typically a stalling tactic. This is true of fires, floods, wind damage, tornadoes, etc.