Everyone is busy, we understand that better than anyone, so if you missed our webinar on the 7 deadly mistakes people make in the staffing and recruiting collections industry, here is a quick recap on what you missed!
The first mistake that we often see is that companies do not get a personal guarantee when they extend a line of credit to a client. This is a deadly mistake that can cost you money because 80% of businesses will go out in the first two years and an additional 80% will go out in the third year. So, make sure to get a personal guarantee from the head of the company because if they are not willing to take the risk, why should you?
Next, when a company is in the process of signing a new client they do not have a separate form for a credit application. This can be dangerous because if a company goes under then their attorneys will look for an escape clause. If you do not become secured creditors, at least add wording to your contract that allows you to file UCC1. Each state has slightly different rules, so make sure you get a signature and details such as a personal address from anyone you enter business with. This is important because you should always file where your debtor is located. We advise that a creditor should ALWAYS add to the client application, “the debtor agrees to pay any and all litigation out of collections in the state your jurisdiction is in”. This is the best way to protect your company.
Another mistake we have seen companies make is they do not do their due diligence when signing a new client. This can even be just a simple Google search on the company, but you may be unpleasantly surprised what surfaces if you do not do your research. We once did a Google search on a potential client and found a live news article as they were on the run. I hope this does not happen to you, but it should go to prove our point. As you are doing your due diligence, make sure to check with the secretary of state and see if the company information you were given matches the description filed with the state. This is an extra step that we highly encourage to avoid any deception or misinformation about the foundational aspects of the company.
A very common mistake that companies make is they do not review a client’s credit application based on risk. It is important to be aware of the risk you are taking because some clients are worth a $5000 risk but not a $15000 risk. Also, recheck the credit application every 12 months and create a plan if the client’s risk has increased. You should always have a process for your employees to follow to help them in dealing with their clients.
The biggest and most common mistake you can make is not getting things signed! This goes with our earlier point of getting a personal guarantee and having everything signed. Along with that, we want to emphasize how important it is to know who you are dealing with. Get the guarantee and do your due diligence, and do not let your company make one of these deadly mistakes.
We go through all of this in detail in our webinar. So, if you want more information, email Wilson Cole at firstname.lastname@example.org.