Upfront Identifiers Key to Collecting Overdue Receivables

Mason LawWe recently wrote about the “Top 7 Pitfalls to Avoid with Overdue Receivables.” Not following the tip given to us recently by Mason, Schilling & Mason Co., LPA, could add Pitfall #8: “Not getting all the personal and business identifiers you need upfront, when any type of credit is granted.”

The Tip: Creditors of all types and sizes must make sure they know exactly who a potential debtor is before granting credit of any kind. Founded in 1973, Mason, Schilling & Mason Co., LPA, (MSM), practices exclusively in the area of creditors’ rights. They are uniquely qualified to give advice on information that can be critical when it comes to collecting overdue receivables.

“The creditor is in the best situation to obtain all the necessary information when opening the account and establishing the relationship,” said Blake Thomas, an MSM attorney who focuses his practice in the areas of commercial law, and creditors’ rights. “Proof that this is the person or entity you dealt with can save a lot of time on the back end.”

Blake then shared advice on the types of information and documentation that can and should be collected in order to make it easier and faster for an attorney to help a creditor collect on accounts that might possibly become overdue:

Commercial Collections

On the commercial side, requiring a credit application that includes all the identifiers you might need is a given. It’s up to a vendor or lender to conduct their initial due diligence when they open a new account and be sure that they have:

  • The correct corporate name and address;
  • A Tax ID for corporate entities, along with a list of officers and/or members;
  • The correct information for who ordered the goods or received the services;
  • An exact record of the goods and services provided;
  • Who is the responsible party of contact, and the responsible party for payment;
  • Who provided a personal guarantee, when applicable;
  • If a personal guarantee is provided, verification that it is enforceable in the jurisdiction at issue.

“Ensure that your applicant provides substantial documentation about their business,” Blake told us. “This must affirm that they have the power and ability to enter into an obligation that they say they do. The applicant should agree that the lender/creditor can contact trade references and other creditors, and confirm banking information on a line of credit.”

Personal Identifiers

When working with sole proprietorships or DBAs, the following should be requested:

  • Date of birth and social security number for the proprietor;
  • A copy of the individual’s drivers’ license;
  • Other open account references.

 Purchased Debt

With correct information, collectability increases and is faster. The longer a debt lingers, the less likely it is that it will be collected. Documentation is key if the debt is not owned by the original creditor or lender. A chain of title is of the utmost importance to the court. One must show that the creditor has the right to enforce or pursue recovery. Keeping records and notes on dates, times, contacts made, and all relevant transactions can help to corroborate claims, if a claim gets to the point of filing suit. For example, if you send written communications or make calls, keep a record, in case a debtor claims ignorance of the debt.

Online Searches

“When we attempt to verify a new claim and are looking for information about a business, we initially review the Secretary of State’s records, which are typically available online.” For example, online searches currently available in Kentucky and Ohio are:

  • Search for an organization by its name or identification number
  • Search by current officername
  • Search by founding officer/initial directorname
  • Search by registered agentname

Once you locate your organization online, you can access certain filings and documents associated with the entity. Once the correct entity is identified, bankruptcy investigations can be performed, and potential time limitation issues can be addressed.

We thank Blake Thomas for taking the time to share these tips on documentation with us. To file a claim with MSM or another creditors’ rights attorney who meets your specific needs, go to www.nationallist.com, and then stay to look around at the other resources, products and services that are there at your fingertips.

For questions about these tips or other ways to collect on unpaid invoices, contact The National List at 800-227-1676, or email results@nationallist,.com.

Categories: ARM Industry, business debt, collect overdue receivables, Commercial collections, Creditors Rights Law Firms, Creditors' Rights, National List, NL Insider, old debt, Technology

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