Article Abstract:
Companies can avoid business failure by developing good business practices in the area of credit management. Organizations can take several steps to avoid bad debt loss, including conducting research on customers' financial standing, being cautious when accepting unsolicited orders, refusing to make additional shipments if previous shipments are beyond terms, and being very cautious when dealing with customers who have previously filed for bankruptcy. Businesses can also become aware of the normal loss ratios in their industry, turn delinquent accounts over to a professional collection agency within 120 days of delinquency, and bond all employees who handle funds.
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Article Abstract:
Guarantees provided by either individuals, partnerships, or corporations function as fall-back mechanisms for charging payment in cases of default. The proper drafting of such a guarantee would be critical to its effective use. Among the things to note in the preparation of the guarantee are that it be in written form, that a financial statement be provided by the guarantor, and that the word 'guarantee' be placed prominently at the top of the document. Included are other factors to be considered in the preparation of the guarantee.
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Article Abstract:
Credit executives are prone to make errors when dealing with delinquent accounts, including: failing to establish the exact name of the corporate debtor; failing to act within statutory time limits; and failing to note restrictive endorsements on checks.
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