Collections – Pointers For Success

The first step in Collections is knowing your customer. And we mean, REALLY knowing your customer.

Collection of any debt starts at the very beginning of the debtor/creditor relationship.  Many of you may not think of yourselves as a creditor, but any time you sell a good or provide a service that is not paid via cash or credit card….that is a credit transaction.  Any time you invoice for your goods or services, you are extending your customer credit.  You are betting that your customer will pay per the agreement you have in place, usually net 10 or 30 days.

Too often only a name and address is obtained…however, have you actually verified this information?  For instance, the name “ABC Services” may not have any direct relation to the actual company name.  Here are some examples:

  •  “ABC Services” could be a partial name for the correct business, ABC Services and Construction, LLC. There could be numerous ABC Services.  You must know which one is your customer.
  • “ABC Services” could be an assumed name for John Doe.
  • “ABC Services” could be an assumed name for XYZ, Inc. or worse XYZ, L.P.

And what about that address?  Very often 123 Main is nothing more that a private postal mailing center.

Here are some pointers:

  • When dealing with an individual, get his/her full name and driver’s license number.
  • If you are dealing with a business, get the actual full name and ask what type of business entity they are.  A business entity will typically end with “Inc.”, “LLC”, or “LP”.
  • “Inc.” indicates a corporation.  Find out where it was incorporated and obtain its registered agent and registered address.  Never solely rely on a P.O. Box.  Always obtain a physical address.  If the registered agent is a corporation such as CT Corporate Systems, also get at least one officer’s name and physical address.
  • “LLC” indicates a limited liability company.  Obtain the same info as a corporation.  In this case you also need to ask for the manager’s name and address and its members names and addresses.
  • “LP” indicates a limited partnership.  Obtain the same information as for the other entities, and also obtain the name and address of the general partner.  A general partner of a limited partnership is jointly and severally liable for the debt.  Be aware that the general partner is often a corporation or a limited liability company.  In that case, obtain the requisite info for that entity.
  • Obtain the name and address of a bank reference where they maintain their bank account.  Always keep a copy of any checks received from the customer.  At “crunch time” in the collection process, you might be able to garnish the bank to collect your debt.

These simple beginning steps will go a long way to help you when your customer doesn’t pay and you have to start the collection process.  Being able to give this information to your attorney will save you time and money.  If you need assistance in collecting a debt, please keep Murray-Lobb, PLLC in mind.

Meet David R. Baker

David R. Baker has 30 years of experience representing businesses and individuals in a wide variety of matters. His focus has been upon corporate and real estate transactional matters, with perhaps the best description of his practice being business planning.

In the corporate area, his experience has included the organization, maintenance and dissolution of virtually every legal entity authorized by the laws of the State of Texas. This representation has included negotiating and drafting all of the customary (and even not so customary) documents associated with these legal entities, including employment and consulting agreements, buy-sell agreements, and voting agreements and trusts. He has been extensively involved in a significant number of business acquisitions, both asset acquisitions and stock (or other equity) acquisitions..

In the real estate area, his experience has included the acquisition and sale of all manners of real estate properties, both undeveloped and developed. He has, from time to time, been heavily involved in the representation of lenders and their secured real estate lending. Another area in which David has been extensively involved is the negotiation and drafting of commercial leases, including retail, office and industrial. This involvement has been from both the tenant and the landlord perspective.

In recent years, David has found himself increasingly serving in a capacity much like a so-called “in-house” counsel. His lengthy relationship with many of his clients has led them to consult with him on any legal issue with which they are faced. Many, of course, are within his areas of expertise and he gets involved personally to handle them. Frequently, he has found himself assisting clients in resolving various kinds of legal disputes in the pre-litigation stage. Many matters inevitably involve areas beyond his experience in which case he assists the client in identifying attorneys with the necessary expertise and typically, interfacing with these other attorneys to assure that the matter is efficiently and effectively handled.