A Note from Karen Riggio,
Attorney-at-Law

I don’t need to explain to my small business clients that these are difficult times. However, many who come to me for help on collecting debts could have minimized their risks by knowing who they were doing business with in the first place. In this issue, I outline the importance of getting a signed credit application and running credit checks to arm you with the information you need to know if your customers will be reliable payers.

Karen M. Riggio

Contracts, Contracts, Contracts!

(Repetition is the key to memorization.) As I’ve mentioned before, I’m a strong believer in making sure businesses have the correct contracts in place to protect them in case customers default. To this end, I’ve launched a web service to provide you with downloadable legal contracts and forms for you to fill out and use. From a credit application form and home improvement contracts to demand letters, we’ve assembled what we believe are some of the most important to keep your business protected. Visit our New Forms Section today!

NEW! Entering a business agreement and want some quick legal advice? If you don’t need the services of a retained attorney, but you could benefit from some legal help about a creating a contract or collecting a debt, you can now call me for one- or half-hour phone consultations, which includes a free legal form or contract, if applicable. Call my law offices at (203) 968-8715 or (212) 539-6703 or e-mail me today for a session.

Today millions are behind on their bills, credit cards and mortgages. Many businesses are no different, experiencing an unprecedented economic hardship. Everyday I counsel my clients to not repeat the same mistakes that got us here in the first place when the banks turned a blind eye to risky customers. By proceeding with caution with a potential customer at the beginning of your business relationship, you can minimize the risk of not being paid for the services or products you provide.

"It’s not enough anymore to trust in a “good feeling” or make a handshake agreement. Information is power…"

One of the best practices to employ is ask for a signed credit application up-front—before you provide your service or supply your product. Based upon the information in the application and credit report you’ll get an idea of exactly who you’ll be dealing with—and gain insight into the terms you should determine for your business agreement. A credit application should provide you with the person’s full contact, banking and employment information and if married, it will give you their spouse’s information as well.

With a signed credit application in hand, you’ll have the legal authority to run a credit check. Although there is a fee associated with pulling a report from the bureaus or a service, I suggest to my clients that they do so to understand a client’s full credit history. However, having a signed application form can be ammunition if a client falls behind in payment—sometimes simply sending them a copy of the signed application is enough to encourage them to pay.

Also important in thinking ahead: With a signed credit application it is much easier for you to collect interest and legal fees if that language is contained within it. Ultimately if you end up fighting in court, it is easier to get a judgment, to garnish wages, do a bank execution, and if the person owns real estate put a lien on their property.

It’s not enough anymore to trust in a “good feeling” or make a handshake agreement. Information is power, and I can’t stress enough the importance of knowing who you’re dealing with when you enter a business relationship. A credit check will help to determine your risk and ultimately minimize your financial losses. Visit our forms section for a credit application you can use, and if you need some advice on filling it out or running a credit check, you can contact me for a quick half- or one-hour consultation.