Credit Line - NACM Business Credit Services

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Personal Guarantees
by Scott W. Lee, CCE, J.D., Vice President NACM BCS
This is a topic I promote enthusiastically. Why? We receive collection matters on a regular basis for businesses that have ceased doing business and there are no assets worth
pursuing. The creditor is not supposed to be happy when payment is not received. But it
is you, the creditor, that is in the best position to set yourself up to get payment. Signed
credit applications, contracts and engagement letters are good things and I encourage you
to get them from your customers. I also encourage you to understand the form in which
your customer does business.
If your customer does business as a corporation, a limited liability company (LC,
LLC) or other form of entity with limited liability, then you may only look to the company for payment when things go bad. That is unless you have a signed writing stating
somebody else or some other entity will be responsible for paying your customer’s bill
if your customer doesn’t. We refer to this signed writing as a personal guarantee or
corporate guarantee. Corporate guarantees work similarly to personal guarantees except
that the issuing entity should execute a resolution giving the entity the authority to make
the guarantee. So, as we talk about guarantees, the concepts apply to both personal and
corporate guarantees. If I use the term person, it includes entities. (Also, don’t exclude
other types of entities just because we called them “corporate” guarantees.) And remember, you can have multiple guarantors on one account.
An often overlooked item in guarantees is whether the guarantor has the ability
and willingness to pay. Many companies just have the entity principal sign the guarantee
without ever looking into that person’s credit history or assets. If the person has no ability to pay, never has and never will, what good is the guarantee? The best thing a guarantor could do to protect himself/herself is to make sure all of the assets he/she wants to
keep are in somebody else’s name along with any income streams. What does that do for
you as the creditor when you need to collect? Not much! Next, what does the guarantor’s credit history look like? Pull a credit report. Have you ever gone into the secretary
of state’s data base and conducted a “principals search?” You can see the other entities the
guarantor (usually just individuals here) has been involved with. How many of them have
gone down in flames? Credit report anyone?
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PERSONAL GUARANTEES continued from Page 1
The law states that in order for a person to be liable for the debts of another there must be a writing memorializing the agreement
and it must be signed by the guarantor. That agreement should include terms such as whether the guarantor will be liable for interest and
at what rate, collection fees and attorneys’ fees in addition to the principal balance due. You can be negotiable with this contract. Perhaps
the guarantor only guarantees the first $10,000 or the guarantee is only valid for the first two years of the relationship.
If there is more than one guarantor, you should state that the guarantors are jointly and severally liable. This means they are liable
together and each is liable for the whole amount. Again you can negotiate and have each guarantor be responsible for a different percentage of
the debt. It is up to you.
You should also include language that allows you to pursue the guarantor directly and immediately without having to prove the underlying debtor can’t pay. (This effectively turns the guarantee arrangement into a “suretyship”. Don’t worry about the term – it’s like being a
co-signor on a loan.) You should state that it is a continuing guarantee, unless you negotiated a term limit. Guarantees are effective indefinitely
unless otherwise limited. Things like death and bankruptcy can cancel the ongoing nature of the guarantee but won’t cancel it retroactively.
You just have to deal with it in a different arena. The guarantor can cancel the guarantee by notifying you in writing but the guarantee will still
be effective for the debt incurred up until the time you received notice.
We haven’t talked about obtaining social security numbers, authorizations to pull credit reports or giving the Equal Credit
Opportunity Act notice because it would make this article too long. As with all things in life, there can be many variations on this theme.
One example of this is on our website at www.nacmint.com/. Click on news and resources and then forms.
Use guarantees more often. You’ll like life a lot better if you do. I guarantee it.
Special Thanks Prize Donations
NACM Entertainment Committee 2009-2010
A-Core Concrete Cutting
A & K Railroad Materials
Acre
Affiliated Metals
Electrical Wholesale Supply of UT
Geneva Pipe
Geneva Rock Products
Henderson Wheel
KSL
LienCounsel
Midwest Floor Coverings
Shelf Reliance
Lauri Lee
Kelley Kunz, CCE, Chairman, Martin Door Mfg.
Wendy Bradley, CBA, Affiliated Metals
Tammi Russell, CCE, KSL
Joanne Martin, CCE, L K L Associates
Penny Williams, Midwest Floor Covering
Erin Doll, CBA, Mountain States Marketing
Boyd Ipson, Redman Van & Storage
Sandra Brown, Schmidt Sign Service
Bingo Winner
Gina Salmon, Muir Enterprises
Craig Rogers with A-Core Concrete
Cutting was the lucky
MP 3 winner
Winner Liz Luing with a big smile
and Committee Chair Kelley Kunz
Kevin Luing a $100 winner between
Kelley Kunz, Entertainment
Committee Chairman and NACM
BCS President, Dean Wangsgard
Wendy Bradley at the
sign in table
Rossy Martinez won $65 at Bingo
page 2
Bingo winner Amber Farmer
Golf High Lights
1st place was won by team A-Core Concrete
Cutting: Craig Rogers, Jerry Ohrn, Jared
Williams and Jake Rogers who also won the
men’s longest drive.
2nd place was won by the team from
Reliance Metals: Kevin Luing, Tim
Young, Matt Broome and Zach Perry
Zach Perry also won the
Indoor Putting Contest
3rd place went to Geneva Pipe team
Rossy Martinez/Rick Simpson and
Miller Paving team:Sue Miller and
Roger Koos
Susan Archibeque won the women’s closet to
the pin and the women’s longest drive with
team Dean Wangsgard, Jacob Alder and Ryan
Cartwright
Highest score went to Chad Wheeler, NACM;
Carol Taylor, Roofers Supply; Georgette Bevan,
NACM; and Daniel Cassity
Geneva Rock Products team: Mark Jones, Rick
Newton, Wayne Olsen and Shane Inglesby
Our Idaho team–Landview player Bob
McMillen and J R Simplot team: Brian Davis,
Jerry Rudd and Rick Lawson
page 3
WATCHDOG INFORMER SERVICE
A FREE Member Service
Reporting New, Dangerous Trends
CUSTOMIZE this free service by
calling 801-487-8786
1) You can choose days past due
2) You can choose any dollar amount past due
1. When you supply your credit information to the NACM database, or order an NACM credit report on a business, NACM monitors those accounts. (No other credit reporting agency offers this service free.)
2.You receive an email or fax the very next day if serious information is reported on your customer such as:
State Tax Liens
Federal Tax Liens
Judgments
Bankruptcies
Returned Checks
Write Offs/PAL
NACM Collection Accounts
Past Due Trade Lines
The NACM WATCHDOG INFORMER SERVICE has proven to be an important tool in assisting members. Rather than manually
accessing our NACM local credit reports on your customers, WATCHDOG is a fully automated notice to members via email for
FREE.
If serious information is reported on customers, members can choose to review the NACM local business credit report.
NACM delivers credit tools to make your job easier! It is simple to use and saves you time and money.
Don’t forget to CUSTOMIZE your WATCHDOG service
email [email protected], fax to 801-484-1891 or call Credit Reporting at 801-487-8786
Page 4
Code
October, 2009
Industry Credit Groups
Other events
Looking
Looking Ahead
Ahead
Sat. / Sun.
Oct 7
Credit Boot Camp, NACM Training Office
Oct 14-16 Western Region Credit Conference Las Vegas, NV
Nov 4
Bond and Mechanic’s Lien Seminar, NACM Training Office
Monday
Tuesday
Wednesday Thursday
1
2
Hardware & Lumber
3/4
7
6
5
10/11
13
12
Floor Covering
14
Food & Restaurant
SLC Contractors
Steel & Welders
9
8
nacm credit
boot camp
Friday
icel Luncheon
Red lion hotel
11:45 a.m.
Concrete,Paving,
Excavating &
Waterworks
15
16
Industrial Supply
Diesel Engines
western region credit conference
17/18
19
Masonry, Landsc
31
20
21
Equipment Dealers
General Services
Electrical
Ogden Contractors
22
23
Printing Ind. of Utah Advertisers, Media
General Contractors So.West Region
Heating & Plumbing
Ut. County Contr.
Material Suppliers
Automotive &
Truck Suppliers
National Distributors
Credit Professionals
Roofers & Siding
Window/Doors
NACM Credit Boot Camp
Wednesday, October 7, 2009, 7:30 a.m. – 12:30 p.m.
NACM BCS Office Training Center, 7410 Creek Rd., Ste. 301, (1130 East) Sandy, UT
Cost: $50 NACM Members, $80 Non Members
Are You Prepared?
7:30 – 9 a.m.
Collection Calls:
What really works!
9:15 – 10:45 a.m.
Credit Reports:
Read, Interpret & Utilize
Everything On A Report
11 – 12:30 p.m.
Credit Policy &
Credit Application:
Protection For
Your Company!
To Enlist: Call Georgette at 801-433-6116 or email [email protected]
Page 5
ICEL (Intermountain Credit Education League)
Thursday, October 8th Luncheon, 11:45-1:15 p.m.
“Organizing Your Office & Organizing Styles” Speaker: Lanna Cairns of Organized World
Red Lion Hotel, 151 West 600 South, SLC, UT
Cost: $16, Contact Georgette Bevan, CCE, 801-433-6116 or [email protected]
We all know that organization is a necessary component to being successful and happy in our environment. Once we commit
to that fact and define in writing our professional goals, we then will be able to develop a variety of systems that encourage and support our streamlining efforts.
This course will give us many up-to-date tricks of the trade including paper/filing systems, space planning our cubicles and
time management advice. But more importantly we will create a platform to discuss our very own personal organizing dilemmas and
we will leave with a variety of strategies to make our lives more enjoyable and clutter-free. Lanna will talk about how people have
different organizing styles than our own and how we can create a better working relationship when we understand their organizing
preference. We hope you can join us for this worthwhile program.
Lanna Cairns is an internationally recognized professional organizer and has been teaching people how to gain mastery over
their physical environment since 1998. Lanna’s clients include BMW, Sylvan Learning Center, Canyon Ranch, SBC Global, HarcourtBrace, Mondavi Wineries and Schramsberg Winery, amongst others. A popular, entertaining public speaker, Ms. Cairns frequently
addresses gatherings of Global CEOs around the world. Lanna has written two books, "Organizing for Your Brain Type" and "Every Child
Has a Thinking Style" These books will be available for purchase at the meeting.
1
Day Training Blitz!
Cost $120–NACM Training Office, 7410 So. Creek Rd., #301
Wednesday, November 4, 2009, 8:30 a.m. - 4:30 p.m. Construction
Collection
Too ls
Your will learn EVERYTHING you will need to know to use LIENS & BONDS to collect your money
Sign up today with Georgette at 801-433-6116 or [email protected]
NACM BCS BOARD OF DIRECTOR OFFICERS:
Grant Weller
Chairman
CMC Construction
Services
NACM OFFICERS:
Penny Williams
Vice-Chairman
Midwest Floor Coverings
BOARD OF DIRECTORS:
Dana Farmer, JD
Treasurer
LienCounsel
Dean Wangsgard, CCE
President
NACM BCS
Scott W. Lee, JD, CCE
Vice President & Secretary
NACM BCS
NACM BCS Board of Directors, 2009-2010
Doug Darrington, CCE
Altaview Concrete, Inc.
Nina Flurer, CCE
H & E Equipment
Sandra Brown
Schmidt Sign Service
Tyler Steenblik, CCE
Young Electric Sign Co.
Susan Lujan, CCE
Kenworth Sales Co.
Janae Jeffs, CCE
Muir Roberts Enterprises Inc.
Susan Archibeque, CCE
Nicholas & Company
Allen Vickers, CCE
A & K Railroad,Counselor