1. 8 Tips on Obtaining Financial Statements

Obtaining financial statements from small, privately-owned companies is always difficult. But a financial statement is often one of the best sources of information you can use to evaluate the credit-worthiness of a prospective customer.  Here are some tips for getting financial statements offered up recently by collection consultant Kay Laffoon (klaffoon@adelphia.net):

• Request the statement during a personal visit.

• Make the request for the statement routine.

• Request the statement from a decision-maker, not the accounting person.

   

• If the company is reluctant, tell them you are updating your customer files.

   

• If the customer refuses, ask if you may visit the business and view the statement there.

   

• If they seem reluctant to show the statement, offer to sign a confidentiality agreement.

   

• If they will not disclose the entire financial statement, ask if they would send at least one of the three statements (balance sheet, income statement, or cash flow statement) within their financial statements.

   

• Explain that in order to make a credit decision for their credit limit, it is in their best interest to provide this information.

"Getting this information requires persistence, patience, and self-confidence. Make this part of credit policy to ensure better credit decisions," says Laffoon.

Back to top

3. Are Your Emails Confidential? 

Chances are, your company requires a confidentiality notice on all faxes you send. Why then, don’t you afford your emails the same treatment? Adding a confidentiality notice to all your emails is easily accomplished and can help you avoid serious consequences.

As with faxes, what are the consequences if an email demanding payment is inadvertently misdirected to an outside party? Could you be exposed to trade libel, defamation, or interference with business relations if an email to a colleague discussing the status of an account somehow reaches a third party? Could communicating by email lessen your ability to defend against a preference action, especially if your repeated demands for payment from the now bankrupt debtor were seldom satisfied, indicating those payments received were obviously outside the normal course of business? 

The letter creates the same paper trail, but it’s truly a private communication, much more likely to go only to the intended recipient. If it goes to an unintended recipient, it’s their fault, not yours.   

The use of emails (and faxes) to expedite the collection process requires common sense. Emails are fine for friendly reminders and for exchanging information with debtors, but should be avoided when collections gets serious. Then, phone calls and letters are the appropriate means of communication. 

Source: Attorney Jay Winston, “Legal Issues Affecting Creditors When Conducting Business Over The Internet Or By Fax,” presented to the Advertising/Media Industry Day Group at the NACM Annual Credit Congress, Phoenix, Arizona.