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    Top Secrets for Protecting Yourself from Bad Debts
    Top Secrets for Protecting Yourself from Bad Debts
    Top Secrets for Protecting Yourself from Bad Debts
    Ebook99 pages1 hour

    Top Secrets for Protecting Yourself from Bad Debts

    By Gini Graham Scott

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    About this ebook

    This book is designed to help you collect your money by establishing a good credit policy, so you can make the best decision about whether to extend credit in the form of money, work, or sales. Chapters cover establishing your financial policy, protecting yourself ahead of time, maximizing your personal security, extending commercial credit, and managing consumer credit risks.

    LanguageEnglish
    PublisherGini Graham Scott
    Release dateNov 10, 2009
    ISBN9781452392073
    Top Secrets for Protecting Yourself from Bad Debts
    Author

    Gini Graham Scott

    Gini Graham Scott, Ph.D., CEO of Changemakers Publishing and Writing, is an internationally known writer, speaker, and workshop leader. She has published over 50 books with major publishers on various topics and has written over 3 dozen children's books. Her published children's books include Katy's Bow, Scratches, The Crazy Critters First Visit, and Where's the Avocado? published by Black Rose Writing. She has published 8 children's books through her company Changemakers Kids and is a member of the Society of Children's Book Writers and Illustrators. She does workshops on self-publishing and creativity. She also helps clients write books as a ghostwriter and self-publish or find publishers and agents. Her websites are www.changemakerspublishgandwriting.com and www.ginigrahamscott.com.

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      Book preview

      Top Secrets for Protecting Yourself from Bad Debts - Gini Graham Scott

      Top Secrets for Protecting Yourself

      From Bad Debts

      by Gini Graham Scott, Ph.D.

      Author of a Dozen Books on Work and Professional Development, including Disputes, Disagreements, and All Out War and

      A Survival Guide for Working with Humans

      www.ginigrahamscott.com

      Smashwords Edition

      Copyright 2009 Gini Graham Scott, Ph.D.

      Discover other titles by Gini Graham Scott at Smashwords.com

      Smashwords Edition, License Notes

      This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each person you share it with. If you're reading this book and did not purchase it, or it was not purchased for your use only, then you should return to Smashwords.com and purchase your own copy. Thank you for respecting the hard work of this author.

      Credit: Cover Photos by... Image 1 - Sergey Tokarev, Fotolia, Image 2 - endrille, Fotolia, Image 3 - ktsdesign, Fotolia

      TABLE OF CONTENTS

      INTRODUCTION: THE DIFFICULTY OF COLLECTING DEBTS

      The Credit-Collections Connection

      How This Book Will Help You

      ABOUT THE AUTHOR

      CHAPTER 1: ESTABLISHING YOUR FINANCIAL POLICY

      Some Considerations in Setting Your Policy

      The Link Between Credit and Sales

      The Risks of Extending Credit

      CHAPTER 2: DETERMINING THE RIGHT POLICY FOR YOU

      Hard Line or Soft Line?

      General Economic Climate

      Where You Live or Do Business

      The Nature of Your Business

      Your Own Financial Strength

      The Overall Stability of Your Clientele

      Expanding Sales Versus Reducing Credit Risks

      CHAPTER 3: PROTECTING YOURSELF AHEAD OF TIME

      Accepting Checks

      What to Check For

      Why You Should Take Extra Precautions

      What Can Go Wrong and How to Protect Yourself

      Why You Can't Get Justice Right Away

      Extra Precautions You Can Take

      Waiting for Checks to Clear

      Keeping Records of the Checks You Deposit

      CHAPTER 4: MAXIMIZING YOUR PERSONAL SECURITY

      Contracts and Promissory Notes

      Writing Effective Contracts

      Collateral

      Obtaining Co-Signers

      Conditional Sales, Consignment, and Inventory as Security

      CHAPTER 5: EXTENDING COMMERCIAL CREDIT

      Simple Credit Criteria

      How Much Credit?

      The Bank Reference

      Checking Credit References

      Sharing Credit Information

      Evaluating Financials

      The Balance Sheet

      The Income Statement

      Making the Credit Decision

      CHAPTER 6: MANAGING CONSUMER CREDIT RISKS

      Credit Cards

      Setting Up a Credit Card Account

      The Major Problems with Credit Cards

      How to Offer In-House Credit Without Any Risk

      Maximizing Your Cash-Based Transactions

      The Application

      Checking Credit and Bank References

      Credit Bureaus

      The Balance Sheet7

      Setting Up Your Own Rating System

      Managing Risks

      RESOURCES AND REFERENCES

      OTHER BOOKS BY THE AUTHOR

      AUTHOR CONTACT INFORMATION

      INTRODUCTION: THE DIFFICULTY OF COLLECTING DEBTS

      For many people, the process of successfully collecting debts is fraught with conflict and uncertainty. You ask for the payment you have coming, the debtor gives you an excuse, and you don't know what to say next. Is the excuse really true? And even if it is, how do you convince the debtor to pay you?

      Many creditors give up on collecting debts before they should because they fear the debtor's ill will. Some stop trying because they assume the debtor is a won't-pay deadbeat who has no money, when this is not the case. Still others give up because they aren't aware of the legal remedies available to them, and don't know how to show the debtor they are really serious.

      On the other hand, some creditors become so emotionally involved and pursue their debt so energetically that they may end up owing the debtor money when the debtor sues for libel, slander, harassment, theft, assault, extortion, or other illegal collection practices.

      If you want to collect the money people owe you, you need to know the rules of the collection game; then you can be creative within these general guidelines. Indeed, in many instances, it is necessary to be resourceful; you will be competing with other creditors for payment from a debtor who doesn't have enough to pay everyone, or who uses a priority system to pay the more important debts first. In that case you have to find a way to make your claim come to the top of the pile—or perhaps look for non-monetary alternatives to getting paid.

      Of course, collecting what you are owed is only half the story. The other half involves taking preventive measures in advance to protect yourself from collection problems. Depending on circumstances, these measures can range from writing up effective loan agreements to making decisions about when to extend credit and to whom. A strong credit policy will help you decide under what circumstances you will extend credit—and how much you will risk.

      The Credit-Collections Connection

      Anytime you make an exchange with anyone and don't immediately get cash, you are extending credit. And that includes working for someone, accepting a check (in reality a promise to pay), billing someone for a product or service, or making a loan.

      If you think about it, you'll realize that every society operates on some form of credit. Even a simple society that uses barter instead of money incorporates a credit system. Say a person performs some activity for another, such as working in a field sharing food from a hunt. That activity establishes a debt whereby the other person is expected to perform some reciprocal action in return--perhaps doing work in the future or sharing later from his own supply of food.

      Thus, credit is, in a sense, the grease that keeps the wheels of society moving. Credit facilitates relationships: not every transaction can be immediately concluded with a payment in money, services, or products in return. But because the parties to a transaction agree or expect that reciprocal activity or payment will occur at or by a certain time, they can proceed with their current business, trusting that they will get paid.

      In any situation where you extend credit, you have to determine an acceptable risk level. You must also realize that you are making a trade-off between your investment of time and energy in the transaction and your expectation of getting paid. In effect, there is a trade-off between sales and credit; if enough people refuse to buy from you without credit, your conviction that you are saving money by refusing credit to your customers may come back to haunt you.

      Extending credit can indeed increase the likelihood of making a sale. But the very act of extending credit brings with

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