Why We Can’t Collect From A Defunct Company

It is difficult for collection agencies to pierce the corporate veil

  The chances of collecting on an invoice due from a company that has ceased operating are very slim. If the business was organized as a corporation or LLC (limited liability company) then only the business entity itself is liable for outstanding invoices. If there are no assets remaining in the entity then the entity … Read more

Piercing The Corporate Veil To Create Personal Liability on Business Debts

It is difficult for collection agencies to pierce the corporate veil

  This article has been updated since originally published in CreditToday with new input from attorneys and other credit professionals. We received numerous comments via CreditToday, InsideARM and LinkedIn that has been incorporated into this revised edition. We frequently get asked by new clients about piercing the corporate veil on owner-operated companies that go out … Read more

Simple Personal Guaranty Repeatedly Saves Client

At our commercial collection agency we always prefer having a personal guaranty. Years ago, a new client started sending us claims along with their very simple, one page credit application. At the bottom of the page, immediately above the signature block, it reads exactly as follows: NOTWITHSTANDING THIS ACCOUNT IS ESTABLISHED IN THE NAME OF … Read more

Most Business Owners Are Not Personally Liable for a Company’s Debts

If a business is organized as a corporation, limited liability company (LLC), or other type of separate legal entity, the owner is not liable for the debts of the business unless other conditions exist. For small businesses, the primary reason the owner took the time and expense to set up the separate legal entity was … Read more

Credit Analyst Shares Debt Collection Tip

A discussion on LinkedIn regarding my recent article “Does Knowing the Truth Matter” prompted this comment from Kim Gelinskey, Credit and Collections Analyst for Veolia ES Technical Solutions, L.L.C. “I’ve learned you are more productive working through a problem than plowing through the issue.” This immediately struck a chord with me. I thought of all … Read more

How to Separate Fact From Fiction

Unfortunately, we know that many debtors will provide false or misleading information in order to make it harder to collect. A well-designed and executed strategy is necessary to get to the truth which is key for increasing collections and making good business decisions as discussed in this recent post “Does Knowing The Truth About a … Read more

Does knowing the truth about a debtor matter?

Your collection agency reports that they too have not yet been able to collect on an unpaid invoice from your business customer. Do you care why? Some of your common choices at this point are: Offer a Payment Plan Settle for reduced amount Commence litigation Write off the debt Close the claim Monitor the situation … Read more

Understanding Collection Litigation

We strongly prefer to collect money owed to our clients without going to court.  In most situations, if the debtor is willing to voluntarily cooperate at any level, we can get our client’s money faster and less expensively than going to court.  But, when litigation is the best alternative and appropriate, we do not hesitate … Read more

Financial Statement Analysis For Credit Professionals

Determining the credit limit for customers is a difficult task.  One factor is to analyze the customer’s financial statements to understand their profitability, financial strength, and liquidity.  We have created a comprehensive resource for credit professionals that includes the following: Videos and transcripts explaining of the 3 financial statements (e.g. income statement, balance sheet, and … Read more

Ready To Collect Your Money?