Three old ladies are going to a baseball game. They've never been and are very excited because of the way their team is playing. But just to make the game a little more interesting, they bring along a bottle of Jack Daniel,. It is a really good game and the crowd's into it and everybody is having a good time. The little old ladies keep adding a little Jack Daniel's to their colas and are having a wonderful time. So there's still a lot of game left when they notice that they are out of Jack Daniel's. Did you pay attention? Do you know what inning the game is in?

John Chotkowski has been promoted to Vice President of Collections

Darlene Crosby has been promoted to Vice President of Operations.

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A word I know,
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Question:
I have a check that has been returned to me NSF for the first time. I've heard that I can put this check in "for collection" with the bank and once my customer has enough available funds in their account this check will be honored. WHAT PROCEDURE DO I HAVE TO DO TO PUT THIS CHECK IN FOR COLLECTION WITH THE BANK?

Answer:
A NSF check can be entered for collection. The issuing bank holds the check for 10 days and if during that time the debtor puts money in, the bank will grab it. There is a charge for this service, but only if the money is there. A most effective way to collect.

Question:
A new Credit Manager working for an oil company wholesaler wants to know the criteria for setting credit limits for their customers.

Answer:
Based upon your business, a standard credit limit of $5000.00 would work for most accounts (l tank full of gas). To qualify them for this target credit line you would have them complete an application which will include legal name, ssn# of owner, references, terms and guarantee agreements - Check the references and order a personal credit report on the owner. If both sources show a prompt payment record with no judgments or liens, then you can approve the $5000.00 line of credit - If more credit is needed, then additional information such as financial statements or other business reports may be requested before making your decision. (Our Thanks to Jim Dentico, Corporate Credit Manager of B&L Wholesale Supply, Inc. for the answer to this question.)

It's not easy having a mathematics professor as a new friend. When she invites you to her house she says, "All the houses on my side of the street are numbered consecutively in even numbers. There are six houses on my side of the block and the sum of their numbers is 9870. You don't know which block I live on, and it's a long, long street, but I will tell you that I live in the lowest number on my side of the block. What's the number? Or are you just going to ring the first even-numbered doorbell for twenty blocks?"

ANSWER TO SEPTEMBER BERNIE'S BRAINER Jack has 32 cents and Jill has 21 cents

Often credit managers ask us: "What's the secret? Why can a collection agency collect when we can't? What do you have that we don't?"

Generally, the answer is that we are a third party to intervene and bring a different perspective to the negotiation table. We have learned over the years that collection technique follows basic principles. Follow-up, negotiation, questions and listening are a few of the skills required in collection, but mostly tenacity. We have, however, learned a few secrets because, like Kentucky Fried Chicken, we do one thing, and we do one thing right.

While writing this article, it is not our intention to give away all of our secrets, but certainly a good concerted effort in our office will bring about successful collection when we receive it. It is with that in mind that we submit what we believe are some tips in the collection industry. Some you have heard, some you have not. Use them at your discretion and if you have any questions or suggestions or a better way to do it, we certainly welcome those. The purpose of this forum is to help create dialogue and win one for the "good guys."

1. Review your credit application for areas of weakness. Itemize details such as; is the business a corporation, partnership or proprietorship? Does it list the officer's or owner's names, home addresses and phone numbers? It should also be specific as to the terms and conditions. A separate place for signature of personal guarantors is necessary.

2. Once you have stated your terms and conditions, one of the surest ways of increasing your DSO is to delay the dunning process. You have automatically insured yourself that a portion of your customer base will not pay until day 46 if you don't start dunning your customer until day 45. It is very important to implement a structure that rewards customers for timely payments but more importantly, you should begin dunning a delinquent customer on day 31 if your terms are Net 30.

3. Now that you've decided to contact your customer, they may avoid you. It is very important to keep a log of the hours of day that you call upon your customer and leave messages for them. We suggest that you call at various hours of the business day as well as off-hours of between 8:00 a.m. and 9:00 a.m. and between 6:00 p.m. and 9:00 p.m. You may often catch the owner or principal at a business during those hours, catching up on paperwork. Once someone does answer the phone, and it is the same gender as the person you want to contact, say "Hello, Mr. Jones". You may catch your customer off guard by simply greeting you with "yes" and then you can finally open the lines of communication.

4. Ask the receptionist pointed or open-ended questions such as: "At what other number can I reach him or her?" "What time will he or she return?" "What is his or her cell phone number?"

5. Once you receive payment from your customer, thank them for prompt payment. Many vendors do not follow this policy; however, it is appreciated and sets you aside in the customer's mind. The result may be your getting higher payment priority next month.

6. Finally, it is always important to possess good negotiation skills when speaking with your customers. You never want them to feel that they have been backed into a corner or leave such a bad taste in their mouths that they will not want to do business with you again. Make sure your sales staff is well aware of your credit and collection policies and bring them onboard by communicating with them all the nuances of your responsibilities. Keeping an open dialogue with the sales department is just as important as keeping an open dialogue with your customer.

If you haven't seen ten of those privacy notices on the new law, you've been out the country since 6/1/01. The Gramm Leach-Bliley Act is the first volley toward privacy issues that have dominated congress for some time. This first piece of legislation established a method to allow you to opt out of name sharing. Every insurance company and bank has flooded all of us with this legalese. The questions have come up for both commercial credit grantors and commercial collection agencies, what do we do under the new law. Many of us report to Experian, D & B or some other credit reporting group. The simple answer is nothing. The law was meant to protect consumers not commercial transactions. Some aggressive state regulators have decided to become involved but the bottom line is this bill isn't meant to stifle commercial credit business.

Reprinted with permission, "Legal Notes" August, 2001, Kohn Law Firm S.C. - This Represents Wisconsin but states across the country have adopted this change.

The Wisconsin Legislature has passed a revised Article 9 (Secured Transaction Bill) which became effective on July 1, 2001. Revised Article 9 provides the statutory framework within and across states that govern secure transactions, transactions which involve the granting of credit secured by personal property. This legislation made numerous changes in the law, such as the following:

• It expands the scope of the previous Article 9;
• A security interest can be taken in more kinds of collateral;
• It provides for a national uniform financing statement; and
• It modifies the place for filing financing statements.

The most important documents that come under the aegis of Article 9 are the security agreement and the financing statements in the sale of personal property. Although Article 9 retains the basic framework for the security agreement and financing statement, it significantly relaxes the minimum standards that those documents must meet. Throughout the revision of Article 9, there was an attempt to make the statute more neutral, so that the law would work regardless of whether the parties used proper documents, computerized records, or some other type of method not contemplated by the drafters at the time the revisions were made.

Under the revised Act, neither the security agreement nor the financing statement needs to be reduced to a tangible written form. All that is required is some sort of a record, which is a defined term that includes both paper documents and information which can be stored electronically, or through some other medium that is retrievable in some format. While oral statements cannot by themselves constitute a record, an audiotape recording or an oral message left in some sort of digital voice messaging system would qualify. Consistent with the concept of a paperless transaction, the revised Act eliminates the requirement of a debtor's signature for both the security agreement and the financing statement. In the security agreement, the signature requirement has been replaced with a requirement that the debtor authenticate the record of the agreement. Authenticating includes all permissible methods of signing a document: a signature, or the execution, or the use of some sort of symbol.

With respect to financing statements, there is a total elimination of the requirement of the debtor's signature. The only thing the debtor needs to do is authorize the filing of an authenticated record. The debtor's authentication of such a security agreement constitutes an authorization to file a financing statement covering the collateral described in the security agreement. If the creditor wishes to file a financing statement worded more broadly than the security agreement, or wishes to file a financing statement under the revised Act, explicit authenticated authorization should be obtained from the debtor.

Under the revised Act, the minimum requirements for effectiveness are very similar to those under the current law. Again, as noted above, the writing and signature requirements have been replaced with an authentication requirement. A security agreement must create or provide for a security interest, and the security agreement must provide a description of the collateral.

One of the most significant changes in the amended Article 9 is the new law governing perfection by filing. Article 9 will change both the State and the places within a State where financing statements must be filed. These changes will centralize all financing statements relating to a particular debtor and will be filed in a single office in each state. One should check one's own state to determine which office has been designated for the filing. As a result of the change in the filing place, local filing has been eliminated to file financing statements, where previously the financing statements had to be filed in a local county office. Most states previously had required county-based filing, where it was necessary to file not only in a county office, but also with the Secretary of State. Under the revised Article 9, the local filing requirement is eliminated and instead, most filing statements will be filed in a single statewide office, such as the Secretary of State Office.

Although this article only touches briefly on the more important revisions of the Act, it is important that each creditor and/or attorney review their state's revised legislation to make sure that all of the particulars have been investigated.

By: Attorney Robert W. Kohn
Kohn Law Firm S.C.
Milwaukee WI