Written by: Marcie Walters-Turcotte
In today’s fast paced world where the competition is fierce and the customers are “web-educated” in terms of lowest prices and their rights as a customer, many small business owners believe that every customer that walks through their door is a blessing. Many small businesses are willing to extend credit to new customers without taking the time to ask a few simple questions that, in the long run, would save them a lot of time and money.
If you have waited in line, or been through a chain store check out lately, you will know that consumers are often asked to divulge personal information. More often than not, people answer the questions with very little hesitation. People often don’t think twice when giving out personal information because they too don’t want to take the time to argue or question whether their consumer rights are being infringed upon.
Business owners need to adhere to the legal obligations they have to protect personal information of consumers. Keeping that in mind however; there is no reason why business owners can’t prepare a Credit Application that will provide the necessary information so that if the customer does become delinquent with their payments, they can be found quickly and easily. An effective Credit Application means that debt recovery can be accomplished with minimal cost to the business owner.
Since joining the Burness Paralegal staff in March, I have discovered several things that I believe business owners should do to better protect themselves against debtors.
A consumer credit account should be created by having the customer complete a Credit Application. Within the application there should be a signed agreement that states that the consumer agrees to the terms and conditions of the credit account, including the fact that interest will be charged on an annual basis, and that they will be responsible for all recovery costs. On the application form there are several things that should be asked in order to protect your business from a potential debtor. You should ask the client for any and all telephone numbers where they can be contacted, their driver’s licence number, their date of birth, banking information, their current address, as well as their place of employment. All of this information helps to speed up the process when tracking down a debtor.
One, the slack adjuster is defective; or two, the adjustment mechanism is not being given the opportunity to perform.
On your Credit Application, make sure to ask for credit references from similar-type businesses. If you are a feed company, ask where they last purchased feed. If you are a trucking company, ask who they have dealt with in the past. Take a few moments and follow-up with these references.
Business owners need to be wary of those individuals who pay by cash or bank draft for the first couple of transactions and then start charging large amounts in rapid succession. I have found that this type of behavior can be an early warning sign of a possible problem in that a debtor will accumulate a large debt, very quickly, and then disappear. Make sure that you obtain and keep a copy of a cheque from the customer so that if necessary, you can try to garnish bank accounts.
Debt Recovery can often be a simple process, but without the right tools it can be complicated, time consuming, and costly. Business owners need to be informed not only of the laws that protect their consumers but also the laws that give them their rights.