Understanding the psychology of past due customers/debtors tends to be an overlooked area regarding defaulted customers that end up in litigation or collections. Many lenders could and should have utilized a local presence when facing these issues instead of relying on just standard collection and legal tactics.

How people think and deal with their debts internally and how they resolve their obligations are two separate factors to consider. Nearly 90% of people have the best of intentions and do not get into business to take advantage of others. However, there are those, that fully intend on burning your company, asset and liability investigations are one of the most overlooked ways to identify the difference between those customers quickly. Finding out if your customer has non-exempt assets for their business or individually is a large part of determining their viability. Locating hidden assets such as properties, equipment, bank accounts and other businesses are crucial. This is one situation in which having a licensed and bonded Private Investigator conducting a site visit to make face-to-face contact with a past due customer is vital.

Understanding the value of knowing exactly how your customers’ business is operating the moment they default, could mean the difference of if your company recovers its asset or ends up writing the customer off as bad debt. Asset & liability investigations are also some of the most effective ways to deal with non-paying and defaulted customers.  It begins with identifying these issues as early as possible, this allows you the optimal position as a secured or unsecured creditor. Far too often do companies continue to chase past due invoices longer than they should and miss the boat totally.  Having a reliable vendor in this area can mean the difference for your company’s DSO, creating leverage on top of your UCC will ensure your company dramatically reduces its exposure. With the ever-changing landscape of technology  within the skip tracing industry; aspects like Biometrics, International ID – Verification along with Facial Recognition, you need a partner who can act immediately on your behalf.

The most open-minded and innovative companies tend to understand the value of having services like these implemented into their processes. They understand that a customer’s financial ability can change overnight and having the ability to have someone standing at their doorstep in a matter of days or hours, is crucial.

When should an Asset and Liability Investigations be conducted?

As early as possible.  Creditors can start this process from the customer’s very first or second default or as early as when determining a company’s credit risk

What should a creditor expect from an Asset and Liability Investigation?

Determining if your customer is having more serious problems than they are sharing with you will help to ensure your company makes the soundest decision. For example, often, as a finance controller, credit manager or financing manager you are not going to contact your customer and have them tell you the reason they are not paying you is, “because they have a new lawsuit, Federal or State Tax Lien.” They just won’t typically tell you the bad issues they are having or facing.  Knowing the full facts allows you to move forward in the most informed ways possible. The most successful businesses are the ones who best utilize strategy, and strategies are built on the most intricate knowledge of your counterparts.

Are there other situations where these services are helpful?

You can also pull these types of reports to help you determine someone’s viability for credit. You might just be able to say “Yes” to opening the line of credit or financing that piece of equipment. Once again, “knowledge is power”.  Anytime that you can better understand the people that you are doing business with, you prepare yourself for a more seamless and productive relationship.

How can a service like this tip the scales into your companies favor and help to reduce your DSO?

Every single partnership is different, and not all relationships should be valued the same.  Understanding that when companies work together, they are building relationships that they hope will be long-standing is crucial.   Knowing that each time a connection happens it involves not only your own company name and branding but also all the other relationships that each has built. Next, it must be determined how each company can go in and strategically gather the information required to help mediate and collect on a creditor’s behalf. Keeping your company’s networks for asset and liability searches will only give your company a stronger competitive edge. Private investigators are a priceless resource. Lastly, you need a company with a strong understanding of lien rights and litigation. These things are easily and efficiently accomplished when can you find a firm that can handle each of these areas simultaneously.

Curtis Fort is currently the Group CEO at Construction Credit & Finance Group and has been working to help companies mitigate their losses for nearly 20 years. Feel free to contact him at 239-331-5385 or at cfort@ccfgcredit.com