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How to avoid losing money on customer payments

January 3, 2012

Watch for these red flags to avoid losing money when customers appear to be paying bills: 

  1. Restrictive endorsements.
    1. If you want to recover more on the account, don’t deposit a check marked “Paid in Full”.
      1. If an account is “disputed” most courts will hold you to the wording. 
  2. Personal guarantees. common errors: 
    1. Signature fails to indicate the party is signing personally.
    2. Make sure titles do not appear after the name and that a company name is not directly above the signature.
    3. The account name guaranteed is different from the one on your books. 
    4. The guarantee fails to state that it is binding on:  “heirs, executives and administrators.”
  3. Unsolicited major orders. Why did you get the order? Did other suppliers or creditors turn it down? Get the facts.

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