Our Price $97.00 $79.00

This 640+ page manual covers everything you'll need to successfully set up and operate your credit department. Covers all aspects of credit, collections, and A/R management. Great whether you're just starting out in credit or are a 40 year veteran looking for a desk manual for you and your staff to refer to on any subject.

Here is just a partial listing of the table of contents:

1. The Role of the Credit and Collection Manager
   • The role of the Credit Department
   • Indications of Delinquency and Default
   • The Credit Dilemna
   • Leading and Managing Subordinates
   • Developing Employee Specific Goals
   • Appreciation
   • Annual Performance Reviews
   • Credit Managers as Problem Solvers
   • Hiring
   • Training
   • Training New Employees
   • Using the Credit Policy Manual as a Training Tool
   • Using Off-Site Training as a Motivational Tool
   • The Benefits of Cross Training
   • The Problem with Re-Training
   • Downsizing
   • Redefining the Credit Manager's Role
   • Work Assignments
   • Delegation
   • The Credit Manager'sRole as a Delegator
   • The Hidden Advantages of Delegation
   • Reducing Costs
   • Eliminating Surprises
   • Credit Risk
   • Remember Your Role
   • Managing and Training Department Personnel
   • Coaching Required Constructive Critcism
   • Managing Customer Relationships
   • Goal Setting
   • Performance Evaluations
   • Dealing With On-the-Job Stress
   • Continuing Professional Education and Training
   • Continuing Process Improvement
   • Evaluating New Employees During Their Probationary Period
   • Recognizing Superior Performance
   • Reporting to Senior Management
   • The Credit Manager's Role as Part of the Management Team
   • Employee Retention
   • Maintaining a Current Credit Policy
   • Summary

2. Cooperation Between Sales and Credit
   • The Adversarial Relationship
   • Sales Oriented Credit Managers
   • Surviving the Test
   • Explain, Dont' Justify
   • Credit Overrides
   • The Revolving Door
   • Lowering Credit Standards
   • The Goals of Sales and Credit
   • Us versus Them
   • Conflict Resolution Process
   • Paying Commissions on Collected Sales
   • Improving Communications Between Credit and Sales
   • Keeping it Professional
   • Working Proactively with Credit
   • Improving Communications
   • Breaking Down Barriers Between Credit and Sales People
   • Personal Guarantees and Salespeople
   • Using Sales People as Collectors

3. Measuring the Credit Departments Performance
   • Controlling Delinquencies
   • Days Sales Outstanding (DSO)
   • The Advantages of Calculating DSO
   • Other Negative Measurements of Performance
   • Reports Measuring Credit Performance
   • The Limitations of Bad Debt Analysis
   • Management Overrides and DSO
   • DSO, Extended Dating, and Antitrust Laws
   • Disputes and Deductions and Their Impact on Credit Department Performance
   • Techniques Used to Measure Credit Department Peformance

4. Automating the Credit Function
   • Fully Utilizing Existing Software
   • Credit Scoring
   • Financial Electronic Data Interchange
   • Bank Cash Application
   • Automating the Process of Ordering Credit Reports
   • Automating Statements and Invoices
   • Interoffice Communications

5. Consumer Credit Policies
   • Consumer Credit Decision-Making
   • Consumer Credit - Right or Privilege
   • Interlocking and Overlapping Laws
   • The Forms of Consumer Credit
   • Credit Cards and Installment Debt
   • Consumer Credit Checks
   • The Principle of Independent Credit Decisions 88
   • Factors in Consumer Credit Granting 88
   • Credit and the Law 89
   • The Equal Credit Opportunity Act 89
   • The Fair Credit Reporting Act 91
   • Consumer Reports 91
   • The Fair Credit Billing Act 92
   • The Debtor's Rights Under the FCBA 93
   • The Three C's of Consumer Credit 94 Collection Policies 95
   • Credit Scoring 96
   • The Conditional Sales Contract 96
   • Returned Check Policy 97
   • Calling the Debtor 97
   • Returned Check Charges 97
   • Charging Interest on Past Due Balances 98
   • Cycle Billing 98
   • Policy Requiring Customers to Provide a Street Address 98
   • Policy on Venue 98

6. Commercial Credit Policies
   • The Need for a Credit Manual 99
   • Out of Date Credit Manual 100
   • Mission Statements and Credit Policies 100
   • Is a Policies and Procedures Manual Worth the Trouble? 100
   • The Need for Consistency 101
   • Advantages of Having a Credit Manual 101
   • Specific Credit Policies and Procedures 102
   • Policy on Third Policy Collections 103
   • Policy on Processing Credit Applications for New Accounts 104
   • Policy Concerning Risk Management 104
   • Policies and Procedures Governing Credit Terms 105
   • Policies and Procedures Governing Discount Terms 105
   • Policies and Procedures Governing Outstanding Deductions 106
   • Policy on Maintaining Current Credit Files on Active Accounts 106
   • Policies and Procedures Governing When an Account is Referred to the Credit Manager 107
   • Policy and Procedures Regarding the Use of Third Party Collections 107
   • The Policy on Notifying Customers of a Credit Hold or Other Adverse Action 108
   • The Policy on Using Salespeople in the Role of a Collector 108
   • Policy and Procedures Governing Final Demands 109
   • Policy on Placing Delinquent Accounts Into Involuntary Bankruptcy 109
   • Policy on Ordering Proof of Delivery on Past Due Invoices 110
   • Responding Appropriately to NSF Checks 110
   • Policy for Handling Returned Checks 111
   • When to Place an Account for Collection 111
   • Policy on Selling on Open Account Terms to a Debtor in Possession 111
   • Policy on Mitigating Credit Risk in the Event of a Bankruptcy Filing 112
   • Policy on Filing Proof of Claim Forms in Bankruptcy Cases 112
   • Policy Concerning Documenting Policy Exception 112
   • Policy for Documenting Management Overrides 113
   • Solving the Problem, Not the System 113
   • Summary 114

7. Sample Credit Policy Manual
   • Policy and Practice 115
   • Policy Exceptions 116
   • Credit Granting Authority 116
   • The Objectives of a Policies and Procedures Manual 117
   • How vs. Why 117
   • Documenting Processes 118
   • Policy and Objectives 119
   • Fluctuating Demand 119
   • Type of Merchandise 120
   • Credit Policy is Impacted by Profit Margins 120
   • Legal Restraints 121
   • Financial Strength and Credit Policies 122
   • Loan Covenants and Credit Policies 122
   • Formulating a Credit Policy 122
   • Presenting the Credit Policy 123
   • Sample Credit Policy 124

8. Change
   • The Effect of Global Competition 141
   • Software Enhancements 142
   • Change and Employees 143
   • Helping Subordinates Cope With Change 143
   • Changes Within the Credit Department 143
   • Changing Work Assignments 144
   • Changing Realities in International Credit and Collection 144
   • The Changes in Foreign Buyers' Expectations 144
   • The Use of Credit-Insurance 145
   • Changing Expectations About the Credit Manager 146
   • Changing Competitive Conditions 146
   • Changes in Employment, and Employee Expectations 147
   • Changing Expectations of Credit Managers 147
   • Centralization 148
   • Changing Software 148
   • Changing the Speed of Credit Decision-Making 149
   • Responding to Changing Economic Conditions 150
   • Companies Initiate Change 150
   • Encouraging Change 151
   • Changing Credit Managers 152
   • Termination Employees 152
   • Changing Expectations About Employees 153
   • Changing Expectations About Applicants 153
   • Technology Change 153
   • Change for the Sake of Change 154
   • Summary 154

9. Working With Reporting Agencies
   • Consumer Credit Reports 156
   • Subscribers 158
   • Consumer Access to Information 160
   • Commercial Credit Reporting Agencies 160
   • Dun and Bradstreet 162
   • The Experian Commercial Credit Report 163
   • The Foreign Credit Interchange Bureau 164
   • Using Consumer Credit Reports 164
   • Credit Interchanges 165
   • Industry Credit Groups 165
   • Using Credit Reports to Evaluate 167
   • Using Credit Ratings 167
   • Summary 168

10. Working With Banks
    • Personal Guarantees 170
    • Bank Financial Analysis 170
    • The Differences Between Bank and Trade Credit 171
    • Check Processing 171
    • Types of Checks 172
    • A Note About Postdated Checks 173
    • Bank Ratings for Non-borrowing Relationships 173
    • Bank Ratings for Borrowing Relationships 174
    • Requesting Bank References 174
    • Handling a Reluctant Bank Reference 177
    • Authorization to Release Bank Information 177
    • Working with Foreign Banks 178
    • Working with Banks to Accelerate Cash Flow 179
    • Advantages and Disadvantages of Lockbox Services 179
    • Discounting Letters of Credit to Improve Cash Flow 180
    • Banks and Letter of Credit Discrepancies 181
    • Banks and Debtors 181
    • When Banks Call the Loan [Demand Payment] 182
    • Indications of a Troubled Bank Relationship 183
    • The Trade Creditor's Response 183
    • Value Added Bank Services 183
    • The Automated Clearinghouse 184
    • Wire Transfer Payments 184
    • Financial Electronic Data Interchange 185

11. Trade References
    • When to Check Trade References 187
    • Substituting Trade Clearance Reports for Trade References 189
    • The Credit Bureau Report Alternative 189
    • Antitrust Issues 190
    • Misrepresentation of the Facts 190
    • The Risks Qf Telling the Truth 191
    • Once Bitten, Twice Shy 191
    • Providing False Credit References to Competitors 192
    • When in Doubt, Say Nothing 192
    • Trade References and Defamation 193
    • The Rule of Thumb for Responding to Credit Inquiries 194
    • Specifically Delegate Responsibility for Providing Responses to Reference Request Rating by Telephone 195
    • Ask for a Reciprocal Rating 196
    • The Limitations of Trade References 196
    • Competitor References 197
    • Payment Plans 197
    • Confidentiality 199
    • Summary 199

12. Getting Information From Publicly Held Companies
    • Securities and Exchange Commission Reporting Requirements 201
    • Audited vs. Unaudited Financial Statements 202
    • Canadian Financial Statements 202
    • Direct Requests 203
    • Australian Financial Statements 203
    • South American Financial Statements 203
    • German Company Financial Statements 203
    • Other Sources of Financial Information 203
    • Web Sites 204
    • Press Releases Often Contain Financial Information 204
    • Other Web Sites 204
    • Free Financial Information and Analysis 205
    • Ordering Annual Reports on Line 205
    • Customer Web Sites 205
    • Direct Contact with a Public Company 206
    • More Current Information 206
    • The Annual Report 206
    • The Prospectus 207
    • Summary 207

13. Getting Financial Information From Privately Held Companies
    • How Financial Statements Are Prepared 210
    • Financial Statements for Internal Use 210
    • Financial Statements and Investors 211
    • Financial Statements and Banks 211
    • Gathering Financial Information from the Customer's Bank 212
    • When to Request Financial Statements 212
    • One Reason Requests for Financial Statements are Ignored 213
    • The Financial Statement Controversy 214
    • Using Salespeople to Get Financial Statements 215
    • Tips to Improve the Chances of Getting Financial Information from Privately Held Companies 216
    • Try to Avoid a Showdown 217
    • Personal Visits 217
    • Alienating Customers 217
    • Requiring Financial Statements 218
    • Making it Mandatory 218
    • Annual Update 219
    • An Alternative to Financial Statements 219
    • A Note About Foreign Financial Statements 219
    • Internally Prepared Financial Statements 220

14. Credit Scoring
    • What is Credit Scoring? 221
    • Consumer Credit Scoring 223
    • Home Grown Credit Scoring Programs 223
    • Preventing Bad Debt Losses 224
    • Ignoring the Credit Score 225
    • Reasons to Override the Recommendation 225
    • Credit Scoring Flags High Risk Accounts 225
    • Consumer Credit Scoring Risk Factors 226
    • Factors in Consumer Credit Scoring Models 226
    • The Advantages of a Professionally Designed Credit Scoring Model 227
    • Sharing Credit Scores with Consumers 228
    • Limitations of Credit Scoring 228
    • Who Develops Credit Scoring Models? 229
    • Credit Scoring versus Human Scoring of Applicants 229
    • Commercial Account Credit Scoring 230
    • How Are Credit Scores Used? 230
    • The Differences Between Credit Scoring Software Programs 231
    • Internal vs. External Credit Scoring 231
    • Who Makes the Decision? 232
    • Summary 232

15. Restraints and Restrictions on Gathering and Disseminating Credit Information
    • Credit Rating Rules 234
    • Defamation 234
    • Preventing a Claim of Defamation 234
    • Legislation Governing Gathering Credit References 235
    • Collusion is a Prohibited Activity 235
    • Providing False Information 236
    • Credit Interchanges at Industry Credit Group Meetings 236
    • Rules for Industry Credit Group Attendees 238
    • Consumer Credit Reports 238

16. Sample Credit Application and Information Request Forms
    • The Credit Application as a Contract 241
    • The Short Form Credit Application 241
    • Getting Bank and Trade References to Respond 242
    • Customizing Credit Applications 242
    • Credit Applications and Credit Limits 242
    • Updating Credit Applications 243
    • Personal Guarantees 243
    • Checklist for a Personal Guaranty 244
    • Summary 260

17. An Overview of Financial Statement Analysis and Interpretation
    • What are Financial Statements? 261
    • Timing of Financial Statements 262
    • Manipulation of Financial Statements 262
    • The Focus of Trade Creditors 263
    • Statement of Cash Flows and Notes 263
    • The Value of Out of Date Financial Statement 264
    • Accounting Methods 264
    • Problems with Financial Statement Analysis 265
    • Balancing Financial Analysis and Other Forms of Credit Information 265
    • Financial Analysis Phobia 266
    • Footnotes to Financial Statements 266
    • How to Use Financial Statements More Effectively 267
    • The Balance Sheet 268
    • What Concerns Short Term Creditors? 270
    • The Income Statement 270
    • The Importance of the Cash Flow Statement 271
    • Problems Interpreting the Cash Flow Statements 272
    • Operating Cash Flow 272
    • Financial Statement Audits 272
    • Trend Analysis 273
    • Trend Analysis in Dollars and Percentages 273
    • Comparative Analysis 274
    • Financial Ratio Analysis 274
    • The Limitations of Unauthorized Financial Statements 278
    • The Importance of a Quick Review of Financial Statements Received from Customers 279
    • The Going Concern Concept 279
    • Fundamental Accounting Concepts 280
    • Summary 280

18. Financial Ratio Analysis
    • Financial Ratios 281
    • Uses Ratio Analysis 282
    • Choosing the Right Ratios 283
    • Common Size Ratios 283
    • Using Financial Statements to Manage Credit Risk 283
    • The Types of Financial Ratios 283
    • Benchmarking 292
    • Summary 292

19. Improving Credit Department Efficiency
    • Spend Less Time in Meetings 295
    • Industry Group Meetings 296
    • Delegation 296
    • Dealing with Telephone Interruptions 297
    • Using the Internet 297
    • Improving Communications Within the Credit Department 298
    • Shooting the Messenger 298
    • Improving Communication with Sales 299
    • Improving the New Account Investigation Process 299
    • Making the Order Approval Process More Effective and Efficient 300
    • Communicating with Customers 300
    • Using Mistakes to Improve the Performance of Subordinates 301
    • Rewarding Superior Performance 301
    • Increasing the Chances of Collection on a Seriously Past Due Balance 301
    • Use a Binding Arbitration Clause 302
    • Improving the Process of Order Proof of Delivery 303
    • Arrange for the Bank to Conduct a Lockbox Study 303
    • Use Credit Scoring Software Programs to Evaluate New Accounts 304
    • Streamline Credit Investigation 304
    • Allocate Accounts Based on Risk, Not Alphabetically 305
    • Concentrate Your Third Party Placements 305
    • Use Financial Analysis Software 305
    • Create Automatic Write Off Limits 306
    • Establish Individual Performance Goals for Everyone in the Credit Department Summary 309

20. Factors to Consider in Consumer Credit
    • What is Consumer Credit? 309
    • What is a Consumer Credit Report? 310
    • Types of Consumer Credit 310
    • Denial of Credit 312
    • Consumers and Bankruptcy 312
    • Bankruptcy Fraud 313
    • Easy Credit Makes Bankruptcy More Likely 313
    • The Three C's of Consumer Credit 313
    • The Goals of the Credit Granter 314
    • Consumer Credit Do's and Don'ts 314
    • Consumer Protection and the Law 316
    • How to Evaluate Consumer Credit Risk 318
    • Using Co-Signer to Manage Risk 320
    • Evaluating Credit Risk 320
    • An Ounce of Prevention 321
    • Write Offs 321
    • Summary 322

21. Making the Credit Decision
    • The Cascade Effect 323
    • Follow the Leader 324
    • The Conservatism Rule 324
    • Salespeople Need and Deserve Consistency 325
    • Decisiveness is a Two-Edged Sword 325
    • Develop a Support Network 325
    • Acknowledging Prejudices 326
    • Supporting the Decisions of Subordinates 326
    • Altering Credit Decisions in Light of New Information 327
    • The Credit Decision-Making Process 327
    • Every Credit Decision is Inherently Risky 329
    • Consumer Credit Decision Making 330
    • Delegation of Authority to Make Credit Decisions 330
    • Decision Support Software 331
    • Delaying Credit Decisions 331
    • Personal Judgments vs. Bureaucratic Rules 332
    • Decisions Create Further Questions 332
    • Summary 333

22. Factors to Consider in Commercial Credit Granting
    • The Characteristics of Commercial Credit Granting 336
    • Credit Managers are Risk Managers 336
    • Selecting the Proper Credit Terms 337
    • Offering the Proper Terms of Sale 337
    • Handling Special and Custom Orders 338
    • The Use of Cash Discounts 339
    • Unearned Cash Discounts 339
    • Anticipation Discounts 340
    • A Note About Shortening Credit Terms 340
    • The Parent-Subsidiary Relationship 340
    • Parents, Subsidiaries and Inter Corporate Guarantees 341
    • Subsidiaries vs. Divisions 341
    • Using Trade References to Manage Risk 341
    • Using Broken Commitments to Manage Credit Risk 342
    • How to Use Credit Limits 342
    • Increasing Credit Limits to Release an Order Pending 343
    • Risk Management and Automatic Approval of New Accounts 344
    • Using Bond Ratings to Monitor Credit Risk 344
    • Credit Limits and Guarantees 345
    • Act In Haste, and Repent in Leisure 345
    • Credit Risk and New Accounts 345
    • Offering Cash Discounts to Encourage Prompt Payment 346
    • Managing Credit Risk on Marginal Accounts 346
    • Credit Risks and Checks 347
    • Collection Policies 352
    • Negotiating Payment Payments 348
    • Limiting Bad Debt Losses 349
    • Establishing an Allowance for Doubtful Accounts 349
    • Membership in an NACM Affiliate 350
    • The Legal Form of the Business 350
    • Summary 351

23. Credit Insurance
    • The Benefits of Credit Insurance 354
    • Costs 354
    • Coverage 355
    • Deductibles 355
    • Coverage Limitations 356
    • Claims Processing 357
    • Disputed Balances 357
    • Claim Denial 358
    • Myths and Misconceptions About Credit Insurance 358
    • Cooperative Credit Insurance 358
    • Coverages 359
    • Credit Insurance and Customers 359
    • Typical Exclusions 361
    • The Seller's Obligations to the Insurance Company 362
    • Export Credit Insurance 362
    • Sources of Export Credit Insurance 364
    • Summary 364

24. Getting Consumers to Pay Their Bills
    • Indications of Financial Distress 367
    • Statistics about Consumer Debt 368
    • Secured Debt 368
    • Unsecured Debt 369
    • Civil Litigation on Unsecured Debt 369
    • The Small Claims Court Option 370
    • Preparation for Small Claims Court 371
    • Understanding the Statute of Limitations 371
    • Negotiation 371
    • Alternative Dispute Resolution 372
    • The Fair Credit Billing Act 373
    • Collection under a Conditional Sales Contract 373
    • Banks and Other Creditors 374
    • Keep the Discussion on Track 374
    • Keep Asking Questions 374
    • Avoid Arguments 375
    • Putting Yourself in the Other Person's Shoes 375
    • Start with the Facts 375
    • Persistence Is a Key 376
    • Collection Procedures Can Be Standardized 376
    • Responding to Extended Dating Requests 376
    • Questioning Delinquent Debtors 377
    • The Federal Fair Debt Collection Practices Act 378
    • The Fair Debt Collection Practices Act 378
    • Collection from New Customers 378
    • Do Not Put a Customer on Hold During a Collection Call 378
    • Summarize Points of Agreement 379
    • Summary 379

25. Getting Commercial Accounts to Pay More Promptly
    • Prior to the Sale 381
    • Collecting in Person 382
    • Collection by Telephone 382
    • Preparation for a Customer Visit 383
    • Using the 80/20 Rule 383
    • Accelerate Collections Through the Use of a Bank Lockbox 383
    • Accelerate Cash Inflows with Software Enhancements 384
    • The Squeaky Wheel Concept 385
    • Expect Excellence from Subordinates 385
    • Eliminate Rotten Apples 385
    • Address the Problem, Not the Symptom 386
    • Strictly Enforce Cash Discount Terms 387
    • Encourage Customers to Take Earned Discounts for Prompt Payment 387
    • Be Direct About Collections 388
    • Be Stricter with New Accounts 388
    • Use a Different Opening Line in a Collection Call 389
    • Confirm Payment Commitments 389
    • Be Specific About the Consequences of Delayed Payment 390
    • Holding Orders 390
    • If You Want Things Done Right, Be Prepared to do Them Yourself 391
    • Summary 391

26. Handling Delinquent Commercial Accounts
    • Governing Laws 394
    • Improving Collection Results with Delinquent Commercial Accounts 394
    • Collections from Newly Formed Businesses 395
    • Collecting from New Accounts 396
    • Collecting During Personal Visits 396
    • Preparing for Collection Calls 397
    • Handling the Collection Call 397
    • Using Ultimatums as Collection Tools 397
    • Professionalism as a Collection Tool 398
    • After the Call 398
    • Confirming Commitments 398
    • How to Negotiate with Seriously Delinquent Debtors 403
    • Good Deals and Bad Deals 300
    • A Word about First Offers 399
    • Evaluating Payments Proposals 400
    • Limit Authority to Accept Payment Plans 401
    • Tips for Reducing Delinquencies 401
    • Finding the Right Contract 402
    • Handling Difficult Customers 402
    • Using Credit Holds to Encourage Payment 404
    • Working with the Buyer 404
    • Broken Commitments as a Red Flag 405
    • Negotiating Disputed Balances 405
    • Using Arbitration to Collect Disputed Balances 406
    • Resolving Delinquent Balances Through Mediation 406
    • Extending Collection Calls 406
    • How to Withdraw an Open Account 407
    • Using Promissory Notes to Manage Delinquent Accounts 408
    • What to Look for When a Subordinate Refers a Delinquent Account 409
    • Using Salespeople as Collectors 409
    • Global Out of Court Settlements 410
    • Putting Collection Agencies to Work 412
    • The Role of Cash Discounts 412
    • Using Personal Visits to Address Delinquent Balances 413

27. Reducing Credit Risk
    • A Balancing Act 415
    • Getting to Know the Customer 416
    • Monitoring Payments 416
    • Collect Actively, Not Passively 417
    • Using Credit Limits to Manage Credit Risk 418
    • Establish a Credit Limit for Every Account 419
    • Using Credit Terms top Reduce Credit Risk 419
    • Proper Collection Techniques Help Reduce Risk 420
    • Hold Subordinates Accountable for Their Mistakes 422
    • The Goal is Not to Eliminate Losses; It is to Reduce Risk 422
    • Try to Transfer the Risk 422
    • Accepting Special, Customized Orders 423
    • Recognize the Limitations of Personal Guarantees and Other Assurances of Payment 424
    • Recognizing the Limitations of Financial Statement Analysis 424
    • Using open Account Terms to Establish New Accounts 425
    • Reduce Risk by Refusing to Be Rushed 426
    • Bullet Proofing the Department Against Credit Fraud 426
    • Summary 427

28. Using Third Party Collections
    • Collection Agency Qualifications 430
    • Collection Agencies Are Not Created Equal 430
    • The Telemarketing Collection Agency 431
    • The Fair Debt Collection Practices Act 431
    • Why Are Third Party Collectors Necessary? 432
    • Contingency and Noncontingency Collections 433
    • Low Collection Rates are Not Necessarily the Best Deal, and High Rates Don't Always Involve the Best Service 434
    • Beware of Unusual Fee Arrangements 434
    • How to Select a Collection Agency 435
    • Other Factors in Selecting a Collection Agency 435
    • Professional Collection Agencies 436
    • Referrals 436
    • Determine the Minimum Size Claim the Agency Will Accept 437
    • How to Negotiate a Better Rate 437
    • Questions to Ask a Prospective Collection Agency 437
    • How to Evaluate the Performance of a Collection Agency or Collection Attorney 439
    • When to Place an Account for Collection 439
    • The Point of Diminishing Returns in Collections 441
    • Disputed Balances 441
    • Steps to Take Before Placing an Account for Collection 442
    • Choosing the Right Collection Agency 442
    • Working with Your Collection Agency 442
    • Direct Negotiations with the Debtor 443
    • What about Returns? 443

29. Using Collection Attorneys
    • Similarities between Collection Agencies and Collection Attorneys 445
    • Questions to Ask a Collection Attorney 447
    • Using In House Attorneys 448
    • Misappropriation of Recovered Funds 448
    • What Exactly Is a Collection Attorney? 448
    • Creative Billing Options 449
    • The Litigation Threat 449
    • The Two Step Litigation Process 450
    • How Collection Attorneys Work 450
    • The Asset Search 451
    • Litigation 457
    • Court Costs 451
    • Facilitating Collections 452
    • Comparing Collection Attorneys to Collection Agencies 453
    • Summary 455

30. Credit and the Law
    • The Uniform Commercial Code 457
    • Direct Regulation of the Commercial Credit Decision-Making Process 458
    • What Is Consumer Credit? 459
    • Credit and Antitrust Laws 459
    • The Sherman Act and The Clayton Act 460
    • The Robinson-Patman Act 460
    • The Federal Trade Commission Act 461
    • Defamation 461
    • Discrimination in Credit Granting 463
    • Rules Relating to Co-Signers 463
    • Title 464
    • Offer and Acceptance 465
    • Dispute Resolution and Warranties 465
    • Conflict of Laws 466
    • Credit Fraud 466
    • Becoming a Secured Creditor 467
    • Consignment Sales 470
    • Payment Default and Perfected Security Interests 470
    • Bankruptcy 470
    • The Automatic Stay 471
    • Using Promissory Notes to Document Payment Commitments 472
    • Partnerships 472
    • Corporations as a Separate Legal Entity 473
    • Preferences 473
    • Venue 473
    • Litigation 474
    • Summary Judgment 474
    • Post Judgment Collection 474
    • Litigation Alternatives 475
    • Arbitration 476
    • Assignments for the Benefit of Creditors 476
    • Reclamation 476
    • Summary 477

31. Collections and Bankruptcy Law
    • Types of Bankruptcies 479
    • Bankruptcy Statistics 484
    • Filing an Involuntary Bankruptcy 484
    • Bankruptcy Code Amendments 485
    • The Value of Personal Guarantees 485
    • The Automatic Stay Provision 485
    • Filing a Proof of Claim 486
    • Reclamation Claims 487
    • The Debtor in Possession 488
    • The Role of a Trustee 488
    • The United States Trustee Program 489
    • Steps to Take after Notification of a Bankruptcy 490
    • The First Meeting of Creditors 491
    • Reclamation Claims 491
    • Discharge vs. Dismissal 492
    • Common Mistakes Made When Filing a Proof of Claim 492
    • The Official Unsecured Creditor's Committee 499
    • Converting a Reorganization Into a Liquidation 494
    • Discharge of Debts 495
    • Summary 495

32. Credit Fraud
    • The Con Man 497
    • Fraudulent Financial Statements 498
    • Credit Criminals 498
    • Mail Fraud and Wire Fraud 499
    • Credit Fraud Normally Involves a Conspiracy 499
    • How Widespread Is Credit Fraud? 500
    • Indications of the Possibility of Credit Fraud 500
    • An Inside Job 502
    • Bankruptcy Fraud-The Bustout 503
    • In a Bustout, Timing is Critical 503
    • Bustouts Don't Just Involve New Accounts 504
    • Bankruptcy Fraud 504
    • Asset Concealment 505
    • Abuse of the Automatic Stay 505
    • Piercing the Corporate Veil 505
    • Can Creditors Prevent Bustouts? 506
    • Diversion of Shipment Fraud 507
    • Fraudulent Trade References 508
    • Verifying the Customer's Trade References 509
    • Contradictory Information 509
    • Fraudulent Auditor's Opinion Letter 510
    • Fraudulent Financial Statements 510
    • Bulk Sales and Fraud 511
    • Check Fraud 511
    • The Fraudulent Cashier's Check 512
    • Using the ACH to Beat Check Fraud 513
    • NSF Checks 513
    • NSFs and Fraud 514
    • The Name Game Scam 514 Internet Fraud 515
    • International Fraud 515
    • Combating International Fraud 516
    • Summary 517

33. Fraudulent Financial Statements
    • Financial Statement Fraud 519
    • Delivery of Fraudulent Financial Statements 520
    • The Myth Credit Managers Can Spot Financial Statement Fraud 521
    • Fraudulent Financial Reporting in Publicly Traded Companies 522
    • Glaring Mistakes 524
    • Looking for Inconsistencies 525
    • How to Falsify Financial Statements 525
    • Conditions That Contribute to the Potential for Fraud 527
    • The Intimidation Factor 527
    • Audited Financial Statements and Fraud 528
    • The Responsibilities of Independent Auditors 529
    • Telltale Signs of Fraudulent Financial Statements 529
    • The Securities Act of 1933 530
    • Summary 530

34. Bulletproofing Your Organization Against Fraud
    • What is Credit Fraud? 534
    • The Criminal Masterminds 534
    • A One-Person Band 535
    • Conspiracies 536
    • How Do Con Men Fool So Many Credit Managers? 536
    • Educating the Credit Department Staff 537
    • Stop Blaming the Victim 538
    • NACM's Asset Protection Department (formerly the Loss Prevention Department) 538
    • If It Sounds Too Good to be True ... 539
    • Red Flags 539
    • To Prevent Fraud, Check the Ship-to Location 541
    • Be Vigilant against Fraudulent Telephone or Fax Numbers 542
    • Watch Out for COD Checks 543
    • Defeating Internal Fraud 543
    • Using Personal Visits to Defeat Fraud 543 Bustouts 544
    • Summary 544

35. Managing Disputes and Deductions
    • Deduction Management Requires Teamwork 548
    • Proactively Managing Deductions and Disputes 549
    • Deduction Management Software 550
    • Pricing Errors 551
    • Unearned Cash Discounts 552
    • Disputing the Terms of Sale 552
    • Disputed Terms and Conditions of Sale 553
    • Establish Deadlines 554
    • Compromise 554
    • Consider Creating a Charge back Specialist 554
    • Warranty Disputes 555
    • Creating an Automatic Write Off for New Deductions 556
    • Arbitration 556
    • International Arbitration Services 557
    • Outsourcing Deduction Resolution 558
    • Summary 558

36. An Overview of International Credit and Collections
    • Export Sales Stimulate Growth and Create Jobs 559
    • International Open Account Terms 559
    • International Terms of Sale 560
    • International Risk Management 560
    • Gathering Information 561
    • Alternative Terms 563
    • The FCIB 564
    • Controlling Exports 564
    • International Terms of Sale 565
    • Documentary Collections 565
    • International Letters of Credit 566
    • Advantages and Disadvantages of Open Account Terms 566
    • Consignment Sales 566
    • Collections in Foreign Countries 567
    • The Role of Banks in Foreign Sales 568
    • Foreign Financial Sales 568
    • Foreign Exchange Considerations and How to Manage Credit Risk 569
    • Export Licenses 570
    • Shipping Terms 571
    • Foreign Exchange Risk 571
    • Foreign Exchange Hedging 571
    • The Role of Freight Forwarders 572
    • Summary 573

37. Preparing For International Credit Transactions
    • Establishing the Credit Terms 576
    • Reasons to Require Additional Assurance of Payment from Foreign Customers 57
    • Learning about International Business 576
    • The Trade Information Center 577
    • Selecting the Appropriate Credit Terms 577
    • Cash on Delivery 577
    • Sight Drafts 578
    • The Risks Associated with Drafts 579
    • Credit Cards 580
    • Sales on Open Account Terms Covered by Export Credit Insurance 580 Sources of Credit
    • Insurance 581
    • Factoring 581
    • Forfaiting 582
    • Selling on Letter of Credit Terms 583
    • Letter of Credit Rules 584
    • Letter of Credit Discrepancies 584
    • Banks and the UCP 500 585
    • The Role of the Freight Forwarder 586
    • Shipping Terms 587
    • Insurance against Loss in Transit 587
    • Open Account Terms 588
    • Evaluating Sovereign or Political Risk 588
    • Dealing with Foreign Languages and Customs 588
    • The Role of the Salesperson 589
    • International Salespeople Need Information to Help 589
    • Communicating with Foreign Customers 589
    • Anti-boycott Regulations 589
    • Summary 590

38. Credit and Collection and International Law
    • The Challenge 591
    • Export Licenses 592
    • The Foreign Corrupt Practices Act 592
    • Compliance with Foreign Regulations Governing Imports 593
    • Collection against Foreign Open Account Shipments 594
    • Recognition and Enforcement of Foreign Money Judgments 594
    • Import Restrictions 595
    • International Law 595
    • The United States Convention on Contracts for the International Sale of Goods 596
    • Complexity Is a Difference 596
    • Dispute Resolution 596
    • The United Nations Convention 597
    • Obligations of the Seller in an International Contract 598
    • The Buyer's Obligations 598
    • Licenses 599
    • Labels 599
    • Insurance 600
    • Common Carriers 600
    • Accounting Rules 601

39. The Letter of Credit Process
    • Advantages and Disadvantages of a Letter of Credit 603
    • The Letter of Credit Process 604
    • Rules for Processing Letters of Credit 605
    • The Doctrine of Strict Compliance 605
    • Amendment of a Letter of Credit 606
    • Common Problems with Letters of Credit 607
    • Letter of Credit Consultants 607
    • Letters of Credit are Date Specific 608
    • The Role of the Issuing Bank 608
    • Providing Specific Letter of Credit Instructions to Buyers 609
    • Letter of Credit Confirmation 610
    • Advantages of Confirmation 610
    • Sight vs. Time Letters of Credit 610
    • Discount a Letter of Credit 611
    • Sight and Time Letters of Credit 627
    • Avoiding Problems Caused by Third Parties 611
    • Special Types of Letters of Credit 611
    • Summary 612
    • Outsourcing 641
    • Consignment Sales 641
    • Electronic Commerce 641
    • Credit Fraud Will Remain a Growth Business 642
    • Keys to Success 642
    • Summary 643

GLOSSARY

INDEX