Tips to Protect Your Business from Customer Bankruptcies

Here are some tips from a Chicago business debt collection attorney on what companies can do
to protect themselves from customer bankruptcies:

Require credit applications – require customers to provide you with a detailed credit
application in writing that has been signed by an officer of the company.

Check credit history – always check a potential customer’s credit history prior to extending
credit by obtaining a credit report from Dun & Bradstreet and scour it for any potential red
flags (late payments, nonpayment, etc.).

Get updated credit information – a customer who was a good credit risk five years ago may
not be in good financial shape today. Ask for updated credit information periodically.

Ask for a guarantor – if you are concerned about a customer, ask if one of the principals can
guarantee the debt.

Get collateral – requesting a security interest in the form of collateral may allow you to
recoup the debt in case the customer files bankruptcy.

Cash checks promptly – bank your checks as soon as possible, as the law states the money is
not yours until the customer’s bank clears the check.

Require money orders, COD or cashier’s checks – taking a business or personal check from a
business in trouble is asking for trouble for your own business.

Keep accounts current – if you are having problems collecting from a customer, ask a business
debt collection attorney for help in clearing up your collection problems.

The Jayaram Law is a Chicago business law firm providing a range of legal services
to middle-market businesses, with an emphasis on business litigation, business to business
, local counsel representation, preparation and review of business transactions, and
copyright and trademark licensing.

The Jayaram Law routinely and successfully assists its clients in their business-to-
business collection needs. We take pride in obtaining payment on accounts receivables without
fracturing critical business relationships or engaging in time-consuming and costly litigation
efforts. If you need business debt collection services conducted in a professional manner,
contact our B2B debt collection law firm.