Creditors’ Rights: You Must Protect Them

Posted by Paul Miller on June 01, 2017  /   Posted in Uncategorized

creditors_rightsCreditors rights are a subject near and dear to my heart. I am passionate in my belief that business owners have a right to be paid.

Getting paid a right? Yes. Let me explain. Consider the Constitution of my state, Maine. The first Article in the Declaration of Rights (similar to the US Bill of Rights) is:

All people are born equally free and independent, and have certain natural, inherent and unalienable rights, among which are those of enjoying and defending life and liberty, acquiring, possessing and protecting property, and of pursuing and obtaining safety and happiness.

Your rights come from the fact that when you agree to provide a service for product or service for a fee, you are a party to an oral contract. Contracts are considered assets. Many jurisdictions, including Maine, consider oral contracts valid. However, just having an oral contract leaves your agreement open to interpretation.

When you commit your customer agreements to written contracts you are protecting your right to be paid. A contract does not have to be a long formal document. Draft a simple document confirming your price, terms for payments, and the consequences of non-payment. Make sure you have your customer sign, or indicate their agreement. If you do not have the opportunity to have them physically sign the contract, try emailing it and ask your customer for a return email with their agreement. Voila – a simple contract!

Also, in the world of customer credit, your accounts receivables are an asset. They are, in effect, a promise to pay you for your product or service. However, your accounts receivables are not liquid and are in effect, worthless if they cannot be converted to cash.

If you do not regularly monitor your accounts receivables, or if you delay in sending them to your collection agency, you cannot covert them to cash or real property, and you will lose out.

So, as much as I believe in the right of creditors to be paid, I  contend it is the responsibility of business owners to protect this important right.

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