Credit Applications should always be signed by an authorized
officer of the company that you are extending credit. Accounts
payable managers, buyers and salesmen and women are most
likely not officers of the company.
Be very careful of HOW people sign their names to contracts.
If the signature on the credit application reads, John Smith, Jr.,
be certain that all subsequent documents also indicate the
suffix "Jr." at the end.
Believe it of not, if you must go to court, one of the arguments
that a debtors attorney may raise is that there is a distinct
difference between John Smith and John Smith, Jr. .
It's often been said that extending credit is a matter of "man's
confidence in man". But, as credit professionals often joke,
"Oh yeah. The old confidence scheme".
Just because you know the customer and have had a good
working relationship for many years, you should still ask for a
fully completed credit application with ink signatures by an
officer of the company.
Sometimes good businesses are driven into bankruptcy for no
good reason. They may become victims of expensive lawsuits
themselves. When that happens, they would want you to be a
secured lender and get paid first.
We need only look as far as this internet to see how other
large companies, that should have known better, had allowed
billions of dollars of capital to be lost. In the late 1990s, many
hardware suppliers to dot.com businesses were extending
credit to accounts without getting the much needed corporate
guarantees. Business was booming!
Know who you are selling to. Get the correct signatures, in ink,
in full, on the correct documents that are legible. If possible,
get as much security as your customer is willing to give. It's
much easier and far cheaper to get things done the right way
the first time.