What Should I Know About Attorney Collection Expenses?
Today’s 3-in-3 Topic is: What Costs Should I Expect with Attorney Collection Efforts? Today we sat down with Danielle Moon to discuss attorney...
2 min read
wpengine Jan 30, 2017 12:00:00 AM
A Standby Letter of Credit is a written guarantee issued by a bank to pay on behalf of their customer in the event their customer does not pay. If the bank’s customer fails to do something (pay on time, complete a project on time, or satisfy terms of a contract), the bank (not the customer who failed to deliver) pays you–the beneficiary.
Here are some basic steps you can take to implement a Standby Letter of Credit for your company:
Work with your Sales and Credit Departments to establish guidelines for what kind of job or order will require a Standby Letter of Credit. These guidelines are usually set by very high dollar amounts. From there, you can set the terms of the Standby Letter of Credit for the customer.
Communicate the terms of the Standby Letter of Credit to your customer. Make sure one of the terms in the Standby Letter of Credit is “irrevocable.” Your customer, also known as the applicant, will apply to their bank for the Standby Letter of Credit and will have to provide collateral or meet certain credit standards to compel the bank to issue the Standby Letter of Credit.
Once the Standby Letter of Credit has been issued and the issuing bank is viable, orders can be fulfilled/work can be performed for the customer.
*Make sure the total value of the goods/work is not more than the dollar amount of the protection described in the Standby Letter of Credit. It is critical to pay attention to this, especially when multiple orders are being fulfilled.
Today’s 3-in-3 Topic is: What Costs Should I Expect with Attorney Collection Efforts? Today we sat down with Danielle Moon to discuss attorney...
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