Help Your Customer Understand UCC Filings

A Letter to Help Your Customer Understand UCC Filings & What It Means for Their Business

Implementing UCC filings in your credit-granting process includes educating your customer on the process and what a UCC filing will mean to their business. To help you better explain the process to your customer, we created a letter you can provide to them. Some like to include this letter when presenting their customer with the Security Agreement or Credit Application, others like to mail it to their customers once a year as a friendly reminder. No matter how it fits into your process, we hope it helps!

Our Credit Granting Process, UCC Filings, and What it Means for You, Our Valuable Customer

Dear Valued Customer,

Credit granting processes used to be fairly simple, requiring a quick review of references, a simple financial statement, perhaps a letter of credit, and very little paperwork. Credit granting today is intensive, in-depth, and often requires a comprehensive assessment.

As part of our credit granting process, we file UCCs to ensure our position as a secured creditor. UCC filings allow us to reduce our financial risk and exposure while extending larger credit lines to you.

UCC filings (also known as Financing Statements) are recorded with the Secretary of State and establish a public record of our security. UCC Financing Statement + Secretary of State + Public Record may sound ominous, but this simple public record filing does not negatively impact you. In fact, unless you were to default or file for bankruptcy protection, you may not even notice it.

What Is a Secured Creditor? In the unlikely event that you default or file for bankruptcy protection, your creditors may be either secured or unsecured. Secured creditors (like us) are paid before unsecured creditors, and sometimes unsecured creditors aren’t paid at all.

What Do We Need From You? To secure our right to be paid, we ask that you sign a Security Agreement. That’s it! There is no other action required on your part. This Security Agreement permits us to record a UCC Financing Statement with the Secretary of State and grants us a security interest in the goods or services we are selling to you.

What You Should Know about UCC Filings

  • UCC filings do not hurt your credit rating. UCC filings will appear on a credit report, but simply to provide confirmation that another creditor has a secured position or that you pledged collateral for trade credit.
  • UCCs, filed by us, cost you nothing.
  • UCC filings are security for us, as your vendor, in the unlikely event that you default or file for bankruptcy protection.

We have partnered with the leading professional UCC filing service, NCS Credit. NCS Credit prepares and records all required documentation, and you may receive correspondence from them. You can learn more about NCS Credit at NCScredit.com or by calling 800.826.5256.

We truly appreciate your business and your support of this process, and we are here to answer any questions you may have!

Sincerely,

Credit Manager, Sample Company Inc.

NCS Is Here to Help

If you have questions or need help educating your team or customers on UCC filings, please contact us! We want the UCC process to protect you and to be as streamlined and stress free as possible.

Editor’s Note: This content was originally published in March 2022. It has since been updated and revised for 2023.

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