Top 5 Reasons You Should File UCCs

Top 5 Reasons You Should File UCCs

If reducing your DSO, mitigating your risk and improving working capital aren’t reason enough to file UCCs, I’ve compiled a list of a few more reasons.

Five more reasons!

#1. Sell More!

A properly perfected security interest gives you the extra security needed to sell to marginal accounts that were previously off limits.

The marginal accounts may have included those potential customers that came to you with little to no credit history, your existing customers who are teetering at the edge of a maxed-out credit line, and even the accounts where you couldn’t quite meet the same price as a competitor.

Sometimes it’s not about beating your competitors in price; it’s quite possible your competitor wouldn’t extend enough credit to this entity — if you can extend the credit, you can get the business. File that UCC!

#2. Fewer Write Offs!

It’s simple. Fewer write offs lower the costs associated with your product.

These lower costs mean you can sell your product at a lower price while maintaining effective profit margins.

As you’d imagine, selling at a lower price makes your company more competitive.

If you are more competitive, you have an opportunity to obtain a larger share of the market. Do the math: more sales + stable profit margins = life is good!

#3. Everyone’s Doing It!

Growing up I used to whine “But Mom, everyone else is!” And she would respond with the ever popular “If everyone jumped off a bridge, would you do it too?”

Well, I probably won’t jump off any bridges, but I absolutely would file UCCs.

UCC filings are a common business practice; just as common as completing a credit application. Think about it, your mortgage, your car loan, an equity line of credit, all have security language written in to the documents you sign — banks won’t just throw money at you without security.

#4. Low Costs!

The overall UCC process is generally quite economical.

The fees (except for a few states) are low and the long-term maintenance doesn’t require significant monetary investment.

For 10 cents per day or less, you can secure collateral in agreement with your customer’s promise to pay.

What’s better than low fees for you? No fees to your customer! Filing a UCC doesn’t cost your customer a thing and contrary to popular belief, a UCC does not hurt their credit.


It may seem like I’m shouting and that’s because I am: FILE UCCS BECAUSE IT IS YOUR RIGHT TO BE A SECURED CREDITOR!

OK, no more shouting. I just wanted to be sure you heard me: as a creditor, you have the right to take precautions to protect your interests.

In the unlikely event that your customer files for bankruptcy protection or defaults on the terms within your agreement, a properly perfected security interest elevates your company to a secured creditor position.

I needed a #6 so I could say:

#6. Don’t Be Skeptical!

Let’s look at the facts:

  • Fact: In bankruptcy, secured creditors have priority and are paid before unsecured creditors.
  • Fact: In the event of default, a properly perfected security interest provides the right to repossess.
  • Fact: UCCs will not hurt your sales opportunities, in fact, UCCs promote sales opportunities by providing security when selling to marginal accounts.
  • Fact: UCCs will not impair your customer’s credit rating.
  • Fact: UCCs are a common business practice.

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