Commercial Collections Specialist

This Specialty Certificate will present and explain the concept of the cost of credit.  It will present the four basic costs of credit that businesses should consider when developing a credit policy which will aid in understanding why a customer doesn’t pay, and thus enable a business to prevent some of these situations.  It will also show how documenting the credit relationship is a vital part of the preparation for lending and how to get set up properly so that the right policies and procedures are in place to help ensure a good credit relationship with the customer.  It will also explain how to evaluate whether a company’s credit policies comply with the law.  Federal and state regulations govern the extension and enforcement of credit. You will also learn about collection strategies, clear and consistent policies, seeking outside help during the collection process, and different bankruptcy chapters.

The material in this collection of modules is designed for the beginning credit professional, with 0-3 years of credit experience.  Also please note, regulations vary from state to state; this presentation covers general concepts about state regulations.

Instructor: Robert S. Bernstein is managing partner of Bernstein Law Firm, P.C. He serves as counsel to commercial landlords, equipment lessors, bankruptcy trustees, creditors' committees, creditors, and reorganizing businesses in proceedings throughout Pennsylvania and the Middle Atlantic States, concentrating in the many facets of bankruptcy and commercial law. Mr. Bernstein writes and lectures for local and national groups on matters of collection, bankruptcy, business law, and professional ethics and, for more than ten years, has been certified as both a creditors' rights and business bankruptcy specialist by the American Board of Certification. , Mr. Bernstein earned a BA from the University of Pittsburgh in 1976 and a J.D. from Duquesne University in 1981.

Module 1: Why Customer’s Don’t Pay

In order to better understand why customer’s sometimes don’t pay, it is helpful to understand the concept of the cost of credit. There are four basic costs of credit that businesses should consider when developing a credit policy which will aid in understanding why a customer doesn’t pay, and thus enable a business to prevent some of these situations. Topics covered in this learning module include The Costs of Credit, Reasons for Non Payment, “Real” Reasons for Non Payment, and Bad Intentions. After successful completion of this learning module the student should understand what the four costs of credit are and how they impact a business, the concept of the Payment Gap, the concept of the Red Zone, the reasons that customers don’t pay and customers with bad intentions.

Module 2: Documenting the Credit Relationship

Documenting the credit relationship is a vital part of the preparation for lending. Getting set up properly so that the right policies and procedures are in place can help ensure a good credit relationship with the customer. , This learning module presents Preparation, the Credit Policy Manual, Requirements for Credit Decisions and the Credit Agreement. After successful completion of this learning module the student should understand why preparation is important, the importance of a credit policy manual and what should be included in it, the requirements for a credit decision, what a credit agreement is, what goes into it, and who should use one.

Module 3: Granting Credit- Regulatory Considerations

It is necessary when thinking about credit policy to evaluate whether a company’s credit policies comply with the law. Federal and state regulations govern the extension and enforcement of credit. This learning module will present the topics of Customer and Guarantor Information, Collections, Federal Statutes and Regulations, and State Statutes and Regulations. After successful completion of this learning module the student should understand the importance of safeguarding customer and guarantor information, what collection strategies are prohibited by the Federal Communications Commission, Federal law, State law, and postal laws, recording-keeping rules for merchants, the major federal statutes and regulations (ECOA, FCRA, Fair Credit Billing Act), and state statutes and regulations.

Module 4: Delinquencies and the Collection Process

It is critical to have a policy in place for implementing the management of credit accounts. A credit policy that provides consistency in decision making and implementation will be helpful if it is necessary to deal with a delinquent account. Topics covered in this learning module include Implementation of Policy, Examples of Collection Strategies and Steps, When to Use an Outside Source and Who to Use for an Outside Source. After successful completion of this learning module the student should understand the cost of credit (the Payment Gap, the Red Zone, the cost of delinquency over time), how payment terms or contractual terms relate to delinquency and collections, the importance of having a collections procedure with increasing pressure at appropriate intervals, when to use outside sources for collections, who to use as an outside source of collections and the role of lawyers in collections.

Module 5: Recovery, Litigation, and the Courts

Compromise and settlements is the next step after delinquencies and the collection process. It is the bridge between in-house collections and the litigation process. This learning module covers Payment Plans, Litigation, Discovery, Motions, and Trials, and Judgment Enforcement. After successful completion of this learning module the student should understand when to consider negotiating a payment plan with a delinquent customer, reasonable terms for a payment plan with a delinquent customer, the risks of negotiating a payment plan with a delinquent customer, what “going legal” means, what an attorney will consider when filing a lawsuit, what happens if there is a dispute in a lawsuit, a creditor’s responsibility to provide a witness and issues involved in enforcement of a judgment.

Module 6: Bankruptcy Overview

Bankruptcy is a federal statute, although there is some variation from state to state due to individual state laws. This learning module presents an overview of the chapters of bankruptcy, giving more detail to Chapters 7 and 11. Other topics covered include The Players and What They Want, Creditor Issues, Preferences and Proof of Claim. After successful completion of this learning module the student should understand what each bankruptcy chapter is designed to address and how it functions, who is involved in a bankruptcy case, and what their roles are, the function of the means test, the role of the creditors committee, the order of distribution of assets in a Chapter 11, what a reclamation right is, what a preference is and when to file a proof of claim.