Board of Directors
August 30, 2016
Written By: Lisa Russell
This is a new feature where we ask the NACM Heartland board of directors a question. This article is also posted on our blog (blog.nacmheartland.com) where you can post your own thoughts.
What, if any, credit enhancers do you use?
RON MCDOWELL – Martin Marietta
The only two enhancements that we use here at Martin Marietta is a personal guaranty and a joint check agreement with the general contractor. We are considered an unsecured lender or creditor as our material cannot be brought back or repossessed … unfortunately.
Both are generally effective, a personal guaranty is a separate document that indicates the customer, personally; will be responsible for the debt if the business doesn’t pay. We can attach or go after personal assets of the signee.
The joint check insures that we get paid directly by the general with the subcontractor listed on the check as well. This insures that we get paid and then we cannot file a lien against the general. Sometimes the sub-contractor keeps the money and doesn’t pay their suppliers. Then we file a lien against the overall project.
KEVIN QUINN – Key Cooperative
Key Cooperative offers extended terms using secured credit through third party lenders. This allows our agricultural producers to carry their crop input expense through harvest. We offer the ability to pay cash and carry items and home heating fuel delivery by use of credit card. We also offer on line bill pay both of these last two are supported by UTA a friend and business partner of NACM.
Of course, we pull credit reports from the NACM Heartland ICE system for commercial credit and use consumer credit reports provided by One Credit Source.
RANDY BURES – Helena Chemical
We use as many credit enhancers as we can based upon the risk of the credit file/customer. Many of these have been positioned before the transaction or require the enhancers such as Personal Guaranty’s, Corporate Guaranty’s, Security Agreements, Letters of Credit, Joint Checks, etc. Credit Enhancers are looked at as tools in the event of default our credit decisions are and should be based upon the fundamentals of credit starting with Character-Capacity-Credit...then Collateral / Enhancers. The security may be I sleep better when I have them.