Imagine you own a business selling goods. A good is anything tangible and movable, regardless of dollar value. A customer places an order, but then does not pay you. What do you do?
Most business owners wait, continue to wait, possibly sue, and hope they get something back. The better question is: What should you have done?
The answer: Use Article 9 of the Uniform Commercial Code to protect your business by securing the transaction. Here is how I’d show a business owner how to protect her company. I would draft a security agreement; and then file a financing statement with the state.
This way, the goods my client sold become collateral. If the buyer sold the goods, then any of the buyer’s assets will be seen as collateral too. Stated simply, my client is going to have a much better chance of getting her money. If the buyer does not pay, my client can start repossessing the buyer’s assets. What if the buyer goes bankrupt? Well, as a secured creditor my client is first in-line to collect the remaining assets. If she did not secure the transaction, she would have been at the end of the line. Let the law protect you. If you’re business is selling goods…secure every transaction. You’ll be glad you did.