UCC Financing Statements: the Filing Myths & Default Facts
There are risks associated with extending credit to a customer, and as diligent credit professionals, you take steps to mitigate that risk. Often times, you begin by reviewing your customer’s credit history, the amount of outstanding debt and payment history. But, assessing your customer’s credit-worthiness is only the beginning. You know that risk mitigation is an ongoing endeavor. Once you decide to extend credit to your customer, you need to ensure you are a secured creditor. Implementing basic credit management remedies, like UCC filings, could save your company hundreds of thousands of dollars.
Article 9 of the Uniform Commercial Code (UCC) governs secured transactions in personal property and affords trade creditors the opportunity to secure their goods and/or accounts receivable by collateralizing the personal property assets of their customer. A properly perfected UCC Financing Statement (UCC, UCC filing or UCC-1) grants the creditor a security interest, therefore reducing the risk associated with extending credit.