Published Articles by David Balovich
||WHAT ARE WE
credit as defined by Congress. Two of those types are consumer credit and
trade credit AKA business credit.
If you look at Regulation B of the ECOA, it will identify the types of
One type of consumer credit is known as installment.
Trade credit is defined as self liquidating and is considered the only
type of credit that is self liquidating because terms are generally very
short and each transaction covers a specific purchase. Generally, there
is no such thing as an "add on " once the invoice has been
We, as trade creditors, have often told the customer in our collection
efforts that "we are not the bank" and expect payment on the agreed to
payment date. But, have we through our actions become the bank?
I would suggest that we have strayed from trade credit into the area of
consumer credit. Now, we have had some help here. In 1990, Congress
amended Regulation B to say that any business whose previous years
revenues were less then one million dollars would be required to be
treated as a consumer under the ECOA.
Our organization, through its actions, has communicated to the customer
that their purchases may be installment rather then single payment. If we
accept less then full payment for a invoice or past due balance and
continue providing goods and/or services when the customer has not
fulfilled their obligation, would this not be considered an installment
agreement? We may not have entered into an
installment agreement initially but our actions
certainly convey our acceptance of the customers intention
of changing the agreement.
If a customer owes us lots of money in several aging categories, but pays
us something every 30 days and we continue to sell to them
every 30 days are they really past due? Under an
installment agreement, I am of the opinion the
answer would be no. As long as an agreeable minimum payment is received
during a 30 day period the account would be deemed current.
What do you think? You know how to contact me, let's here
I wish you well.
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