If you look at Regulation B of the ECOA, it will identify the
types of credit as defined by Congress. Two of those types
are consumer credit and trade credit, AKA business credit.
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 produced.
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 your opinion.
I wish you well.