A Deep Dive Into Asset & Liability Searching

Wondering how to conduct an asset and liability search to determine the financial stability and viability of your customers with past due invoices and collect on customers BEFORE hiring a lawyer?

Join this live webinar led by Curtis Fort of Construction Credit & Finance Group, a trusted company that serves small family-owned heavy equipment and material suppliers and subcontractors, who will teach you everything you need to know.

Register for the live discussion and Q&A to find out:

• Benefits of an asset and liability search
• How credit managers have excelled using these searches
• Proven collection tips from an expert construction credit & finance professional

Transcript

Lori Drake (01:42):
Well, good afternoon everybody. And thank you for taking time out of your busy schedule to join us today, to talk a little bit about asset and liability searches today we have with us Curtis forte, he’s the CEO of construction credit and finance group Curtis thanks for joining us today. Thank you, Lori. Thank you for having me. Absolutely. So Curtis has over 20 years experience. His specialty is construction credit. He has a special, uh, area that he has his, uh, investigations, liability and assets. So he’s going to focus on why we should do this, what they are, how to do it, and then what you should do after you find out the reports.

Lori Drake (04:54):
If you don’t know who Levelset is, we know the construction industry is very confusing, so we try to take away the headaches by giving education webinars. We offer lean and waiver software and much more. If you ever have any questions, please don’t hesitate to reach out. And this is what we’ll cover today. The how and why of an asset and liability search. What is a liability search? What are the benefits and what all does the report provide? And I apologize if this is on your screen, I can’t get rid of it for some reason. All right, Curtis, do you want to go ahead and take us off?

Curtis (05:32):
Yes, absolutely. One. I appreciate the opportunity with Levelset to give me a platform to, you know, help credit managers, uh, to it’s a great honor and privilege. So I do appreciate this opportunity. Um, you know, there are a number of investigations, uh, that our credit manager or controller can use. And, you know, they’re typically an asset and liability investigation. There’s two primary forms of these, you know, uh, that a credit manager can use. Uh, the first would be, you know, a complete and comprehensive report conducted with public records. Um, you know, also private investigation, skip tracing software. This type of report will, you know, generally provide, uh, information such as security creditors who carries primary UCC over that business, uh, tax lien, such as federal or state judgments, current lawsuits, bank searches and additional contact information in case that credit manager needs to be able to have other points of contact to reach out to you regarding payment credit verification, uh, also provide criminal records, which is obviously very important.

Curtis (06:47):
Um, you know, confirming socials and date of birth on anybody who has filled out a credit application and, you know, properties, which are very important assets listed in various States. Examples can be boats, homes, rental properties, and et cetera. Um, you know, the second type of investigative report, you know, that we utilize is a little bit more up close and personal. I’m a licensed and bonded private investigator, uh, can physically go out and conduct site visits to the business address, um, or the personal guarantees personal residence, you know, to photograph all assets such as those properties, equipments, cars, vehicles, inventory, uh, that investigator can make face-to-face contact with that past due customer and provide them notice that a third party is now representing the creditor and all that communication is now to go through the third party moving forward. They can even research permits in new jobs that the customer may be on and go to those new job sites to make contact with that past due customer. Um, all of these investigative tactics are very helpful at a credit manager determining credit after it means once a credit, uh, has already been extended, but it’s very vital once a customer’s with 60 days past their terms, if that helps out blurry.

Speaker 4 (08:29):
Do you see the next slide, Curtis? Yes. Okay. Do you want to go ahead and keep going? Yeah, you can keep going. Well, no, that’s the new question. So why should you pronounce that?

Curtis (08:40):
You had a question, another question for me, sorry. So when should you do an asset and liability search and why? Um, typically creditors should conduct these investigations. If they provide, if the customer provides a questionable credit application, uh, once the customer has reached 60 days past their terms, this will help determine if the customer is having more serious problems. Uh, then they’re sharing with you, uh, for example, as a credit manager, I’m sure you’re typically not going to have your customer when you call them for payment, have them tell you the reason they’re not paying is because they have current lawsuits or federal or state tax liens. They just typically, aren’t going to tell you the bad things of why they’re not paying you more often than not what a credit manager hears is. You know, typically they’re waiting on funds from a project or financing, et cetera, and I’m sure that with your credit manager experience, you, you could agree and attest to that.

Speaker 4 (09:48):
And how about what is an asset and liability search?

Curtis (09:52):
Um, there are several ways to conduct an investigation. Uh, that’ll give you information more than your traditional methods, uh, while businesses and individual credit reports are extremely valuable tools for credit managers to determine credit worthiness of a potential customer. They’re not always going to give that credit manager the full and whole picture. Uh, that is why it’s so important to use the services of a company that understands the complexity of collections investigations and when the credit manager or their teams, uh, internal efforts fall short, uh, consider allowing a company that specializes in pre-litigation debt collections, coupled with that strong investigative research approach. And what you’ll find is when collection efforts, you know, fail to collect and you want to move forward with litigation or small claims court, you’ll have more information to provide to your attorney.

Speaker 4 (11:00):
And what all does the report provide?

Curtis (11:04):
Um, it’ll provide information such as locating vehicles, watercraft, bank, bank accounts, uh, property and other counties States possible assets that are trying to be hidden. Uh, the customer may try to hide their assets by transferring to someone else with an asset search. You’ll be able to backtrack your target and find when, who, and how much they gave and which may benefit the creditor in court.

Speaker 4 (11:35):
How about tricks of the trade? What do you know that most people wouldn’t?

Curtis (11:41):
Well, I, I think we should probably touch on what all does that report provide? Um, a complete report that provides all of the items listed above can come to a client in a secure PDF. Uh, it allows creditors to make a fully educated decision on approving a line of credit, which is always a good thing, uh, for their new customer or it will help them take the next steps to recovering the money owed to their company. Um, but yeah, absolutely tricks of the trade. You know, look in your local newspapers and trade magazines. You can sometimes find your customers listed. Um, try having a, third-party pull a pacer report to look for bankruptcies or lawsuits. And if your customer will not provide you with a financial statement, you can then ask them for their tax returns and you can turn those tax tax returns into financial statements, and you can watch more for that information on an up and coming webinar. I believe that you’re having on June 2nd at 2:00 PM central, you you’re welcome.

Lori Drake (12:49):
I think we got off on slides. There are some technical stuff. Um, well what would you do with an asset and liability search? Uh, what would you do if the report showed that they were viable or they weren’t viable?

Curtis (13:01):
Absolutely. Um, first thing to do when you find the customer has viable assets allow a third party agency collection agency, uh, to contact the debtor, you know, notify them that you have found assets and it may help collect the money. If it doesn’t help, uh, trigger a payment, then you may want to consider hiring an attorney to file suit. And once that suit is filed, um, and the judgment is entered by the courts, then the attorney can start attaching the assets. Um, once those assets are attached, the attorney can start recovering those assets through the laws in that current state with the, where the judgment was actually entered against the debtor.

Lori Drake (13:47):
So what if the report showed viable assets that they looked like they had plenty of money, plenty of that. I mean, would you still try to go forward with your direction or if you do that in the beginning of a credit review, does that help you at all with, as being a credit manager?

Curtis (14:03):
Yeah. I mean, if you’re seeing viable assets and, you know, the debtor’s cashflow positive, I mean, those things are gonna help you one want to extend the credit. Um, but if, you know, you’re already past that stage, you’ve already extended credit terms and the customer’s past due and they’re falling behind. Um, at that point in time, you know, those assets help a guy like me and a company like ours, truly leverage debtors, you know, um, finding those things that the debtors are trying to hide and not really be straightforward about are really what helps, uh, get the money collected.

Lori Drake (14:34):
Definitely. Let’s see, here’s a summary. And again, I can’t get that bar out of there. I apologize. I can summarize everything that you had talked about again, I know we got off on slides and I apologize for that.

Curtis (14:47):
Uh it’s all right. Ecology is not a certainty. Um, but I mean, you know, make a determination credit managers, you know, making a determination based on the balance over really, you know, whether or not litigation is their best option or, you know, small claims court or whether they’re write it off. If a collection agency can’t collect, you know, it’s usually wise to make those determinations and not spend good money after bad money.

Speaker 4 (15:18):
[inaudible]

Lori Drake (15:19):
Um, I show on here that in summary, it would minimize the liability, your customers aging, and it can lower your DSO and increase your company’s working flow cashflow. Can you talk a little more about that?

Curtis (15:30):
Yeah, absolutely. Uh, when you have a customer that, you know, typically is, is giving you a number of reasons why they’re not paying, uh, whether it is, you know, they’re just waiting on payment from a general contractor or property owner, whatever the case may be. You know, it’s just important for suppliers and subcontractors to really know their rights and when the right time to send that account to somebody like an agency, uh, somebody that can get in make collection attempts in the event that those, you know, attempts fail. Uh, you need to be able to make quick and concise decisions, Um, minimize minimizing the liability to your company’s agent report is by being proactive and looking for those red signals. You know, the first red flags that say, Hey, we may have a problem here. And so you just want to mitigate those, uh, costs to your company and try to utilize the services of somebody that can help lower your costs versus going into litigation and potentially spending tens of thousands of dollars.

Speaker 4 (16:37):
Okay.

Lori Drake (16:39):
All right. It’s question and answer time. I, if you have any questions, there’s a chat box available on your screen. Please go ahead and put it in there. And I will ask him to, uh, Curtis in the order received, we do have three questions that came in prior for people that can’t attend to the webinar, but they’ll get the answer. Anyways. The first one was from Debbie and she said, has there ever been an asset that you have missed when you’ve done a search on the assets and liabilities? Yeah.

Curtis (17:05):
Uh, yes, absolutely. Um, investigations are not always, uh, you know, the easiest task. Uh, their debtors can be very creative and hide assets and other people’s names or even through other corporations. So yes, you can miss things from time to time. It happens

Lori Drake (17:25):
If you’re that, uh, Joe out there says, how much does an asset search cost?

Curtis (17:31):
Uh, typically, you know, these types of reports, uh, through private investigator firms out there can run anywhere from a thousand dollars to 1500. Um, but you know, here with us, you can get those reports for right around 500 to $750, which can provide a lot of additional details.

Lori Drake (17:52):
Do you know why there’s such a cost difference?

Curtis (17:55):
Um, you know, I’ve built a network of, and, uh, investigators over my career over 17 years, I’ve been able to establish long-term relationships and been able to feed these ATAR, uh, investigators, a lot of new business. And so they’ve been able to help me with my cost, which helps bring my client’s cost down.

Lori Drake (18:13):
Not only at, see, we got a question from Sarah says, can you file a levy on someone’s bank account or even automobile?

Curtis (18:25):
Yes, you can. Uh, I can, but yeah, uh, you can absolutely, uh, you’d need an attorney to file a levy, uh, once you have that identified asset.

Lori Drake (18:37):
Oh, we got a question for Tom here. He says, what is the turnaround, uh, when you request an asset and liability search,

Curtis (18:44):
Uh, typically I can have one done, you know, a comprehensive report. I can have that done typically in about three days, it’s a full review, uh, the more aggressive approach. So to say by actually getting a private investigator typically about a week, week and a half turnaround. Okay.

Lori Drake (19:02):
Sharon asks, what type of assets do you focus on first

Curtis (19:07):
Unencumbered where there’s no UCS secured creditors attached? Anything that we can go after the quickest and lovey quick, the quickest,

Lori Drake (19:18):
Is there a certain type of asset that takes longer? I’m assuming that’s probably the one when somebody tries to transfer it to somebody else.

Curtis (19:24):
Yeah, those absolutely would. Yeah.

Lori Drake (19:28):
Yeah. Valerie says shouldn’t a good third party. Be able to facilitate the asset searches to help the credit manager.

Curtis (19:36):
Could you repeat that question again? I’m sorry.

Lori Drake (19:38):
A good third party, maybe like collection agency or something, be able to facilitate the asset searches to help the credit managers.

Curtis (19:46):
Sure. Yes. I mean, that can also be part of, I mean, a lot of credit managers may not use an agency specifically for collections. They may use that agency specifically for investigative research, but yes, a good agency that is working with a creditor that has an ongoing relationship, uh, that places, you know, a collection cases with that agency, uh, that all can be coupled into the pricing of what that agency has to offer. It’s a very good question.

Lori Drake (20:16):
Now I know there’s a lot of talk out there of what is legal and what’s not legal. Is there a certain line that you have to draw when you’re pulling that information in?

Curtis (20:26):
Um, as far as what can you help be a little bit more?

Lori Drake (20:30):
Uh, I, I don’t know for sure if somebody had asked it, um, when they talk about pulling someone’s assets, getting into their individual personal information, there’s a lot of talk about what’s actually legal and what’s not legal. I know in Texas we have very specific laws, so trying to, or searching somebody. I mean, there’s certain things that are legal and not, I know if you have a lien or a judgment, you can’t take like the third cow or something like that when you do get a lot of those issues.

Curtis (20:57):
Yeah. I mean, one, you have to make sure you have a signed credit application with a personal guarantee to look at anybody’s personal assets. If you have just a business credit application with no personal guarantee, you’re not going to want to start up trying to look at personal assets. They’ve not given you the legal right to do that.

Lori Drake (21:15):
Does it make it harder when you don’t have a personal guarantee?

Curtis (21:18):
It always does. Yeah. It always does.

Lori Drake (21:26):
There’s still people typing questions and answers, but do you want to just tell us a little more that maybe we should hear about?

Curtis (21:33):
Yeah. I mean, you know, uh, that collections in pre-litigation services is a very complex business. It should be really designed to compliment a credit manager’s efforts. You know, once a credit managers, uh, done their due diligence, extended credit, you know, and those efforts sometimes down the road, just go back and know it’s sometimes not the credit manager’s fault. Sometimes it’s not even the, the, the customer’s fault. Uh, they get on these job sites, they get over extended and, you know, to be able to have somebody to act quickly and get in there and, uh, get that money collected without the need of having to go to litigation is always an upside using an agency that is full of diplomacy, uh, and treats the customer with respect. And, uh, that, that is also very vital, you know, to repre, you know, represent a company’s brand name.

Curtis (22:28):
Uh, we work with a lot of companies that, you know, we have to treat their customers with respect. We can’t use, you know, old collection tactics of the past, uh, to try to collect on these receivables, especially on the, you know, in a time of covet everybody’s, life’s changed. Customers have changed. Businesses have just changed all, all across the spectrum. So you have to be very tentative to those, every moving part. Um, so being able to work with these people and help them, uh, sometimes is the best Avenue instead of making a hard line and demanding, uh, and threatening litigation. It’s just usually better to try to work with folks in a lot more. That’s fine.

Lori Drake (23:14):
Do you find any difference when you’re trying to pull assets on site, say you only have the credit after the company, you don’t have a personal guarantee. Is there any difference when you’re trying to pull assets on residential compared to commercial? Okay.

Curtis (23:28):
Um, yeah, I mean, absolutely. It still goes back to that personal guarantee. Um, when you’re looking at a business’s credit, it’s hard to look for any other assets other than the ones that are listed to that actual business. So trying to go look at other assets, you know, really doesn’t make a lot of sense if there’s no personal guarantee. Uh, that’s why over the 17 years I’ve been doing this, uh, when I go back in to try to reeducate a customer, it’s always vital to make sure that, you know, salespeople credit managers are getting those personal guarantees and making sure that before the actual credit line is opened and extended, that you’re verifying that information. You know, that the personal that the person that’s signed, that personal guarantee is an officer of the company. You can verify that information through the secretary of state. So, you know, just making sure you’ve done your due diligence is vital.

Lori Drake (24:22):
Absolutely. So say you’re a credit manager, you just got a credit application, got a personal guarantee on it, but you’re just, you’re just now starting to review their credit. Is there anything you can do like quickly that gives us a look at something that, Oh, we see a red flag now we want to pull the full report or, Oh, this guy looks good. We’ll move on with our trade references.

Curtis (24:43):
Yeah, absolutely. I mean, they can go in immediately look at secretary of state’s make sure the corporation’s active, make sure that the person that signed that personal guarantee is listed through that secretary of state, uh, that companies doing business in other States where maybe they want a heavy piece of equipment or building materials delivered to, it’s very smart to go to that state and look at that secretary of state, make sure all that information, all that data as lining up properly. So that way, when you’ve extended that credit, you’ve known that you’ve done your due diligence after looking at experienced, you know, uh, business credit reports and any other form that a credit manager is looking at. If you’re seeing, you know, overextended credit cards or credit cards that are right at their max, or you’re seeing tons of lines of credits on there that are getting towards their max, you have to use your better judgment and not just because maybe a sales guy wants to get a deal done, and you want to get that line of credit. You want to make sure that you are extending credit wisely.

Lori Drake (25:42):
Absolutely. Yeah, it absolutely does. I appreciate that. Um, I don’t see any more questions in there, so we’ll keep going. Uh, don’t hang up yet, but thank you, Curtis, for taking the time today. I know that you’re very busy, but we really appreciate getting the extra information. It’s. I mean, I was a Brent major for over 20 years and I didn’t have a one student asset and liabilities church. So I mean, it, it, it kind of seems like something that people just aren’t aware of.

Curtis (26:07):
No, they’re not. Um, you know, uh, it’s, it’s, it’s very odd, uh, to, to not look at additional resources, especially in an economy where things are very tough. You know, this is a crucial time to know who you’re extending credit to who you’re doing business with. Um, if you have old credit applications, you may want to, you know, uh, look at your terms and conditions, make sure that they’re up to date with current state laws in the state that you’re extending credit in and, um, you know, do everything that you can to make sure that you’re current with the times, uh, asset and liability investigations are crucial to ensuring that you mitigate your losses. Uh, you know, again, if you find that a customer has a number of lawsuits, judgments tax liens, probably not the kind of customer you’re going to want to go extend a $50,000 line of credit too.

Lori Drake (27:03):
All right, well, let’s go next. Um, the webinar, we have two that are upcoming close. The one that Curtis was talking about is the bottom, right? It’s the having his customer’s tax returns and credit review. And it’ll show you a lot of the stuff that you would find in financial statements, but also shows hopefully a lot of the stuff that you would pull in an asset liability search. And on Monday, we are going to be talking about the lumber industry and how it affects everybody and what we’re going to do to kind of get things going around it. Uh, we do have a free credit management course, if you haven’t checked it out yet, it’s live, let’s say at credit management Academy right there, um, via Dudley has been around forever. She’s called the credit overlord, and we’ve written a book with her, all the guides credit collections. And if, and we, it takes the class or downloads the book, you’ll be entered into a raffle for a free Amazon gift card.

Curtis (27:57):
Thea is amazing. She is awesome.

Lori Drake (28:02):
Or there’s Curtis’s information. If you have any more questions or maybe want to run a report, you can reach him@seaportatccfgcredit.com. There will be a quiz after this webinar’s done. So just keep an eye out for your email. It’ll, uh, it’s just like three questions. And if you pass it, you’ll get a certificate that you can share on social. If you share it, you’re integrated to another Apple and that’ll be for some little fun Levelset stuff. So Kara for this, we really do appreciate you coming in. Again, taking time out of your busy day. This is definitely something that I’ve never looked into. And I’m sure there’s that people probably got a lot of good information out of it.

Curtis (28:38):
I hope they did. And hopefully I can do more of these, you know, this was my first webinar ever. So sorry if I was a little quick little nervous, uh, but you know, got to catch up with the times, like you told me, right Laurie,

Lori Drake (28:50):
Okay. Technical difficulties eyes. Oh, I’ve done this for three months. So now you get them around. Um, I was going to read you one more thing from Valerie. She says one of the biggest things we see is people not reviewing credit applications for completion of all necessary fields and specifically the personal guarantees verifying. It’s not verifying, it’s an individual and not an officer. If you are expecting more than one guarantor, did you get all the required signatures, be sure to review these items. And that definitely sounds like something that would be important for you to do your research and pull the legal information.

Curtis (29:27):
Absolutely. Uh, you know, research and all the personal guarantors and finding out, you know, what companies they may be involved in. Uh, these guys, we, we, we find a lot of, uh, interesting things that our customers don’t know. Uh, you know, we come back and provide these reports. Uh, my private investigators that actually go out, you know, a lot of these guys are ex cops, ex detectives, sex sheriffs, uh, you know, that have now started their own investigator firms and the, the research that they do uncovers quite a bit of information that you may not know about your current customer. So, you know, those, those fields, all the information that you can get customers to fill out, uh, helps those investigators, uh, dramatically.

Lori Drake (30:09):
Yeah. I know I don’t do credit anymore. That makes me want to get somebody’s credit application just so I can see what one looks like,

Curtis (30:15):
Find a way to send them over to me. Uh, we can, we can uncover some stuff.

Lori Drake (30:19):
Absolutely. Well, if nobody has any more questions, I’ll go ahead and let you all go. Curtis, if you want to just hang on for a little bit, we will talk a little more again. I appreciate everyone being here. Thanks for taking your time and be sure to check out Mondays with the lumber industry, all the issues and creds going on there, we’ll have a four person panel going. Thanks for everyone coming.

Curtis (30:41):
Thank you.