Avoiding Late Payments From Vendors

How would you like to free up more time and money for business development by eliminating bad debt collection and chasing down late payments? Collecting on accounts receivable is a common subject for discussion among independent abstractors. Here are 12 ways to spend little or no time on chasing bad debts, and spend all of your time on what you like doing most, and what matters most which is cultivating valuable new clients and doing great title research.

Payment and collection problems are not really an accounting issue, they are a sales problem. Taking on poor quality customers and not creating a firm expectation at the time of onboarding are the two biggest factors in ending up with a collection issue. At least half of the effort on collecting bad debt happens before you even take an order from a client. A subtle inquiry about the clients background mixed into the sales conversation can be the most important factor in preventing issues with payment well before it becomes a problem.

 

  1. Inquire about the clients current title search resources. Who has been doing their searches to date? What is their current volume? Why are they switching? Understanding their need for a new vendor can help your sales efforts with the contact, and also notice any red flags for avoiding a non-paying client.
  2. Ask about their payment intentions early, at the same time the client asks about pricing and TAT. You can even imply that your turnaround time is faster for clients who pay quicker. What are they predicting for their payables time? At this point in the conversation they will be likely to offer a really optimistic payment schedule in order to get your best price.
  3. Ask for a copy of their E&O, licensing, and/or title underwriter documentation. Companies with these credentials are end-user clients and helps you avoid dealing with brokers who may have less working capital to carry them through cash flow needs. This will also help ensure that the client at least has primary coverage so that in the event they make an error in using your title research it will be less likely for the abstractor to have liability.
  4. Obtain their corporation filing and the names of principals. Cross reference the corporate officers and company name to see if there are other firms which have been used in the past to avoid paying vendors. Look to see how long the company has been established. It should be easy for you to look this info up based on what we do everyday for a living!
  5. Establish a firm payment schedule. Right from the beginning, have the client agree to a payment date. “Upon delivery” or 20 days is best, and avoid anything longer than 30 days. Most clients intend to pay their bills, but when money stays in their pocket for more than a month, it is tempting for them to start thinking about it as theirs. It is a subtle psychological mental shift, but it does happen. Once you and the client have agreed on a time for payment. Ask, the following question: “Can I count on you for that?”
  6. Get a clear understanding of how payments are processed. Know the mechanics of their internal system. Who gets the invoice? Who approves it? Who writes the check? How is it sent? How does each person pass the information along to the next? Get the contact names, titles, phone numbers and emails for each of these steps. Draw yourself a flowchart or organizational chart to keep in that clients records. By visualizing each of these the abstractor can verify “stories” offered later when a check is late. Plus you will have multiple contact people to contact besides the vendor manager.
  7. Never accept orders for payment based on “when the deal closes.” A company who wants to pay when they get their money from closing is either not operating with enough working capital, or wants to use you for free financing. It also puts you at the risk of how well they manage clients and deals, and you have no idea how good they are at that.
  8. Keep in close contact with the client about TAT of the order, and of the payment. During the search process keep the client in contact with regular status updates on the search. It demonstrates you are professional and have expectations of professionalism. Then when it comes time for payment check in with them to make sure your check is in the pipeline the way it should be according to what they promised. This way you’ll know way in advance if there is a problem.
  9. Offer ACH transfer. A method for the client to pay you with the press of a button eliminates many moving parts and human labor intervention to the system. An automated payment is a good payment.
  10. Get agreement in writing. Once you have established the terms upon which you and the client will be doing business, formalize it in writing. It does not have to be a lengthy contract, a simple document laying out the details is better than just a verbal handshake. It yay help you if you need to go to…..
  11. File small claims lawsuit. If a client does not pay, take legal action. File a suit in their home county even if you are located elsewhere. Most companies do not want the public record of a judgment on their history to discourage future clients or vendors.
  12. Don’t throw good money after bad. Once you have determined that a customer is not acting as they agreed, don’t keep doing more searches just to get paid on old ones. If a client says “if you shut us off you will not get paid on the old ones” that indicates very bad faith intentions. Would you take them on as a new client at that point?

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David Pelligrinelli is founder and President of AFX. The companies are involved in title research, legal investigations, and marketing research. AFX is a licensed investigative agency in multiple states.

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PRIA Land Summit

On Wednesday February 29th, 2012 the Property Records Industry Association (PRIA) held a Land Records Summit as part of their Winter Symposium. Held in Washington D.C.,

Visiting the US Treasury while in Washington DC

the summit featured a group of panelists representing the major interests in the public records industry. The intention was to begin a conversation about the future of property records and what developments would serve the needs of interested parties. Industry leaders from the following companies and agencies served on the panel:

 

 

 American Land Title Association (ALTA)
 American Escrow Association (AEA)
 Department of Justice Financial Crimes Unit
(FBI)
 Fannie Mae
 International Association of Clerks, Recorders,
Election Officials and Treasurers (IACREOT)
 Internal Revenue Service (IRS)
 Interthinx
 Mortgage Bankers Association
 Mortgage Electronic Registration System
(MERS)
 Mortgage Industry Standards Maintenance
Organization (MISMO)
 National Public Records Research Association
 National Association of County Recorders,
Election Officials and Clerks (NACRC)
 National Association of Independent Land
Title Agents (NAILTA)
 National Lien Registry
 National Notary Association
 Pennsylvania Association of Notaries (PAN)
 Property Records Industry Association (PRIA)
 Real Estate Standards Organization (RESO)
 ULC – Real Property Law
 USFN (Mortgage Banking Attorneys

NALTEA was represented on the panel by Dave Pelligrinelli. In addition, approximately
 200 were in attendance as audience participants, many from county recorders offices across the country.

The panel discussion covered a number of important topics including MERS and the nominee trustee system, erecordings, nationl lien registries, and notarial processes. Here are a few takeaway points and quotes from the discussion:

Charles Proctor from NAILTA praised the NCA testing program, and suggested that title abstractors be a more uniformly trained and certified profession.

Jason Newport from the FBI made note that the Bureau is currently working on over 2600  mortgage fraud cases, with about 70% of that total being cases over $1,000,000 each.

Scott Lindsey from the IRS disclosed that while many government agencies would benefit from a national lien registry, budget realities are keeping that idea from progressing. He also noted that FTL recording accuracy are greatly improved thanks to a system of matching lien documents to taxpayer records.

Two representatives from notary industry trade groups both agreed that more stringent education and testing is needed in many states for certification as a notary.

Law Professor Dale Whitman pointed out that while there has been wide criticism of the MERS registration database as an obstacle to determine the owner of a mortgage, he urges abstractors to remember that the country records system itself has never been a reliable way to determine the owner. In past decades banks often kept a contingent assignment in their files for use when a mortgage was to be foreclosed or released.

Peter Rabley provided information on how his firm (Thompson Reuters) and other tech companies have created and established complete national electronic land records systems from scratch in many countries. He pointed out that the biggest obstacle is not that it could be done of that it would be useful, but that the 3600 counties in the US are not currently on a standardized system of records and laws.

Bill Beckmann from MERS explained some of the inner workings of the system, and dispelled many misconceptions of what MERS does and does not do. Regardless of past problems, he handled some very direct, pointed, and often hostile questions from the audience.

This event was a milestone in the process of resolving conflicts of various interests regarding land records. The mortgage industry, real estate sales, search and insurance, as well as government agencies all have needs for and from the public land records system. Mark Monacelli and Kay Wrucke of PRIA have made great efforts to get these various interests on the table so that a mutually valuable system can eveolve over time.

While there is still currently great disagreement in what “should” happen with the future of land records, most of the experts agreed that:

  • E-recordings and electronic records will become more mainstream in the next 3 – 6 years
  • No national land records system will develop for at least a decade
  • The current system needs changes to meet the current environment of technology, and securitization.

NALTEA members should note that no matter what the format of land records will be, that  the value added by professional title abstractors is not “getting” the records, but it is in the analysis and interpretation of them. The need for highly skilled and certified abstractors continues. My presentation to the panel was that NALTEA wished to support a solutioin to the land records systems in the US which will allow for abstractors to provide search reports to clients will will document title status to a definitive degree. The records should be robust enough to be usable by clients, and eliminate ambiguity for end-users and liability for the searcher. Secure property ownership in the US depends upon this being able to be accomplished.

I stopped by the White House while in Washington, I could not get in for dinner though!

If any member has specific questions or would like more details from the PRIA Land Summit, please feel free to contact me at 706-867-6794 ext. 100.

– Dave Pelligrinelli

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FL county files class action lawsuit against MERS

Duval County Clerk of Court Jim Fuller is seeking class-action status in a lawsuit filed Oct. 31 against Mortgage Electronic Registration Systems, or MERS, which he said operates an “unlawful scheme.”

MERS could face other challenges from both the consumer and investment relationships with their business.

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Thanks Pat Scott

Many thanks to Pat Scott for leading NALTEA as President since 2008. Pat was instrumental in advancing the role of the association in the title industry. Under his watch, the NALTEA certified abstractor program developed into a more well known credential, with inquires from several LTA’s to use as a model for their program.

He was instrumental in the release of several position papers promoting the view point of NALTEA in areas of offshore searching, electronic records, and the MERS / nominee trustee sytem.

Pat is currently the sales and marketing director at O’Connor Title, where he has been a valued executive for 15 years. His 20+ career in the title industry has spanned title abstracting, escrow, and title examinations.

Directed by Pat, the NALTEA monthly board meetings were efficient and productive. Past and present board members thank Pat for his excellent leadership over the past 4 years. He was on the board of directors for NALTEA since 2006, and will remain as an integral part of the membership committee. You might also see him out on the lake catching walleye.

NALTEA is certainly a better association due to the efforts of Pat over the past few years.

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2010 NALTEA Conference, Dallas TX

On October 22nd the National Association of Land Title Examiners and Abstractors kicked off its 8th national conference.  NALTEA members from around the country converged at

Wanda Steudel & Quanah Rhodes

the Crowne Plaza in Dallas TX for two days of education, certification classes, future planning, and networking. After a cocktail reception for members on Friday evening, President Pat Scott officially started the conference on Saturday morning with his opening remarks, and then conducting the business of the treasurers report presented by Wanda Steudel, and committee reports.

With official business out of the way, the informative line up of expert speakers began with David Pelligrinelli offering an almost two-hour presentation about non-traditional title

David Pelligrinelli

searching. The seminar included discussion of ten practice areas including mineral rights searching, cell tower searches, environmental liens projects, and wind/solar farm projects. He demonstrated tips on performing these advanced searches, as well as ideas for developing a client base and pricing. According to Pelligrinelli, seasoned and experienced abstractors will see increasing opportunities in these areas. “Experts such as NALTEA members and certified abstractors are in a position to be in high demand for these underserved markets, as clients have trouble finding qualified searchers,” he said. After a members lunch where there was great food and productive conversation, Quanah Rhodes trained the members going for their NALTEA Certified Abstractor designation.

Quanah Rhodes certification instruction

At the same time other members participated in a roundtable discussion about the nature and future of title searching. The event was so well attended that two separate discussion needed to be arranged. Pat Scott led a discussion on the challenges and opportunities in the future for abstractors, while Joel Kissell presented ideas for independent abstractors to use technology to further their business.

In the next discussion, Christie Phillips talked more about non-traditional searches and

NALTEA Conference Presentation

offered her own personal experiences working in this area of business, and her dealing with many customers for these types of searches. To finish out the day, NALTEA planning and events committee chair Ed Gunther arranged for members to hear from the Dallas County Recorder John Warren, who spoke to NALTEA members with information from the inside of a records office. They heard fascinating insight regarding the technology involved, and how the county protects its residents from identity theft. Mr. Warren was impressed enough with the association to stay around and speak with members informally for a while after his talk.

Frank Navarro, John Warren, Ed Gunther

On Saturday evening, members were treated to an unscheduled night out to dinner at

Surprise for Patricia Roberts Birthday

Cantina Laredo. In addition to an excellent evening of socializing with fellow members, the attendees heard the baritone tunes of Board Member Ed Gunther, who entertained the group. The group also surprised Patricia Roberts by celebrating her birthday.  On the final day, attendees held their annual election of board members, where Ed Gunther and David Pelligrinelli were both re-elected. This was followed by a town hall style meeting where Jill Kissell engaged the group in a conversation about how NALTEA can best help its members in the future. “This is your association.  We can only be as good as our members.  Where do you want to see this association go?  What do you want your Board to do for you in the coming year?” she asked. As part of the discussion Vice President Doug Gallant offered suggestions about member benefits.

Jill Kissell (center) leads town hall discussion

Title insurance expert Bob Philo made the final speaking presentation. He spoke to

Bob Philo & his crystal ball

members about what abstractors can see in the future for opportunities and keys to success. His “crystal ball” revealed good fortune in areas of non-traditional searching, and also in providing expert witness testimony for clients.  After having the audience raise their right hands and be sworn in, he declared “you are all now experts,” and sent the crowd out to be successful.

At the conclusion of the event, the

Stephanie Haley NCA receiving her certificate from Debi Merrill

directors along with Secretary Tamikio Veasely conducted their monthly board meeting, and Education Committee chair Debi Merrill presented Stephanie Haley with her NCA certificate after she passed her certification exam.

Attendees came away with a great deal of knowledge and ideas for future success. Carol Walker, who attended from Arizona said that she thinks “it is always good for us to get together with fellow abstractors to see what is going on in other parts of the country.” As the Board of Directors begin planning the next annual conference, they look to the success of the 2010 conference and the direction of Planning & Events Committee chair Ed Gunther. At the end of the conference he had this to say about those who came to Dallas; “I want to thank all of our speakers – they did a great job! I’m sure every attendee was able to take home a good idea or two from each of the presentations.”

Additional pictures are posted below, and readers can view more pictures from the event on the NALTEA Facebook page, from this link.

“A great mix of people.  A good group to spend time with.”–  Jill Kissell

“I’d like to thank all of our presenters and members who worked so hard to make this conference such a successful and memorable event.  I’m already looking forward to NALTEA 2011.” – PAT Scott, NALTEA President

Debi Merrill

Doug Gallant & Tamikio Veasely

Eddie Carrillo, Wanda Steudel

Christie Phillips and Sandy Bevens

Patricia Roberts and Rob Gallant

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