Joint Check Agreements.(credit management)(Brief Article)

A common credit management devise is the joint check agreement. This requires the consent of not only your customer but also your customer's buyer.

The most important thing to remember with a standard joint check agreement is that IT ONLY HELPS YOU IF A CHECK IS EVER WRITTEN. For example, you may supply materials to a construction subcontractor who has a joint check agreement with the general contractor. However, the general contractor may later assert back charges against the sub or claim that the subcontractor never completed its contract. If the general contractor is not obligated to pay the sub, the general contractor is also not obligated to write a check and the joint check agreement will do you no good.

A joint check agreement is not actually "security," and this difference can also be very important in the event of bankruptcy. For this reason, it may be worthwhile to reword the standard joint check agreements, as shown at the end of this article.

There are a couple of ways to avoid these problems. You would certainly prefer a guarantee from the general contractor. Here, the general contractor guarantees that you will be paid no matter what problems he has with your customer. This option should be remembered, although the word "guarantee" usually sends shivers up and down spines.

Another option is to request ...