In July, we discussed the importance of carefully reviewing the Articles of Incorporation (Articles of Incorporation: Not Just for Name Verification), in order to verify an entity’s legal name and to verify jurisdiction. Did you know, it’s also important to monitor an entity’s standing with the Secretary of State and that an entity’s status is listed on the Articles of Incorporation? Today we take a few moments to hear a client’s perspective on the importance of knowing whether or not an entity is in good standing with the state, and how it could save your company thousands.
“Our company truly appreciates the state corporate name monitoring service and has found that it adds significant value. The customer business standing with each State is one early red flag signaling that something could go wrong with collecting accounts receivable.Using the service NCS has been providing, our company has already identified two accounts with open credit limits which could have resulted in material losses:
- Account One: $100,000 open credit limit and open accounts receivable. NCS identified the account as inactive with the State. Subsequent conference calls with the CFO of our customer found that the customer was “very close to running out of cash and it is unlikely to be funded further by outside investors” Given such dire status provided verbally as well as the State standing, we reduced the limit to $0.
- Account Two: $250,000 open credit limit. NCS identified the account as inactive with the State. We had no open exposure and decided to reduce the limit to $0 until the business returns to active status or until a sufficient explanation can be provided. As a general rule, we do not do business with companies that are inactive with the State without sufficient explanation and understanding.With both cases above, the existing credit reporting companies we have contracts with provided no alerts and the credit reports provided did not reflect inactive standing with the State. NCS is truly providing a niche service and we really appreciate your help in getting this project underway.”