CALIFORNIA INDEPENDENT OIL MARKETERS ASSOCIATION REGIONAL MEETING
ONTARIO HILTON HOTEL, ONTARIO, CALIFORNIA, NOVEMBER 18, 1993

Your risk usually lies with the small mom-and-pop customers, the small company, or the new companies. Unlike a larger company, they usually don’t have a line to serious credit. They use personal credit to start their business, take a mortgage on their home or use five different credit cards to finance their business. They don’t have a team of financial analysts to determine their strategy. How can your protect yourself? You can not sell to them. But 85% of businesses in the United States are classified as small businesses and you’re losing a lot if you don’t sell to them.

We classify a small business anything under $20 million annually.

It is estimated that 85% of all proprietors in America have a 0% to 15% chance of becoming seriously derogatory within one year. 12% have a 16-49% risk. 3% have a 50% to 100% chance. The status characteristics are: derogatory credit obligations, delinquent credit obligations, and credit obligations have a balance owing less than $20,000.

Red flag: have a number of different social security numbers. Sometimes it’s a typo but sometimes they use four or five different social security numbers to try and get rid of a bad credit rating.

Get a social security number from your companies because you’re probably doing a lot of business with S corporations.

People will do a lot to keep their personal credit clean. If they’re not keeping their personal credit clean, the odds are good it will carry over to their business. Many business owners take their credit cards, charge them to the limit to keep the business afloat and drag down their personal credit.