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15

Dec

2020

Purchase Money Security Interest Agreement Template

By Erik. Posted in Uncategorized | No Comments »

One thing to note is that customers who are not willing to accept a PMSI are often exactly the customers you are having trouble collecting in the future. The requirement of a PMSI therefore has the added benefit that a subjective decision becomes part of the objective criteria on which you make your initial loan decision. After sufficient time and successful cash receipts, you may find that a particular customer is strong enough financially to warrant a credit extension without a PMSI agreement. But above all, the best method to sell to marginally qualified customers, in accordance with the practices described in this article. For many years, I have recommended to clients (and many credit managers in speeches and articles) that they consider obtaining Money Purchase Security Interest (PMSI) in the products they sell to credit customers in order to more effectively facilitate a financial recovery in the event of non-payment. But too often, my experience was that sellers don`t buy valid PMSIs until it`s too late. Even in times of good economics, I often hear the same familiar excuses for inaction: that it`s “bad deal” or too many problems or too expensive. It is possible that your practice is already conducting UCC research before doing business with a new customer or before authorizing major sales transactions with an existing customer. In any case, you should conduct such research and if you learn that your client has already granted a general security interest for his equipment, inventory or assets in order to make your PMSI effective and to take precedence over competing security interests, you (1) you must improve your interest in security (by submitting a UCC-1 funding statement) before the debtor receives the goods or within 20 days.

, or (2) in the case of an inventory, you must (a) perfect the PMSI before the seller receives the merchandise and (b) if there is a contrary security interest; (i) you must also send a certified notification in accordance with the holder of the conflicting security interest; (ii) the holder of the conflicting securities interest must receive notification within five years before the debtor receives the inventory, and (iii) that you must purchase or wait for a PMSI in the inventory, and you must describe the stock.

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