The Enclosed Agreement With Your Check Made Payable To: Fill & Download for Free

Reliant is a loose, subjective term in this context. I may have an answer. First, though, a story.Many years ago, I had one of my best pals, William (Billy), ask me for a $3,000 loan. I was a 23-yr-old bartender who, after starting my job spillin’ cocktails at 19 (drinking age in my state at that time) began diligently saved my tips, while living a rather frugal lifestyle. In fact, the first hint of anyone - my parents included - getting wind of just how much money I had tucked under my pillow came when I bought the bar I worked at for a fire sale price of $40,000 cash, from a desperate owner who was severely addicted to cocaine, and his all consuming addiction forced him to liquidate the last shirt on his back, his uber hip bar & grill that anchored the epicenter of the popular art district.Suddenly this college dropout who some, I imagine, had written off as a Shakespearean tradgedy that peaked in high school, took on a rather unsavory role in his still tight knit core of high school friends.Banker. Or, I suppose to some, Santa Clause.My buddy asked for $3,000 and, based on his hyper kinetic rush to explain, he had to have it, like, yesterday.I didn’t ask why he needed it, and why people need money I choose to lend is something I never consider. They ask, I decide. It’s that simple. Motive isn’t my concern and I don’t want to be drawn in on someone’s personal stuff anyway. The less I know, the better.So I gave my friend the $3,000 as a loan. He offered to sign a contract, and I politely refused and, instead, suggested a handshake & mutually principled understanding that the money would be paid back. In fact, when he initially asked me to, “float me the money and I’ll pay you back next Friday when I get paid”, I told him I didn’t want him to feel any pressure by paying me back six days later. We were the same age and the year was 1989, so 3k was worth a whole lot more than todays USD, when adjusted for inflation. Also, he was a laborer (roofer) who was paid cash (on the DL) once a month by a contractor, and I knew that there was no way he could swing paying me nearly an entire months pay without being in financial peril again a short time later.We came to an agreement. I would lend him $3,000 that day, and he would pay me $100 next Friday, followed by payments terms of “30/60/90” days, in equal sum, until the loan was repaid in full.Next Friday arrived and my buddy showed up at my bar, as he did about three times a week, flashed me a huge grin and peeled a fresh C-pape on the bar. All was good.Or so I thought.A couple weeks after Billy borrowed money from me, he abruptly stopped coming in to the bar. I wasn’t overly concerned, however found it odd because he had a running tab he would pay monthly (always on time) and it always came with a strong pour and a few free rounds. And remember, this bar was the absolute shit. Socially, to be you had to be seen and, well, this was the place it all happened.A month came and no sign of Billy. Weird. Now I’m concerned. Not about the money, mind you. Only about the welfare of my pal. I called him. I called him again. Then again and, well, you know, etc…..Billy ghosted me. Imagine, if you will. It’s 1989. No mobile phones, and pagers weren’t yet ubiquitous. The only thing I could rely on was an answering machine. I left Billy about a dozen messages. None of them made mention of the money he owed me. They all voiced concern over whether or not he was okay. Nothing. No call back.Ugh.I stopped calling. I heard from other friends that Billy was fine. One guy told me he up and moved to Mexico. That was a lie.Six months pass and Billy had been reduced to a footnote of scorn in my memory. It was late Friday afternoon. I was setting up my bar and briefing the staff on happy hour specials when I turned to look and, gasp, there was Billy.W.T.F.(?!?!?!)I said hello and remained calm. He began barfing out a bunch of lame excuses as to why he hasn’t been around or called. I just smiled and nodded.Then, the best part. Billy asked me for more money.I was quietly aghast and in utter shock. Billy was so, so sorry he hadn’t yet paid me back. He needed $2,400 or else he was “gonna be killed”.This is the time to ask about motive. I excused myself to the staff and brought Billy back to my office.I told Billy I would help him, however only if he told me everything that’s been going on with him and why his life was in peril.Turned out Billy was in deep with a sports bookie, and I wasn’t the only guy he owed money to.I gave Billy the additional $2,400 on three simple conditions. First, I made clear to him that this was not to be considered a loan. It was a gift. In addition, I told him I was forgiving the $3,000 initial loan and his plate was cleared of me.The other conditions, though, were that I wouldn’t help him unless he allowed me to speak with his bookie to talk about his debt, and before I did he would enter an inpatient institution for gambling abuse treatment. Billy began to cry profusely. Sobbing, he softly mumbled, “goddamnit, please help me”.Two days later Billy was in treatment. I called “Wayne”, the bookie, and told him who I was and why I was calling. He was actually a pretty cool guy. He told me Billy owed him $18,600. After some heady negotiating, I convinced Wayne to take all of something or none of everything.Wayne settled for $5,000 to clear Billy’s name and get him off the books. I paid the money and got on with my life.Billy called me after completing treatment and we stayed close for a few more years. He changed for the better and I had every reason to believe he was on the straight.And he was. Boy, oh boy he was.In 1998 my bar closed. My lease had expired and the building I was housed in was zoned to be torn down to - get this - build a parking garage.The city razed paradise and put up a parking lot. Go figure.Spring of 2000 came and I hadn’t spoken with Billy for several years. I had moved to the west coast and lost touch with most of my childhood brood. One day I got a call from my mother telling me that Billy had stopped by to say hello to them (they still had the house I was raised in) and he left an envelope for me. She said she’d forward it to me.About a week passed and I received a letter from my mom. Inside her letter was a small envelope that contained a Thank You card from Billy. A simple, heartfelt scribe.Dear Ch***,It was wrong for me to lie to you and take your money to gamble with. I’m truly sorry.Thank you for changing my fate. I will never forget it was you who saved my life. No amount of money could buy the love you gave me. Please accept this payment as repayment of my debt, with interest I feel is only fair.I love you, friend.BillyEnclosed was a check made payable to me in the amount of $100,000.Billy was co-founder of an internet hardware company that developed technology to increase broadband capacity and speed. He may have lost at the sports book, but he won at the biggest roulette wheel in the world. Wall Street.So, to your question. How do you help a friend? Simple. My suggestion is to give what you can, when you can, with zero expectations of ever getting your money back.All the best.

It’s important for home buyers to understand that a mortgage commitment letter in NYC does not guarantee that the bank will fund your loan.As you will see from the NYC mortgage commitment letter sample below, there are many contingencies in place for the bank to revoke its loan commitment to you. If you’re about to submit an offer and deciding whether to waive the mortgage contingency, it’s important to understand what a mortgage commitment letter entails and how much assurance a loan commitment offers you in the first place.What does a NYC mortgage commitment letter sample look like?This is an example of a standard mortgage loan commitment letter that would be issued to a New York City condo or co-op apartment buyer. There are additional sections in this NYC mortgage commitment letter sample you should review such as Commitment Conditions.MORTGAGE LOAN COMMITMENTBorrower Name(s):Borrower Mailing Address:Lender:Property Address:Type of Property: [Condo, Co-op, etc.]Commitment Expiration Date:Date:It is a pleasure to notify you that your application for a mortgage loan has been approved subject to the following matters set forth below and on pages 2 and 3.INSTRUCTIONSPlease sign, date and return Lender’s copy of this Commitment, along with any required fees and items requested, to the Lender at the following address, within 15 days of the date hereof, or at the option of Lender, this Commitment shall become null and void. Should you have any questions, please contact:This approval is not a final commitment. Due to the fact that interest rates are subject to change without notice, your approved payment and loan amount may change if interest rates increase or decrease.EFFECTIVE DATE AND COMMITMENT FEEThis commitment will become effective upon compliance with the terms herein and, if applicable, the receipt of your check in the amount of any non-refundable commitment fee (“stand-by fee”). It is understood and agreed that if this mortgage loan is not settled in accordance with the terms and conditions of this commitment, the Lender shall retain this fee as earned charges for the origination and approval of this loan.AMOUNTS, TERMS AND FEESAmount of Loan $[Amount]Initial (Contract) Interest Rate [Rate]%Loan Term [Number] monthsAmortization TypeBalloon Term (if applicable) [X] monthsLoan TypeLien Position 1st LienPAYMENT (P&I)Your initial interest only principal and interest (P&I) amount is $[Amount]. This amount does not include any escrowed amounts and may change if there is a change in loan terms.ESCROW[ X ] An Escrow Account is not required.[ ] An Escrow Account is required.Even if an Escrow (Impound) Account is not required at time of settlement, subject to the terms of your specific loan documents, the Lender may set up and require an Account should the taxes or insurance on the subject property ever become delinquent.EVIDENCE OF TITLEThe Evidence of Title is to be provided to the Lender and must indicate no liens, encumbrances, or any adverse covenants or conditions to title unless approved by Lender. The Evidence of Title must be issued from a firm or source, and in a form, acceptable to Lender. Borrower will be charged for the cost of providing such title and the cost of recording documents, all of which will be ordered by Lender unless requested otherwise.CANCELLATIONThe Lender reserves the right to terminate this commitment prior to the settlement of the loan in the event of an adverse change in your personal or financial status, or if the improvements on the property are damaged by fire or other casualty.REQUIRED ITEMS OR CONDITIONSAll Items Listed on the Commitment Conditions Addendum Apply.THE FOLLOWING CONDITIONS MAY APPLY TO YOUR LOAN DEPENDING ON THE LOAN TYPE AND TERMS.BALLOON MATURITYA balloon loan matures before the loan is fully amortized. The balance of the loan will be due in a lump sum payment at maturity.FIRE AND EXTENDED COVERAGE INSURANCEPrior to settlement, we will require an original insurance policy and/or binder containing fire and extended coverage (i.e., windstorm, hurricane, hail damages, or any other perils that are normally included under an extended coverage endorsement) insurance in an amount equal to the lesser of 100% of the insurable value of the improvements, or the unpaid principal balance of the mortgage as long as it equals the minimum amount (80% of the insurable value of improvements) required to compensate for damage or loss on a replacement cost basis through a company acceptable to the Lender, and a receipt showing premiums paid in advance for one year. The insurance policy shall also contain a standard mortgage clause in favor of Lender. We cannot require you to obtain a policy which exceeds the guaranteed replacement cost of the improvements securing the loan.If the property is new construction and you are not able to occupy the property immediately after closing, you will be required to furnish an original fire/hazard insurance policy or binder, including a Builder’s Risk Rider. If this is a renovation of an existing dwelling that will remain occupied, a Builder’s Risk Rider is not necessary.GOVERNMENT INSURED LOANSLoan Commitments issued for these types of mortgage loans, including, but not limited to FmHA, RHS, FHA, and VA, are subject to all the terms and conditions of the Agency’s commitment, or the VA certificate of reasonable value, as well as the rules, and regulations, and all applicable requirements of the Farmers Home Administration, Rural Housing Service, Department of Housing and Urban Development, the Department of Veterans Affairs, and/or other state or municipal authority.FLOOD INSURANCEBy signing and accepting this commitment, you acknowledge that if the property securing this loan is in an area identified as having a special flood hazard you agree to these insurance requirements.Our policy, in order to best protect collateral interest, is to adhere to the more common industry practice of requiring flood coverage for the lesser of: the full 100% Replacement Cost Value or the maximum amount of insurance available under NFIP for the particular type of building; currently $250,000 per residential dwelling/condominium unit. A copy of the declaration page or application signed by the agent, along with proof premium has been paid, is required prior to closing.Flood insurance is mandatory now or in the future if this property has been or will be determined to be in an area which has a special flood hazard. Federal Law requires that flood insurance, available through any agent, must cover the lowest of: the outstanding principal balance of the loan[s]; the maximum amount of coverage allowed for the type of building under NFIP or the full replacement cost value of the building or contents securing the loan.TAX AND INSURANCE PAYMENTSMonthly deposits and initial deposits as determined by Lender are required to cover the payment of estimated annual real estate taxes, special assessments and, if applicable, FHA or Private Mortgage Insurance Premiums. Lender may also require additional deposits for hazard or other insurance if required for this loan. Such deposits are to be placed in a separate escrow or impound account.SPECIAL ASSESSMENTSIf required, all unpaid and future special assessment installments must be paid in full prior to, or at time of settlement.DOCUMENTATIONThe mortgage or deed of trust, note and other pertinent loan documents will be provided by Lender and must be signed by all applicants that are to be contractually liable under this obligation. Further, the mortgage or deed of trust must be signed by any non-applicant spouses if their signature is required under state law to create a valid lien, pass clear title, or waive unclear rights to property. Note: Samples of loan documents are available upon request.ADDITIONAL CONDITIONS FOR CONSTRUCTION LOANS.CONSTRUCTION LOANS: ONE PAYOUT AND MULTIPLE PAYOUTImprovements are to be built in a good and workman-like manner in strict accordance with plans and specifications furnished Lender and in compliance with applicable building codes. After completion, said improvements shall be approved by a representative of Lender and an occupancy permit shall be issued by local municipality. Any changes, whether they be additions, deletions, or alterations, of the plans and specifications, must be approved in writing by Lender in order that this loan commitment remain in effect.CONSTRUCTION LOANS: MULTIPLE PAYOUTEvidence must be submitted that the net proceeds of our loan are sufficient to complete the construction of the building, free and clear of all claims of Mechanic’s Liens for labor and material. All disbursements will be made upon the order of the borrower upon presentment of proper waivers of lien, subject to compliance inspections by the Department of Veterans Affairs, the Federal Housing Administration, or Lender, not to exceed 80% of the value of the work done. The remaining funds will be held back until the certificate of completion and/or occupancy certificate is issued.I (WE) accept the terms and Conditions of this Commitment and will notify Lender if there are any changes to the information provided on the application before the closing of the loan.Borrower DateCOMMITMENT ISSUED ON BEHALF OF LENDER BY:Take special note of the cancellation clause listed above. If you lose your job or suffer some other financial setback, the bank will have cause to terminate your loan commitment!What are some typical commitment conditions in a NYC mortgage commitment letter sample?This is an example of a some typical commitment conditions in a NYC mortgage commitment letter sample. Note the long check-list of tasks that must be completed in order for the lender’s commitment to be valid.COMMITMENT CONDITIONS(Attachment to Mortgage Loan Commitment)Borrower: The Closing Disclosure will be provided to you in advance of your closing indicating your loan terms and is followed by a government mandated waiting period before the actual closing occurs. Receipt of the Closing Disclosure does not indicate all loan conditions have been satisfied which must occur prior to closing. Changes of any kind that occur after the final Closing Disclosure has been delivered to you may result in an additional waiting period prior to closing.Borrower: This loan is also subject to all other lender specified conditions and must comply with all applicable federal, state, and local laws and regulations.Lender: Verification from the Lender’s Closing Agent / Attorney that a Recognition Agreement has been executed by the the Cooperative Board and received by the Closing Agent/AttorneyLender: Title to have Recorded UCC1 lien search at time of closingLender: Recognition agreements and stock certificate required at time of closingLender: This loan is approved for a maximum interest rate of — [ ]% (qualifying pmt)Lender: If the loan does not close by the expiration date of the credit documents which includes verification of employment, assets and credit, re-verification will be required. To avoid re-verification the loan must close by: [Date] (rate)Lender: Obtain a completed and signed Form 4506-T (written permission to request tax returns from the IRS) for all borrowers at and before closing. — ** rcvd prior to closing **Lender: Closing agent to verify borrower(s) identityLender: Fully executed and signed Social Security Administration release (form OMB #0960–0760)Lender: Loan was approved based on the following parameters: Debt to Income Ratio not to exceed [ ]%; Total Reserves required for Transaction are $[Amount] or 12mos (subject to change) plus closing cost & prepays of $[Amount] (subject to change). Required Liquid Funds for transaction can be no less than $[Amount]. If any of these parameters change, as required by product guidelines, the loan will be subject to re-underwriting.Lender: If the loan does not close by the expiration date of the following documents, re-verification will be required:Appraisal: [Date] Verbal VOE: [Date] Rate: [Date] Lien Search: [Date] Co-Op Approval: [Date]Lender: No subordinate financing allowedLender: Seller paid closing cost may not exceed actual costs, the maximum amount that can be paid is — $[Amount]Lender: No cash out to borrower(s) at closingNote that this hypothetical lender does not allow any subordinate financing. That means you won’t be able to take out a 2nd lien home equity line of credit at a later time. Please also note that if your purchase doesn’t close in time, the lender may need to re-do the underwriting process.Sample Mortgage Commitment Letter InstructionsCONGRATULATIONS!Your application for a [Bank Name] Co-op Loan has just been approved. Enclosed you will find a commitment letter which provides you with specific details regarding your loan approval. We urge you to read it carefully as it contains important information on the financing terms and the documentation that is required in order to close your loan.WHAT ARE THE NEXT STEPS?You must sign the commitment and return it to us within ten (10) days of the commitment or before the expiration date, whichever is sooner with any fees specified. Please note that this commitment letter contains two critical dates. If you elected to lock in your interest rate and points there is a rate expiration date. If you do not close your loan on or before the rate expiration date, the terms and conditions will change.In addition, there is credit document expiration date. If you do not close your loan on before this date you will need to satisfactorily update certain credit documents in order for the terms and conditions of this commitment letter to apply. If your rate and points have not been locked, the rate expiration date will be established once you elect to lock in your rate. You must lock in your rate at least five business days prior to loan closing.Please read the commitment letter and riders carefully, as they contain conditions that must be satisfied prior to your loan closing. It is incumbent upon you to make sure that we are in receipt of all items listed. These items must be reviewed and approved at least three (3) days prior to loan closing. Again we must emphasize that you cannot close your loan unless all these items have been satisfied.We have notified the closing attorney for [Bank Name] of this loan transaction.Arrangement and instructions for closing your loan should be obtained by contacting the [Bank Name] attorney named in your commitment letter. A loan closing can be scheduled shortly after all necessary documents have been received by [Bank Name].The [Bank Name] attorney will be able to provide you with specific information regarding the following:-Closing Date-Closing Location-Prepaid Interest and Escrow Funds-Co-op Lien Search Requirements-Survey Coverage Requirements-Insurance Requirements (Hazard/Flood/Condominium/Co-op)We encourage you to have your attorney contact the [Bank Name] closing attorney to review the requirements. This should help to ensure that your closing goes smoothly.Thank you for choosing [Bank Name] for your financing needs. We are delighted to have you as a client.What are sample closing conditions in NYC?Dear [Borrower],We have received today from [Bank Name] a copy of a commitment letter for a co-op loan and will represent [Bank Name] at the closing. Please be advised that we cannot schedule a closing unless we receive confirmation that the conditions required by [Bank Name], prior to closing, have been satisfied and the conditions required at closing will be obtainable and brought to the loan closing.Enclosed with this letter you will find three copies of Recognition Agreements. The Recognition Agreement must be delivered to and executed by an Officer of the Cooperative Corporation. The fully executed Recognition Agreement must be delivered to our office prior to loan closing or it must be brought to loan closing. We will be unable to close a co-op loan without the original executed Recognition Agreement with the corporate seal.Enclosed with this letter you will find a Uniform Commercial Code Authorization Form. This document must be signed by each person who will be on title and promptly returned to our office. This document is necessary for [Bank Name], to obtain a security interest in the cooperative. Upon our receipt and/or confirmation of certain information i.e. section/block/lot numbers of the building same will be inserted in the financing statement prior to filing. Please be sure to note that the executed Uniform Commercial Code Authorization Form and the check required by paragraph 3 below must be remitted to our attention at the time you accept your commitment letter to a assure a timely closing.To ensure that [Bank Name] has a proper security interest, a Cooperative search of the appropriate records will be conducted solely for [Bank Name]’s benefit. The search will be ordered by our firm and will be reviewed and approved by our office prior to loan closing. Payment of the lien search must be remitted to our office at the time you send back the UCC-1 Authorization form. The cost of the search is $275.00 and the filing fee for the UCC-1 is $100.00. Please remit a check for $375.00 made payable to [Name] for the lien search and the recording of the financing statement.Unless paid prior to loan closing, all charges and fees due to [Bank Name] must be paid from the loan proceeds. If you call our office the day before loan closing, we will advise you of the exact amount being deducted from loan proceeds.The commitment letter has two expiration dates; one is the Commitment Expiration and one is the Rate Lock Expiration. The loan must close and funds must be disbursed on or before the earlier of the Commitment Expiration or the Lock-In Expiration. In the event the loan is a refinance transaction and it is subject to the required three (3) business-day right of recission it must close four (4) business days prior to the expiration of any applicable rate lock agreement.Please note that a closing cannot be scheduled until the following items have been completed:– We have been advised by [Bank Name] that all commitment conditions have been satisfied.– The U.C.C. -1 financing statement has been filed.– The co-op search has been reviewed and approved– We have a copy of the proposed Stock Certificate and the first page of the Proprietary Lease. At closing, the original Stock Certificate and Proprietary Lease must be delivered to [Bank Name] Closing Attorney.– We must be in receipt prior to or at loan closing of a blanket insurance policy for the co-op evidencing sufficient dwelling coverage.[Bank Name] requires at least two (2) business days to schedule a loan closing.We are committed to providing you with the highest level of customer service. If you should have any questions please feel free to call us at [Phone Number].Content courtesy of https://www.hauseit.com/nyc-mortgage-commitment-letter-sample/Disclosure: Hauseit and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

You still consider this to be the issuance of trade credit (or, setting up a trade account for a customer). But, I’ve been in a position in which this was done very informally, largely relying upon my experience, intuition, basic understanding of who a customer is, maybe some checking around, but sometimes — “just winging it”.In this example, I ran a concrete plant, but I was the CFO of the mother corporation as well, so I was well-acquainted with our capital structure, how our cash flows worked in theory and how I expected cash flows to work in the short-term at that particular moment. It’s a good position to be in if you both control the operations of a business (in this case, a subsidiary of a larger corporation) and you have unlimited access to the mother corporation’s and all other subsidiaries’ financials, so that you can take into account the big picture when you make the “just winging it” types of trade credit issuance decisions.Someone reading this would need to take it as a given that the operations manager/CFO knows how to read financial statements and to do pretty basic financial analyses, especially those related to Aging Accounts Payable and Receivable, and risk-reward and cost-benefit. Hidden within that assumption, again, is another assumption, which is that some qualified bookkeeper is keeping up with this transactional information so that the various financial statements you want are accessible to you in a timely fashion and that they have been created using accurate information.You also need good cooperation and frequent conversation with all managers that spend money and bring it in. As an example, your cash flow analysis doesn’t mean anything if, tomorrow, the mechanic goes and buys a five-figure ($) replacement engine for some truck, and you knew nothing about this, because the President of the corporation authorized that purchased, and it never went across your desk. — Big businesses surely have centralized purchasing departments, but small businesses may either lack them completely, or they may exist but just not work very efficiently.In this case, I was a person who could authorize large purchases, and that was twofold, because I could do so on behalf of the plant, for my own business needs, or for any other operations manager, in my role as CFO.Two other people, technically, had similar authority, but large purchases would need to be run by one of two people; of course, I was only one person. The other person was the President. — Almost by definition, the executive in control of everything could authorize anybody to do anything, so if he decided to purchase a fixed asset on a whim, without telling me first, then my cash flow analyses wouldn’t be worth anything.As an example, he might be on an online equipment auction and see something we needed (even that I needed for the plant!); it’d be selling for a good price, so he’d put in a bid, and when he won, he’d call me up and tell me how much money I needed to find and where to wire it to at the bank (and by what deadline). — While I might be happy that we were getting something new, or that some deferred repairs and maintenance was finally getting addressed, if he’d been unable or unwilling to tell me about the upcoming purchase first, my decision-making could’ve been off, then, when it made sense before.You probably should expect this type of thing to happen at smaller-sized businesses. — For what it’s worth, it’s not like my own decisions, as CFO, vis-a-vis when to pay bills, wouldn’t surprise, from time to time, the President that we had less cash on the books than he’d expected, so he’d need to orchestrate his crews to finish jobs so that he could collect money due to us, that way he could get done what he needed to get done going forward. My assistants would make lists, or I might email a memo over, but if he hadn’t looked at the bill lists (with due dates) on his desk, or read my cash flow memo, then they were worthless.Okay. So, on to the question of bizarre requests from customers. I wouldn’t consider these as bizarre, to me, but they would’ve been if I’d tried to do the same thing with my suppliers (in the beginning).Let’s just take concrete manufacturing, where your #1 component of cost of goods sold for concrete will be Portland cement.You can approach a supplier and say, “Hi. I’m XYZ Concrete. I need a load of cement. I’m willing to prepay for it, so just give me your wiring information, and the funds will leave our accounts today, and I’ll need that cement delivered two mornings from now.”No big deal, right — to the supplier? You’re offering to prepay for what you need, just like you would the milk and flour you need for a cake.Now, hopefully more realistically, you call the supplier up and say, “Hey, I’m Jared of XYZ Concrete. We’re a ready-mix concrete supplier in the ABC area, and we like your company, from what we’ve heard, so I need to set up a credit account.” — Immediately, you’re going to get a credit application sent over.You’ll have to fill out all of your identifying information; your tax resale number; your FEIN (Federal Employer Identification Number [think: Social Security Number for a business]); how many years you’ve been in business; how the company is structured (sole proprietorship, corporation, etc.); what your bank’s name is; what your banker’s name is, and his or her title with the bank; perhaps, a copy of a canceled check from that/those account(s); who will be authorized purchasers on this account; what your desired credit limit will be; and, usually, the last thing will be your option to sign a Personal Guaranty, which means — if the business goes belly up, you’ve just committed to paying these people for what the business bought — yourself.It would not be uncommon for some of these applications to require you to enclose your most recent financial statements, like Profit and Loss, Balance Sheet, etc. Tax returns. — While trade credit accounts do not charge you interest, or directly affect your credit score (if applicable), applying for them is very much like applying for a bank loan in most circumstances.So, quite a bit of stuff to collect and turn in; then, their credit department will do some due diligence on you, like making sure you have no obvious civil cases filed against you; verify your credit references; more stuff than I care to list here. — Then, you will get a letter approving or denying you, and if you’re approved, you’ll be told what your credit limit is.It would not be uncommon for a relatively small business to get approved to have $50,000 due to the cement corporation at any one time. — However, to have gotten that much of a credit limit, which probably is flexible if you keep in touch with your salesperson, you had to submit a lot of personal information. That information was checked, probably using LexisNexis (that’s what attorneys and collection agencies use to track you down!), and no doubt the credit references you listed were called.What I’ve encountered that’s bizarre is that, in the concrete manufacturing business, a man (usually, they’ve been men; no offense to anybody) walks into your office and sits down and says he wants a bid for, let’s say, $75,000 worth of concrete, and he’ll pay you what he owes you as soon as he gets paid. Then, he just leaves his specs with you and walks out. — You might only know him by his first name!First of all, what is different? → You, the supplier, are told the credit terms. You don’t run a detailed credit check. Yes, you probably send over to his office a sheet to be filled out which gets the identifying information, like where and how to send bills, but the buyer assumes that you will extend to him, for whatever period of time he needs (e.g., based on the weather; based on his customer’s and subcontractor’s schedules; based on when his customer pays him for his work), large sums of product on credit. That’s the same thing as large sums of money on credit.Surely, if you’re not doing this for practice and are in it to make a profit, the $75,000 you bill the customer will not represent $75,000 worth of expenses you currently bear, but it’s funny how that can be true, because what if the $75,000 part is just Phase I?Based on your performance in it, you might then get Phase II, which is $1MM ($1,000,000) in contract value. — In that case, you very much may find yourself having given out loans, effective in value, to $75,000 or more. Because work continues; orders keep coming in. But, no money is coming in. Payroll is still cash going out for you. Materials costs are still going out for you.Your suppliers and your employees and your bankers and your insurers — they all care!Does your customer care? — Not one bit.If you can make it to the end of the project, and your bids were good, then you should recover all of your cash-out, and the net results should be a profit for the corporation.It’s risky, though. — If this barge-in customer screws up whatever he is supposed to do to transform your product into what the ultimate end-user wants, he won’t get paid, and neither will you.During the first few years in that role, if I got solicited to bid on big projects like what I’ve been talking about, I just told them to call my competitor because we could not do the job. And, sometimes, the potential customer (you know, the voice on the phone) would get angry that we would not even give a bid.I knew that, in order to fulfill their wishes, I’d have to go to the bank and take out working capital loan that could only be collateralized using real property (i.e., land) and improvements in a commercial real estate portfolio that we kept separate from the construction business. — All of the financial analyses failed, so I turned them down.Over the years, I grew the plant’s operations and reformulated its capital structure, largely by entering into trade credit agreements and keeping good relationships with my salespeople (I mean, one woman — she knew my voice and I knew hers, and we didn’t have to introduce ourselves when a call was made; same went for our trucking contractor). Also, profits rose. By definition, profits have another name: “net cash inflows from operations/operational activities”. — Having those allowed me to take on more risk.Finance is the study of risk. A stock portfolio manager deals with money, but really he’s a risk mitigator. An insurance agent CSR deals with money, but really, they are insuring against risks. Bankers lend out money, but really, they are judging your riskiness and your risk ratio as a part of their larger at-risk portfolio.Money is, usually, at most peripheral to a financier’s primary function. — A financier’s primary function is to listen to details, hear the “goods” and the “bads”, and then to make a decision about whether taking on that risk is worth it based on the dynamic cash flow load expected for the short-term and in the interest of the continued growth of the enterprise while ensuring that it remains a going concern.All of that fancy stuff said, customers walking in and basically demanding free product for an indeterminate amount of time, interest-and-fee free, and the person acting on behalf of the business even entertaining that request is — well, bizarre.If you have the experience and intuition to make deals like that, though, they do end up being value-adds for the business and contributors to cash-in and profitability.I don’t remember, in business school, ever really being told that business transactions worked like that, or could work like that. If anything, it reminds me of options and futures, and stuff you deal with while warming your seat on Wall Street. Risk.That it works out, or can, in small business also comes off as a bit bizarre to me.