Credit Control
Personal Guarantees
If you are not content about offering credit other than on a cash on delivery basis you may consider in respect of limited liability companies taking a personal guarantee from the company's directors who are often, in small companies, the main shareholders too. Obviously the company directors have to be willing to grant such a guarantee and, of course, a guarantee will only be as good as the director's ability to honour it. So in this situation you should satisfy yourself that the company director will be good for the sum guaranteed. You should establish whether any judgements have been registered against the director and whether or not he has any assets, in particular whether or not he owns his house and what, if any loans are secured over it. What you wish to avoid is having a worthless personal guarantee but adequate investigation should establish the wherewithal of the guarantor.
Such personal guarantees should be in writing, see third party guarantee.
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