The NACM also says a study by the National Bankruptcy Review Commission found that more than 90% of preference recoveries are not dedicated to satisfying the needs of unsecured creditors but instead go to funding recovery activities.
Of course, the best defense to the risk of being sued in a preference action is to keep customers on a regular payment schedule. "If a customer has been paying net 45 [days] on average and they start slowing down, you have to pull back on the reins and get them back into the 45-day area," says Schaeffer. "The finance department that is more alert to customers' financial problems and treats all customers the same reduces its exposure to [bankruptcy risks]."
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