The aftermath of Sept. 11 may impact your credit decisions both directly and indirectly. The aftermath of Sept. 11 may become the common reason a credit executive hears for non-payment of an account.

How may you assess the post-Sept. 11 risk? With potential customers, and a public company, review the most recent quarterly report (10Q) or annual report (10K) filed with the Securities and Exchange Commission. What disclosures are made regarding the aftermath of Sept. 11. Has the potential customer identified risks, and do these risks affect the ability pay your extension of credit? 10Q and 10K disclosures should provide a sense of direct credit risk. Included in your analysis for the potential customer is indirect credit risk. Analyze whether the potential customer is in an industry susceptible to recent developments.

As to indirect credit risks, there may be a domestic credit crunch as an aftermath of Sept. 11 and banks balk at lending. A credit executive should be aware of this risk with a potential customer, as the credit executive does not want to see its goods foreclosed on by the customer's lender because financing is cut off. A credit professional may consider taking collateral, personal or corporate guarantees, letters of credit, to back up the immediate credit risk.

With existing customers and credit lines, consider classifying your customers with post Sept. 11 risk. Those classified with greater direct and indirect risk should be monitored closely in the coming months. Perhaps with some customers, consider taking collateral, personal or corporate guarantees, letters of credit, to back up the immediate credit risk.

With an applicant seeking credit from you, if it is a public company investigate whether the applicant has backup credit lines that can be tapped in the event of a disaster that allows it to access capital and continue to operate. A customer that has reserves to withstand a disaster may allow it meet its operating debt.

The credit professional should consider backup computers and telecommunication systems of the credit department to avoid the risk of loss of customer information in the event of a disaster.

In light of events, the credit department may wrestle with whether it should be centralized or decentralized, particularly if the location may pose a security threat.

Douglas G Fox, GSCFM, CCE is a member of Mid-Atlantic NACM and is active in the Greater Delaware Valley Region and Philadelphia area.

Scott E. Blakeley is a principal of Blakeley & Blakeley LLP where he practices creditors' rights and bankruptcy law. He can be reached at sblakeley@bandblaw.com