It is a best practice to retain original documents signed by your customer. This would include the original credit agreement, signed purchase orders, signed delivery tickets, etc. Original documents are necessary tools for the courtroom lawyer if you need to sue to recover amounts owed to your company.
When a customer does not pay their bills, it could be because their company is going through hard times. This type of customer will generally work with you to come up with some sort of discount or payment plan to pay off the debt.
However, there is a category of business people who simply have a practice of not paying bills until they are forced to do so by the judicial system. If you are dealing with a customer like this, know that they are unlikely to cooperate if a commercial collection suit is brought against them. They will do what they can to slow or prevent your collection efforts. In some circles, such customers are referred to as a “difficult debtor”.
In some sense, this is as it should be. When you make an allegation in court, the default of the judicial system is to place the burden on you to “prove it”.
Often, the strategy of the difficult debtor is to simply deny each and every allegation you make against them. They deny entering into a credit agreement with you, they deny that they signed any purchase orders, and they deny that you delivered the materials they ordered.
There is a relatively easy solution for dealing with the difficult debtor. In a word, the solution is “evidence”. When the debtor denies that he applied for credit, show the court the credit agreement he signed. When the debtor denies placing an order, show the court the purchase order he signed. When the debtor denies receiving the materials, show the court the delivery ticket he signed.
This solution only works, however, if you have the documents to prove your case. Original documents are far better than copies. If your client faxes you a signed credit agreement, make sure that he follows up by mailing you the original. If the document has two sides, make sure that you keep both sides of the document in your file.
Do this, and when the difficult debtor tells you to “prove it”, you will gladly oblige.