Countering Defenses Raised in Business Collections Suits

Business Collections cases are usually open and shut when it comes to liability. Often defendants don’t even bother answering the complaint and let a default judgment get entered. While this certainly makes things easier and speeds up the process, plaintiffs can’t count on all debtors conceding a case. To head off potential defenses and protect its claims, a business should follow these simple steps:

1. Insist on written Purchase Orders. When the terms of the transaction are in writing, debtors will have a hard time arguing over price, quantity or warranty terms. Many transactions are subject to the Uniform Commercial Code which requires written documentation. The contract should contain language that merges all prior terms discussed into the purchase order.

2. Implement quality control and inspection. Companies that routinely check all orders and document their process can prove items were free from damage when shipped.

3. Use a tracking service or have delivery confirmed. UPS/FEDEX make life easier because of their tracking capability. Shippers know when a package reaches its destination. If a common carrier or the company’s own trucks are used, make sure to get a signature when delivery is made.

4. Require disputes as to quantity or quality of goods be made within a set time frame. If a customer doesn’t dispute an order until a collection case gets filed, chances are, there was nothing missing and the claim is mere pretext to delay things.

5. Stick to consistent terms. If exceptions are never granted then claiming special circumstances allowing delayed payment or reduced pricing aren’t an issue.

6. Make every effort to have the Purchase Orders state that the customer will be liable and responsible for your reasonable attorney’s fees and costs that are incurred in the event the invoices are not paid within 10 days or whatever your payment requirement time is. Generally without that statement, you will not be able to recover attorney’s fees or costs that you incur in collecting the money you are owed.

Following these basic procedures will help overcome most defenses raised by debtors. They can’t prove they never received the goods, never ordered them or got damaged goods when documents clearly show otherwise. If your firm wants to learn more about making collections as strong as possible, contact us. We want to collect as much as you do and happily share tips on how to manage accounts.