You've decided to proceed with legal action against a delinquent customer. The complaint has been filed and the debtor has been served. Unfortunately, a default judgment was not rendered and the debtor continues to dispute the case. You're headed for a hearing or trial. What will you have to prove in court to win the case?

Lawsuits can become quite complicated. However, they all require you to document certain facts.

In order to have a valid case, you must prove:

You received an order from the debtor.
You and the debtor agreed on a price for the merchandise or service to be provided.
You delivered the merchandise or provided the service.
A demand for payment was made.
No payment has been received.

These requirements are fairly straightforward and can usually be met by presenting the basic documents which exchange hands during the sales process. It's important to provide the collection attorney handling your case with sufficient documentary evidence to prove each of these points. If you're unable to do so, there's a possibility the debtor may be able to have the case dismissed. He may even secure an adverse decision against you, which could require you to pay the debtor's costs.

No Witness, No Case

If your case does go to trial, you'll have to provide a witness. You have no chance of winning at trial without one.

Just as in a criminal case, the burden of proof at a U.S. trial will be on the plaintiff (you). The defendant, in this case the debtor, is presumed not to owe the money until you prove otherwise.

To properly introduce the documents necessary to prove your case at trial, you'll have to have someone present them who can testify that they are, in fact, documents your company uses in the routine course of business. You also have to establish, through testimony, that the specific documents being introduced into evidence are accurate and properly reflect the state of the debtor's account with you.This is important. Without personal testimony by someone familiar with the documents your company uses and the way your company keeps its books and records (a books and records witness), the defense attorney can simply object to the documents as hearsay evidence and there goes your case.

Many times a case goes to trial because the debtor disputes some or all of the amount of the delinquent account. He may claim that the salesperson quoted a different price or promised things that were not provided. In that case, it's necessary to have someone familiar with the actual transaction testify as to what promises were and were not made. Often the employee who knows the facts of the specific case can also serve as the books and records witness. However, if the person familiar with the facts does not have the required knowledge of your company's recordkeeping procedures, you may have to provide two witnesses to establish your case.

Paper No Substitute For a Person

You may be thinking, why a witness? Doesn't an affidavit or deposition suffice?

The answer is simple -- No.

You must provide a warm body at the time of the trial because the defense attorney cannot cross-examine an affidavit or a deposition. The debtor, through his attorney, has the right to cross-examine and can only do so if a witness is present. Fail to provide the debtor defendant with the opportunity for cross-examination and you have no case because your evidence will be inadmissible.

Fortunately, the majority of U.S. commercial collection cases are resolved before they are scheduled for trial. Many are also settled after they are scheduled but before the actual trial occurs -- through pretrial hearings, final negotiations on the courthouse steps, or in the judge's chambers. If the matter does end up before a judge, however, being prepared with the proper documentation and witnesses to present it holds your best chance of winning.

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Disclaimer: This information is provided by ABC-Amega Inc. for informational purposes only and is not intended to be legal advice and is not a substitute for competent legal advice on the referenced subject.

Robert Tharnish (Bob) began his career at ABC-Amega in 1978, and has previously held positions at the company that included Regional Manager, Director of International Operations, as well as Vice President roles overseeing Operations, Quality Management, Domestic and International Collection Services. He has presented numerous industry-related talks, including a series of lectures on “Credit and Collections in the U.S.” for the British Department of Trade & Industry. He holds a BBA in Management and is a member of the Commercial Law League of America.

Credit-to-Cash Advisor is sponsored by ABC-Amega Inc. - providing effective accounts receivable management and commercial debt collection services since 1929.