We’re always keen to grow our business and we’d like to encourage you to be on the look-out for anyone who may need our services.

If you can recommend a friend or a business acquaintance to us, we will send you a £5 Marks & Spencer gift card for every new client that uses our services.

We are happy to help clients with the following services:

• Collecting outstanding debts
• Managing credit control
• Tracing debtors that have disappeared
• Running credit checks on businesses to ensure you can deal with them with confidence

We enjoy helping businesses and would like to help as many as we can.

Thanks, in advance, for thinking of us.

We’re always keen to grow our business and we’d like to encourage you to be on the look-out for anyone who may need our services.

If you can recommend a friend or a business acquaintance to us, we will send you a £5 Marks & Spencer gift card for every new client that uses our services.

We are happy to help clients with the following services:

• Collecting outstanding debts
• Managing credit control
• Tracing debtors that have disappeared
• Running credit checks on businesses to ensure you can deal with them with confidence

We enjoy helping businesses and would like to help as many as we can.

Thanks, in advance, for thinking of us.

It has been a difficult time for many companies this year and we are well aware that there are many bad debts out there at present.

With this in mind, we would encourage you to send in any new bad debts / outstanding invoices for us to collect as soon as possible to ensure you get paid for the hard work you’ve already done.

As an incentive, we will send you a £5 Marks & Spencer gift card for every valid debt recieved until 30 September 2011. There is no limit to the number of gift cards that you can claim.

In order to get a voucher, please download a new debt from from our website here:

Debt Collection Form

Please fill it out & write “Marks & Spencer” across the top and post, fax or email it back to us.

There are a number of things that you can do quickly and easily to improve your cashflow & reduce your debt collection costs to zero. We wanted to give you 10 things you could do now that would have an immediate effect on your business.

1          Use a Credit Control Service

It could be costing you more than you think to have debts. As well as the hassle of not having the money and not being able to spend it on improving your business, you are probably incurring a large number of other costs getting those debts paid. These include:

• Overdraft fees
• Bank Charges
• Your time – time that would be better spent earning
• Staff time – time that would be better spent earning

Collecting debts can be a massive drain on a company’s resources. The simplest way of fixing this situation is to use employ credit control services.

What you can do:

Look at our credit control calculator to see how much your client debts are costing your business:

What we can do:

We can offer a credit control service that manages your clients and ensures that thy keep on top of their payments without damaging your relationship with them. Our clients find that, because we are chasing money for them, their client relationships improve as they no longer have to talk about money. If you would like us to help, call us on 0800 4334113 or Contact Us.

2          Add a Debt Collection Clause to your Contract

Although you have to get your debts collected, there is no reason why you should have to pay for the privilege of getting your own money back. If your terms & conditions of business with your client include a clause that make the client liable for debt collection costs, you can reclaim these costs from your client when you reclaim the debt. This simple change can save you a lot of money.

What you can do:

Amend your terms & conditions so that you no longer have to pay for debt collection

What we can do:

We help you amend terms & conditions in relation to your debt collection costs. Call us on 0800 433 4113 or Contact Us & we will help you to reword your terms & conditions.

3          Run a Credit Check on your Prospects

There is nothing worse than working for a customer that goes bust or cannot afford to pay. In our experience, however, a large number of these bad debts can be avoided by running a credit check on a customer before they become a liability. A business credit check takes a few minutes and costs a few pounds but it can save so much time, heartache and money that it is truly worthwhile.

What you can do:

Undertake credit checks on all new customers.

What we can do:

We offer a credit checking service that will give you comprehensive information on the ability that your client has to pay as well as any bad credit history or CCJs that they or their company might have. Call us on 0800 433 4113 or Contact Us.

4          Provide a discount for early payment

It is very common for companies to think about applying fines for late payments but it is not so common for them to apply incentives for early payments. It may be possible to improve your cashflow by offering your clients a discount if they pay within say 14 days. This discount could either be worked into your prices or it could be based upon the time & hassle you would save in collecting a late payment.

What you can do:

Offer a discount to customers (or just problem customers) for early payment. You may consider offering them an incentive to get them to sign up for a standing order – the person in their accounts department might be glad of a couple of cinema tickets and it’ll save them having to write  cheque every month.

What we can do:

We can give you some ideas of what our customers are doing to give customers an incentive to pay early. Furthermore, we can show you how much of a difference our credit control services can make to your cashflow. Call us on 0800 433 4113 or Contact Us.

5          Provide multiple ways to be paid

By providing different ways for customers to pay an invoice, it makes life easier. The hassle of writing and posting a cheque can be removed if customers can pay online. If you would prefer a cheque make sure you state on each invoice who the cheque needs to be made out to. Payment by BACS provides instant cash, so it’s important to add your bank account details sorting code and bank account number on every invoice. Other credit card processing services such as PayPal or Google CheckOut into provide a low-cost way to a help business customers pay you. When dealing with a new prospect, a simple solution is to set up a direct debit or standing order process which relieves administrative hassle from their perspective, while guaranteeing your business a steady flow of cash.

What you can do:

Add banking details to the bottom of your invoice and setup a process to get customers to pay directly (perhaps get them to include their bank details and sign a standing order form as part of the intake process that makes them a new customer).

What we can do:

We can tell you how our clients provide multiple ways to get paid. We can also tell you how we do it. Our clients can pay us online and we can provide the details of how you can get this done on your website too. Call us on 0800 433 4113 or Contact Us.

6          Clearly communicate your terms of business

When you deal with clients, it is essential that your terms of business are highlighted at an early stage. These include adding your payment terms to your standard terms and conditions of trade, application forms, and order notes, statements of account, order acknowledgements, dispatch notes, contractual documents, invoices and emails. By communicating your expectations, your customers will not be surprised when you send an invoice with a payment deadline. Try and get your invoices paid faster than the time it takes to pay your own suppliers. You will know what the average time it takes your customers from their own invoices. By providing your contractual terms, your liabilities are protected in case of any potential legal dispute in the future. If you provide materials or goods to a customer and they consequently go into receivership before they settle your invoice, you may have some recourse if you had effectively sold those goods on the correct legal basis in the first place. In other situations, it may be impossible to retrieve and goods or payment if a formal corporate insolvency process has been initiated, and / or depending upon your status and in the queue of secured or preferential status

What you can do:

Check your terms and conditions of business. Check you have terms & conditions of business. Ensure that your customers know what to expect, this will make it easy to manage their expectations.

What we can do:

We can offer advice on your terms and conditions with regard to collection charges. Although we cannot give you advice from a legal standpoint, we can help you with your terms and conditions and show how this will affect you when it comes to chasing payments or collecting debts. Call us on 0800 433 4113 or Contact Us.

7          Get to know the excuses and deal with them

“The cheque’s in the post”

Many of us have heard this phrase and it can often be disarming. It is easy to leave the chasing of a payment when someone says they’ve paid, even though the cheque never arrives. There are a number of things you can ask, however, that will help you depending upon the situation of your client. Here are a few scenarios:

“I’ve already paid.”

In this case, you should say:

“In order to credit your account properly, I need to ask you when and where you sent the cheque and the amount it was for.”

• If the cheque was sent more than ten days ago, ask for a new cheque.
• If the cheque is not received in a reasonable time frame, then it’s time to submit the account for collection.

You can also say:

“Check with your bank to see if your cheque has cleared your account.”

• If the cheque has cleared their account, ask for a fax of the front and back of the cheque.
• If the cheque has not cleared their account, ask for a new cheque.

“I can’t pay.”

You can say:

“What’s the problem?” “Do you see a turnaround in your situation?”

• If this is a long-term problem, the solution would be to suspend credit.
• If this is a short-term problem and the customer is a good payer, offer a payment of half now and the balance by a specific date. Be sure to verify the cheque is received when specified and for the amount specified. If the customer breaks their promise to pay, then it’s time to submit the account for collection.
• If this is a short-term problem and the customer is a bad payer, then it’s time to suspend credit and submit the account for collection.

“I won’t pay.”

You can say:

“What is the dispute?”

And:
“Could we clear up the undisputed portion of this bill?”

• If the customer is unwilling to clear up the undisputed portion or is unwilling to negotiate, submit the account for collection.

“I promise to pay.”

You can say:

“Since this bill is already past-due, please give me a specific date on which we will receive your cheque.”

• If the customer is willing to give you specific information on the payment, confirm this information with them and thank them for their promise to pay.
• If the customer is not willing to give you specific information, ask them who can. If you are talking to the right person and are told they don’t know when they can pay, suspend their credit and submit the account for collection.

What you can do:

Ensure that you and your staff are consistently chasing people. Print off the different scenarios above and refer to them during credit control conversations. Alternatively, you can call us and we can tell you about how we can offer a credit control service for a fraction of your staffing costs.

What we can do:

We offer a credit control service that ensures that your clients pay on time and that your relationship with them is maintained. Good credit control means fewer issues and better cashflow and it frees up you and your staff in order to do what you are best at. Call us on 0800 433 4113 or Contact Us.

8          Send comprehensive invoices out on time

Because of time pressures and poor administrative controls, some businesses do not send out invoices when they could have done so at an earlier date. This represents credit control suicide as it is a simple process, completely under the control of the business owner and is a simple matter of producing an invoice and sending it to the customer. Make sure your invoices have the minimum details:

• Trading Address
• Company Number
• Registered Address
• VAT number (if appropriate)
• Telephone number and Fax Number
• Contact Name
• Preferred method of payment
• Invoice Amounts and currency
• Payment terms including discounts
• Deadline for payment, including implication of non-payment
• Trading Terms and Conditions
• Detailed description of goods or services provided including references to customers purchase order, customer number or other internal reference
• Website and email are also helpful

What you can do:

Ensure your invoices have the details above and that they are sent out on time.

What we can do:

We can help you in relation to setting up an invoice process. Furthermore, we can offer a credit control service that ensures your customers pay on time. Call us on 0800 433 4113 or Contact Us.

9          Ask customers for trade references

When dealing with a prospective customer seeking trade credit, a commonplace action is to ask for the names and telephone numbers of some of their other existing suppliers. If offering credit terms asking real people about them is essential. Referees have already dealt with your perspective customer end hence will be up to provide a first-hand account of how they do business, how quickly they settle their outstanding debts and whether they are to be relied upon. Ask questions like how long have they known them, what sales per month and do they keep their promises.

What you can do:

Ask your customers for references. These will show customers that you are good at what you do and it will make them aware that you are putting your money and the viability of your company on the line when you extend an offer of credit to them.

What we can do:

We offer a credit checking service that will give you comprehensive information on the ability that your client has to pay as well as any bad credit history or CCJs that they or their company might have. Call us on 0800 433 4113 or Contact Us.

10        Get debts to us quickly

Despite your best efforts, things can go wrong and customers can miss payments. These debts can be chased and you do not need to worry. On these occasions it is essential that you take action as quickly as possible, however. The first sign that a company is in trouble is that they stop paying. If this can be caught early and  they can be made to make a payment or a partial payment, you need not lose out. If the debt is left, however, the company could go bust before you can get the money from them.

The longer a debt has been outstanding, the harder it is to collect as it becomes increasingly likely that the company you are trying to collect it from is no longer around.

If you have any aged debts that are more than 90 days overdue, pass them to us immediately for further action as the cost of inaction is a loss of money.

What you can do:

Take a look at your Aged Debt reports and look at the clients that are 90 days overdue. How much money do these clients owe? There is a risk that you will not see this money unless you act. Chase the debts that are 30 – 90 days overdue and teach your clients that you will not allow them to take advantage of your company’s resources.

What we can do:

We can collect debts of all kinds and we can give you some advice as to when to notify us that a debt needs collecting. Furthermore, we can have an informal chat with you in order to take a look at your Aged Debtors and to see how cost-effective a credit control service would be for your company. Call us on 0800 433 4113 or Contact Us.

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Every company is anxious to find effective ways to encourage customers to pay on time.  Numerous accounts receivables can be difficult for a small to medium enterprise in terms of working capital.  Accounts receivables reduce the company’s liquidity.  A business can resort to various ways to deal with customers who are delinquent when it comes to paying for past due accounts.

Charging Late Fees

One way to resolve the problem of late payments is to charge late fees.  Charging late fees is a practice that has been once disregarded but now very useful in terms of consumer collections.  The main advantage of imposing late fees is that customers are forced to pay on time.  Customers tend to change their behaviour when they know they will have to pay a penalty for being late.  Late fees also serve as additional income for the company.  Lost investment income associated with late payments may be at least offset in partial.

On the other hand, there are drawbacks to charging late fees.  The company will be exposed to the risk of offending their customers.  Once a customer is offended by the late fee, credit experts say that the same customer can turn into an angry salesperson with bad things to say about the company.  It is up to the company to decide whether to impose late fees or not.

Building Good Customer Relationships

Owners and managers of a business should make the effort of getting to know their customers better.  By building a relationship with customers, it will make it more difficult for them to delay their payments especially if they know that the company has limited working capital.  Customers will not risk a good business relationship by consistently delaying their payments.

It will also be easier for companies to collect from customers because payment reminders can be done in an informal way.  Increase personal customer visits whenever possible.  Meeting customers frequently will motivate them to pay on time to someone they know.

When a few invoices have become past due for several days, send friendly notices to customers.  Consider making personal visits to customers with past due accounts.  Inquire about the cause for delay and arrange a payment scheme when possible.  This will encourage those customers to pay in increments.  Both parties will benefit from this arrangement.

Applying Credit Holds

If a company discovers one or a few customers are consistently making late payments, it may be time for management to consider putting those customers’ accounts on hold.  This means, they cannot avail of credit on their succeeding transactions unless their previous balance is paid. A credit hold freezes the customer’s credit.  Customers with outstanding balances can only pay in cash if they want to purchase something from the company.

Despite the best efforts of the company, there are some customers who simply disappear or will not pay. For accounts receivables that are past due for over 90 days, the company should consider hiring the services of a collection agency.  Collection agencies have their own methods of collecting.  Compile a list of reputable and affordable collection agencies and make enquiries.

The Need for Positive Cash Flow

Accounts receivables represent the sales of the company which have not been paid.  They are recorded as sales transactions but payments are still pending.  A product or service has been sold but the company did not receive cash as payment.  A high volume of accounts receivables are usually common for a company accepting purchase orders and credit card payments.  When a company has several accounts receivables, this means an outflow of funds. A business needs a stable cash flow to generate working capital and profits.

In small to medium enterprises, the role of the owner or financial manager is to collect all the money owed to the business as quickly as possible.  This must be done while continuing to offer attractive credit terms to customers in order to increase sales.   The management of accounts receivables entails setting up reasonable credit policies including repayment conditions.  To motivate customers to pay their bill earlier than the due date, the company can offer an incentive or discount.  Customers are more likely to pay earlier to take advantage of the discount being offered.

Evaluating Credit Policies

A balance must be achieved between providing customers with generous credit terms and easier credit policies.  Before deciding to offer longer credit terms to keep customers happy, the firm must evaluate the current status of its working capital.  If the business can afford to carry accounts receivables for an extended period of time, longer credit terms may be offered.  The company should base its credit policy decisions on customer profile, timing of cash flow, risk of bad and credit industry standards.

Determining DSO

To evaluate the current financial performance, the firm must determine its Days Sales Outstanding (DSO).  The DSO is the average number of days of accounts receivables.  A high DSO means that the firm takes too long to collect outstanding receivables.  Maintaining the liquidity of the business is critical to be able to operate effectively.  Some companies choose to train employees in debt collection and credit policies.  Employees will know the importance of reducing DSO.  Improving a company’s collections process means high liquidity for working capital.

Acquire Information Systems Technology and Outsourcing

The development of financial technology systems and electronic systems has made it easier for companies to monitor their accounts receivables.  The automation of accounts receivable processes can bring many benefits such as enhancement of customer experience, increased productivity and employee morale.  The financial performance of the company will also be significantly improved with the optimization of accounts receivables.  Outsourcing financial and accounting processes is also an option for firms that find it difficult to develop their own systems.  The firm should be willing to take the risk of transferring sensitive data to third-party service providers.

If you are interested in outsourcing your credit control services in order to help improve your business cashflow, we would be happy to talk to you. Please contact us or call us on 0800 433 4113.

We would love to recieve your comments below and will add to our articles in order to answer your queries or create new articles based on any questions you have.

Outsourcing Using a Collections Agency

The company can address the problem by choosing to outsource an entire function of the collections department or only a few critical functions.  If the company decides to outsource, the accounts receivable aging report will be sent to a collections agency for turnover.  The collections agency functions as the outsourcing service provider by contacting all the customers of the company with past-due accounts.  Accounts that are 60 days old or whatever period specified by the company, are considered overdue.

The company is responsible for receiving the funds collected.  The collections agency may require a certain percentage from each invoice collected as a form of payment.  Other agencies are paid by the hour for their services.  It is wise for a company to continually measure the performance of the collections agency.  If the agency has a low percentage of invoice collection, switching to another agency is a good idea.

Things to Consider

Before planning to outsource collections, the company should consider the different factors.  One thing to consider is the cost.  There are costs to having an outsourced collections company but these have to be weighed up against the benefits that the agency can provide (staff that are trained & motivated to collect debts, the other better uses of your staff’s time in making money for you etc).  Another thing to consider is the efficiency of collections in the long run.  If the company plans to create an effective in-house collections department, staff should reinforce their training and skills.  Purely outsourcing the collections function will not solve the underlying problems that cause the customers of the company to miss payments.

Managing Credit Risk

In order to manage credit risk, a company will have to learn how to balance credit sales including the profits earned against the risk of granting credit to a customer.  There is no fool-proof way to manage these factors.  The right balance of credit risk depends on the strategic goals and profit margins set by individual companies.

One way to manage credit risk is to set a credit limit per customer type.  This should be standard for new customers.  The assigned credit limit should be based on the customer’s credit history including credit score.  If the company has high-risk customers, a special provision about a reserve for bad debt should be in place.  A payment schedule should also be set to ensure that customers will pay on time.  Consecutive late payments and delinquency should not be tolerated.  This will allow the company to manage credit risk more effectively.

The Cash Protection Agency is a debt collection agency offering debt collection and credit control services. We would be happy to help your company collect its debts and deal with any underlying issues in billing and collecting money from your clients. Call us on 0800 433 4113 or contact us online.

Many UK companies offer credit terms to their customers (some offer 30 days, some 60, some 90 etc). This can be beneficial to both the company and the customer as paying on credit helps the customer’s cashflow and enables them to buy more. The longer the company goes without getting paid, however, the worse this relationship becomes as the company itself can suffer from cashflow problems, it can spend unnecessary monies on debt collection and it can run the risk that the customer can go into liquidation before the company can get its money. Set against this background, a credit controller:

• Keeps in regular contact with debtors to ensure that they will pay on time or arrange a schedule for payment
• Keeps records of contact made with debtors to help businesses identify risky debtors and to provide an audit trail for any legal action that might be necessary down the line
• Credit checks new customers to ensure that they are not payment terms that they can meet
• Identifies customers that a business might not want to have or might want to give restrictive payment terms to
• Resolves problems of missing paperwork for clients so that they can pay promptly
• Instructs debt collection firms or solicitors if payments are significantly overdue
• Deals with liquidators
• Works with and reconciles debts and the aged debt register
• Creates or improves a credit control process for the company that enables the company to identify why customers get into debt, what can be done to reduce problems and how it can be done systematically to save the company time & money
• Reports to management enabling management to take swift decisions on problem customers before those customers go into liquidation

Many companies have an in-house credit controller that works exclusively for the company. The Cash Protection Agency offers an outsources credit control service to companies that has proved extremely popular for small and medium-sized businesses. Rather than incurring the costs of a member of staff and associated training costs, companies send their aged debtors list to the Cash Protection Agency whose expert staff contact the people and businesses that owe the customer money in a way that ensures that outstanding debts are minimised and the relationship for the customer is maintained for the future.

Many small businesses struggle to get money in. Many businesspeople worry that conversations about money will affect customer relations and they feel that they are not the right people to recruit and train a credit controller as it is something that they find difficult. In these instances, an outsourced credit controller, in the manner that the Cash Protection Agency offers, gives the company peace of mind, saves them money and improves their cashflow.

If you would like to know more about what a credit controller does or if you would like to make use of outsourced credit control, please give us a call on 0800 433 4113.

If you have any comments or further questions, please leave them below and we’ll be happy to answer them for you.

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Credit transactions are regarded as transactions done in good faith.  From the time credit is granted to the debtor, he has every intention of meeting that obligation.  However, the business of lending money is risky.  Sometimes, account receivables are declared as bad debts because they have become uncollectible.  Learning to handle debtors effectively can increase the chances of a full payment.

Handling Objections and Excuses of Debtors

Debtors are more likely to invent all types of excuses to avoid payment.  The same goes for people who have made a career out of borrowing money.  When attempting to collect and ask payment for a past-due account, an objection will always come up.  Look at this type of situation as an opportunity and not an obstacle.  Objections from debtors can become opportunities.  When a debtor uses an excuse, the creditor can always counter that excuse by offering a payment solution to the debtor.

Most of the problems in collecting started from an objection.  Objections are stated reasons or excuses for not paying what is owed.  These objections may be personal misconceptions, other priorities and other factors used by debtors.  Objections are different from conditions.  A condition is a real and tangible reason.  For example, a debtor cannot pay because he is on the verge of bankruptcy.  A certain company may not be able to pay debts because of a foreclosure or merger.

If the debtor presents his personal financial condition as the reason that he cannot pay his obligations, further investigation should be done to verify the information.  The credit bureau is a good place to start since a creditor can get information regarding the debtor’s current financial transactions.  Verifying information provided by the debtor is important in planning the next course of action.  If the debtor is telling the truth about his dwindling finances, the creditor can ask for a meeting again and try to work out some form of payment arrangement.

Handling Professional Debtors

Professional debtors are people who go around borrowing money from different creditors.  They are called professionals because they have become experts in what they do best: non-payment of debts.  Professional debtors are smooth operators who can talk their way with creditors.  A thorough credit and background investigation should always be done as part of standard procedure.  Collection payments should also have a certain process for all debtors to follow.  Specific date and time of payment must be indicated in the terms and conditions.  If the debtor signs the document, this means he or she has understood and accepted the obligation to pay within specified terms.

Keeping payment terms and collection procedures specific, and thorough background checks are sure-fire ways of deterring fraudulent debtors.  Creditors should be prompt in collecting due accounts since any delay may cause the debtor to think about non-payment.  Making a firm stand on collection and payment procedures will encourage debtors to remember to pay their debts.  Professional debtors may want to stay away from tough creditors.

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Overdue accounts can be challenging to collect especially if the debtor is deliberately avoiding all your attempts of communication.  If the debtor does not pay within a reasonable amount of time, you can start thinking about writing it off as a bad debt or hiring a collection agency to do the collecting for you.  You already lost a lot of time trying to track the debtor on your own.  Months may have passed and still no money returned.  You may have wasted your time when you notice that the expense you incurred is almost the same as the amount owed to you.

Establish a Good Collection System

To avoid wasting any more of your precious time than you already have, it is time to move on and forget about the experience.  The best thing that you can do now is to establish a good collection system.  Having an efficient collection system should be treated as a process.  Collection is not just about writing a single letter without communication beforehand.  It is better to let your customers know your terms and conditions before allowing them credit.

Plan a Series of Steps

In designing your collection system, you will need to plan a series of steps to ensure a higher rate of return on all your accounts. Do not allow an account to exceed 60 days past-due.  If an account is nearing its due date, you can send a friendly reminder to the debtor.  This can be done through telephone, e-mail or a formal letter.  A past-due statement can be sent to the debtor when there is no response after your attempt to remind.  If the statement of account did not work, scheduled phone calls can be made.  Calling at the right time is the key if you wish to speak to the debtor.

Make an Effective Final Demand Letter

After making phone calls and still no response from the debtor, you can start drafting a final demand letter.  Set a time limit or a final deadline that you expect the debtor to pay.  Indicate the exact date and time of your time limit.  In the final letter, you should firmly state that you will seek legal action if the debtor will not pay on the specified date.

Consider a Payment Arrangement

If the debtor responds and offers to pay in instalments because of financial difficulty, you can set up a meeting to talk about the terms of payment.  It is better to accept a series of payments from a customer and keep him as a good customer in the future.  Cutting the customer off because you demand a full payment is not a good idea especially if this is the first instance of non-payment.

Chasing after past-due accounts is useless if they have exceeded your limit for receivables.  Always monitor your accounts receivable to avoid neglecting a past-due account.  It is also a good practice to establish a personal relationship with customers.  Open communication lines are important to avoid wasting time and effort.

The Cash Protection Agency are a debt collection agency and offer credit control services that allow businesses to collect money from their clients quickly and without damaging valuabel customer relationships. Give us a call on 0800 433 4113, we’d love to chat.

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In any courtroom, evidence should meet specific standards to be admissible.  It is important to determine the authenticity of evidence when a person’s guilt or innocence is being judged.  Before admitting evidence, the court will take the necessary measures to ensure its relevance.

Before deciding to take any legal action, credit companies or organizations will need to consider the impact of a debt collection lawsuit.  The court may require the creditor to disclose certain information about their policies and systems that may be considered sensitive.  The company might not want to expose their network systems, source code and configuration systems.  When filing a lawsuit, the creditor should be willing to cooperate in provide all types of information needed by the court.

Authentication Process

The court will have to evaluate digital evidence beforehand to verify the claims of the proponent.  In a debt collection lawsuit, the proponent is the creditor.  The court will need to examine the evidence presented by the creditor.  Hearsay evidence is immediately rejected.  The court may require original copies of documents for authenticity and verification.  There are other issues that the court will have to consider to determine the admissibility of evidence.  Failure to consider such issues may lead to the proponent losing the case if evidence is to be excluded.

One of the most important elements of determining authenticity of evidence is maintaining and recording the chain of custody of evidence.  Digital evidence is admissible in court if authenticity is proven and verified.  Every person who handled the evidence will be required by the court to testify.  The testimony should declare that the evidence presented in court is the same evidence before there was a lawsuit.  The number of people who will testify along with the creditor should be kept to a minimum.  They will need to demonstrate that the digital evidence has not been altered in any way since it was collected.

This is a necessary procedure in court to demonstrate chain of custody.  Without the solid chain of custody, it could be argued by the defendant (debtor) that the evidence may have been altered or mishandled.  The defendant can say that the creditor has replaced the original information with incriminating evidence.

Best Practice

Creditors are advised to keep copies of relevant documents.  Photocopiers, scanners and computers are acceptable tools in creating exact duplicates.  The copies of digital evidence are generally acceptable.  Presenting a copy reduces the risk that the original document will be altered.  Generating a paper printout of digital evidence is accepted and considered equivalent to the original.  The creditor will have to ensure that the copy is clear and shows all information that the original has.

Modern technology has eliminated the need for recording transactions on paper.  Keeping digital records will make documentation more convenient and accurate.  Organizing and retrieving files will not become a time-consuming task if everything is already stored in a computer.  A back-up file should always be maintained for security purposes.  The credit company should also take the necessary steps to ensure digital files are protected from unauthorized use.