Tuesday, February 1, 2011
Making deals with customers for payments? Put them in writing!
It pains me to say this, but I may be getting too mature for details.
I can’t even recall what I had for lunch—so how can I expect a debtor (a customer who is delinquent in making payments) to remember a deal we made together? I really shouldn’t be amazed when a debtor not only fails to make a first payment—but fails to remember the amount of the first payment and the date it’s due as well.
It’s really to the debtor’s advantage to have a short memory when it comes to payment schedules, which is particularly true if the debtor is struggling to maintain a cash flow and is making an effort to conserve—not spend—cash.
Promises are meant to be broken. At least verbal ones. Once in writing, however, the rules change a bit because the written word is more difficult to ignore (“forget”) than the spoken word.
In many offices, the mantra is that it just isn’t done if it isn’t in writing.
That’s a good mantra to adopt.
The fastest way to obtain a judgment against your debtor is to show the court an admission of the debt and promises to pay it in writing. In other words, courts love to see clear cut writings. Indeed, all of your contracts made with suppliers, customers and other third parties should be clear, concise and contain language that just can’t be misinterpreted. The same reasoning applies: if these matters have to be litigated at some point in the future, you want a slam dunk case to be presented to the judge. So, we put agreements in writing.