To effectively pursue debt recovery, businesses need to make necessary preparations involving various factors. One of these factors is the requisite documentation to ensure the company’s ability to recover debts and prepare for litigation if necessary. In this article, TNTP’s lawyers will provide insights into the necessary documents that businesses should prepare before engaging in debt recovery activities.

1. Contracts or Agreements for the Sale of Goods or Services

To demonstrate a company’s right to demand payment from a debtor, the incurring of debt must be documented in contracts or agreements between the business and the debtor. Contracts or agreements between parties serve as evidence of the legality of the transaction, as well as the business’s right to demand payment. These documents are crucial and should be prepared by the business. Contracts or agreements between parties typically include information such as the content of the goods or services provided, the value of these goods and services, payment deadlines, delivery or service provision schedules, as well as terms regarding penalties for breaches, compensation, and dispute resolution methods. Based on the content of contracts or agreements between parties in the construction industry, businesses can make reasonable and legal demands for the debt and related payments.

However, in many cases, when parties engage in the sale of goods or services during construction without entering into contracts or agreements, it can be challenging to demand payment for the debt. This difficulty arises because the sale is not established through civil transactions. In such cases, businesses will need to prepare the necessary documents to prove the transactions below.

2. Documentation to Verify Purchases and Service Usage in the Construction Industry

In practice, many parties involved in buying goods or using services in the construction industry often fail to enter into contracts or agreements, making it challenging to prove transactions between parties for debt collection purposes. In such cases, businesses will need to prepare documentation to substantiate purchases and service usage in the construction industry, including:

a) Delivery and Service Completion Records

When parties complete the purchase of goods or the utilization of services in the construction industry, there are typically documents confirming the fulfillment of obligations, such as delivery and service completion records. These documents serve as the basis to determine which obligations each party has fulfilled and which remain outstanding. In cases where parties have not entered into contracts or agreements regarding services, documents like delivery and service completion records become crucial evidence to establish the existence of transactions between parties. They also provide a vital foundation for businesses to demand that debtors fulfill their payment obligations corresponding to the completed delivery or service provision.

b) Legal Invoices

According to legal regulations, invoices are documents created by the seller to record information regarding the sale of goods or the provision of services in compliance with the law. Invoices typically contain accurate details about the content of the goods or services provided, the value of these goods and services, essential information about the seller and the buyer (name, address, tax identification number), and confirmation by the seller’s stamp. Therefore, when a business issues invoices to debtors, it serves as evidence of the sale of goods or provision of services.

In cases where debtors do not acknowledge receiving these legal invoices to evade payment obligations, businesses can request tax authorities to verify the submission of these types of invoices by debtors. According to legal regulations, businesses purchasing or using any goods or services from other businesses are responsible for reporting these transactions for tax management purposes. When tax authorities confirm that debtors have reported the invoices issued by businesses, this serves as clear evidence to establish the payment obligation of the debtor.

The above article represents the viewpoint of TNTP’s lawyers regarding the necessary documentation for debt recovery in the construction industry, and it is hoped that this article is helpful to readers.

Best Regard.