In many companies that sell goods or provide services on credit, the documentation of transactions is often seen as a purely administrative matter. From a legal standpoint, however, the way a commercial transaction is documented can make the difference between quickly recovering a credit and facing a long and uncertain dispute.
In professional practice, it is common to encounter situations in which a company has delivered products or provided services, has issued the corresponding invoice, and, faced with non-payment, finds it difficult to claim the amount owed in court.
In many cases, the problem does not lie in the existence of the debt, but in how the transaction was documented.
- The credit invoice as a collection instrument
Under Paraguayan law, the so-called conformed credit invoice (factura crédito conformada) is an instrument of credit content representing goods delivered or services provided that have not yet been paid for, provided that the document has been accepted by the buyer.
The regulation of this instrument was strengthened with the enactment of Law No. 6542/2020, which established a specific regulatory framework for the bill-of-exchange invoice and the conformed credit invoice, defining the requirements it must meet to be considered a negotiable instrument.
When those conditions are met, the invoice may constitute an enforceable instrument, which makes it possible to directly initiate an executory action to collect the debt, as provided in Article 448 of the Paraguayan Civil Procedure Code.
This judicial route is considerably faster than an ordinary proceeding, since it starts from the presumption that the credit documented in the instrument exists.
- A common mistake in commercial practice
One of the most common mistakes in business practice is allowing invoices to be signed by persons who lack the legal authority to bind the buyer—a practice that often arises from the operational dynamics of many businesses.
This frequently occurs when the person signing for receipt of the invoice is an administrative employee, a warehouse supervisor, a security guard, or any other person who apparently acts on behalf of the client.
From an operational standpoint, this may seem reasonable. From a legal standpoint, however, it represents a significant risk.
When the invoice is not signed by the debtor itself, its legal representative, or a duly authorized person, the document may lose its force as an enforceable instrument. In that scenario, the creditor might be forced to initiate an ordinary proceeding to prove the existence of the debt, which entails a longer dispute, higher costs, and greater evidentiary difficulties.
- Documenting well today to avoid problems tomorrow
Experience shows that a large share of disputes related to the collection of commercial credits arises not from the non-existence of the debt, but from deficiencies in the documentation of the transactions.
From a commercial litigation standpoint, it is common to observe that many companies have documentation evidencing the delivery of goods or services, but that does not meet the requirements necessary for direct enforcement.
In those cases, the creditor may still attempt to claim the credit, but will have to do so through an ordinary proceeding, in which it must prove the existence of the commercial relationship, the actual delivery of the goods or services, and the corresponding payment obligation.
This entails longer proceedings, greater evidentiary activity, and higher costs.
For this reason, it is essential that companies adopt certain basic precautions when documenting their commercial transactions.
- When the invoice does not allow for an executory action
When invoices do not meet the requirements necessary to constitute an enforceable instrument—for example, when they are signed by persons without sufficient authority or contain formal defects—the creditor may be forced to initiate an ordinary action for acknowledgment of the credit.
In this type of proceeding, the procedural situation changes significantly. Unlike the executory proceeding, where the document presumes the existence of the debt, in the ordinary proceeding the creditor must fully demonstrate the commercial relationship that gave rise to the credit.
This means proving the existence of the contractual relationship, the actual delivery of the goods or services, the client’s receipt thereof, and the corresponding payment obligation. To this end, it is often necessary to resort to much broader evidentiary activity, including calling witnesses who took part in the commercial transactions or in the delivery of the goods, as well as producing accounting expert reports to verify that the invoices were recorded in the parties’ books and that the credit claimed corresponds to the commercial dealings between the companies.
In many cases, moreover, the litigation develops on the basis of the legal appearance created during the commercial relationship, requiring proof that the person who signed the invoices acted on behalf of the client, or that the debtor’s own conduct created a situation of reasonable trust on the creditor’s part.
All of this entails a longer, more costly proceeding with a greater evidentiary burden.
- The qualified electronic signature as a tool to strengthen commercial documentation
One alternative that could gain relevance in the future, once all the regulations necessary for its full operability are issued, is the use of the qualified electronic signature in these types of documents.
This type of signature, which must be issued by authorized trust service providers, makes it possible to securely identify the signatory, guarantee the integrity of the document, and reduce the risks of a later disavowal of the signature.
From a legal standpoint, the qualified electronic signature is designed to have functional equivalence to a handwritten signature, which opens the possibility of documenting commercial transactions and credit acceptances by electronic means with higher standards of security and traceability.
In mass commercial transactions—such as the delivery of goods or the issuance of credit invoices—the eventual implementation of systems based on qualified electronic signatures could help reduce the risks arising from signatures by persons without sufficient authority, strengthening the identification of the signatory, the traceability of the act, and the evidentiary value of the documents.
By way of example, in ongoing commercial relationships between companies, a scheme could be structured whereby the invoices corresponding to deliveries made during a given period are sent electronically to the client and accepted by qualified electronic signature by the legal representative or by a person expressly authorized to bind the company, who—thanks to the convenience of the electronic signature—may sign the document from anywhere. In this way, acceptance of the document would be clearly linked to the person with the legal capacity to assume the obligation, significantly reducing evidentiary risks in the event of a future court claim.
In a context of increasing digitalization of commercial transactions, these technological tools could, once fully operational, become a relevant alternative for strengthening the legal certainty of transactions and improving the quality of the documentation supporting potential credit claims.
- Some practical recommendations
For companies that operate with credit sales, certain basic precautions can significantly strengthen their legal position in the event of default:
- verify that invoices are signed by the buyer or by a person with sufficient authority to bind it;
- keep records or authorizations of the persons entitled to sign on behalf of the client;
- properly document the payment terms and due dates;
- keep the supporting documentation for each commercial transaction in order.
In many commercial transactions, it is also advisable to clearly establish the applicable default and interest conditions, so that, in the event of default, the obligation is enforceable without further discussion and it is easier to determine the amounts owed.
Likewise, in business practice it is often advisable to have master agreements with clients, governing the general terms of the commercial transactions, payment periods, interest rates, and the persons authorized to sign on behalf of the client.
Nevertheless, it is important to bear in mind that the invoice must always retain its autonomy as to its content and wording, so as to maintain its status as an enforceable instrument. The master agreement may complement the commercial relationship, but the invoice must by itself meet the requirements demanded by law for its enforcement.
- The value of preventive advice
The proper review and structuring of commercial documentation is a form of preventive management of legal risk.
Having legal advice at this stage makes it possible to detect weaknesses in the documentation used by the company and to adopt measures that strengthen the creditor’s legal position in the event of default.
Ultimately, proper instrumentation of commercial transactions not only facilitates day-to-day administrative management, but can also prove decisive when it comes to recovering a credit through the courts.
In matters of commercial credit, the difference between an executory proceeding and an ordinary one often lies not in the existence of the debt, but in how the transaction was documented from the outset.
