How best to collect money owed to our business?
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How best to collect money owed to our business?
We have had issues with our client paying, but have worked with them despite our agreement of Net 30. There are payments now going on 35days pass due for 8 invoices and 6 other invoices 5-25days overdue. We have reached them several times and have been given the run around that the check is going out on Friday, then Wednesday, and Friday each day given was false. They are now telling us that the did not have the funds and could not send. Today we were informed a partial amount would go out so we provided a fedex account to send overnight. They gave us a fedex number but that was false as well. What can we do about them not being honest with us, the amount of $17,000.00 past due, as well as the financial issues we are now having?
Asked on November 4, 2013 under Business Law, Texas
Answers:
Brook Miscoski / Hurr Law Office PC
Answered 11 years ago | Contributor
I am sorry that you are having this difficulty--a loss of $17,000 revenue from a significant client can be a serious issue for a small business.
First, I would ask whether you have a contract or written communications that establish a procedure. I'm assuming that you've established a due date--but are there contractual steps you have to go through before filing a lawsuit?
Second, I would ask what kind of industry you are in. In some industries, there are rules that limit how long your client can take to pay you.
Third, I would ask what your assessment is of whether your client can pay, or has assets. You don't want to throw good money after bad, so the ability to pay or the cost of forcing payment is an important issue.
The sum you want to recover is large enough that you will probably not be able to pursue it on your own in a JP court. You'll probably be required to use an attorney in a county or district court (you won't be allowed to represent your business in those courts), so you'll want to consider having an attorney write a demand letter and prepare to file a lawsuit--provided the answers to the above questions suggest a lawsuit would be appropriate.
Often, this kind of matter does not come to a lawsuit, but your willingness to litigate can help speed a recovery if your client is just avoiding a responsibility it is actually capable of paying.
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