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The Collections Process for Business Owners

Man in suit with $100 dollar bills fanned out

As a business owner or an Independent Contractor (IC), it can be frustrating when clients don’t make good on their payments. If you’ve ever sent an invoice to a client for services or products, you expect to be paid. What, though, happens when the payment is extremely late or never comes? At what point do you contact a Seattle business lawyer and what are your collection options?

Don’t Be Afraid to Take Action

First of all, you earned the money and you’re entitled to payment. If you have invoices that were ignored or if you haven’t received payments after 90 days, you need to start taking action. You can begin the collections process before 90 days, but according to Law for All, some firms take between 60 and 90 days because they too have cash flow problems.

You can, however, start sending collection letters at 30 days. If these letters don’t work, begin making phone calls to the company that owes the money. If it’s a large company, you may have to get into contact with a lower-level employee, but if this doesn’t resolve your payment issues, feel free to call someone higher up. It’s not rude to contact the president or owner of the company. If you need advice, you can contact your business litigation attorney in Seattle, but at this time, you don’t need legal services to solve the problem.

Small Claims Court

If phone calls, emails, and letters don’t work, then your next best option is to sue the company in small claims court. For most states, small claims court handles debt collection cases for amounts between $2,000 and $7,500. If the absent payment you’re expecting falls in this category, then feel free to file a lawsuit. Collections and assets recovery in small claims court doesn’t require legal services, and in fact, most small claims courts don’t allow anyone to be represented by a lawyer. Typically, debt collection cases don’t make it to trial since most clients do in fact owe the money. Also, if the client fails to appear in court, you automatically win by default.

Collections and Assets Recovery in Superior Court

If the amount owed to you exceeds $7,500, then you can choose to sue the client in superior court. For this, you may need the help of a collections attorney in Seattle. Many debt collection cases don’t make trial even in superior court though, because once again, most of the time the defendant does actually owe the money. Even if you choose to represent yourself, however, it’s recommended to hire a collections attorney for advice and other legal help.

If you have a work contract with the client, you should also look for an arbitration clause. In the contract, this clause can be called “arbitration” or simply “dispute resolution.” If you find that the contract does have this clause, it means that you can’t take the client to any type of court. That’s not always a bad thing though, because an arbitrator often settles the dispute quickly, informally, and inexpensively. If you find you need help at any point along the way, a lawyer can help ensure the process is as easy as possible.

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