When Should a Business Consider Litigation for Commercial Debt Collection

Posted by Ryan Howard on Apr 5, 2018 9:36:52 AM

business litigation for debt collection

f you've ever found yourself increasingly frustrated at a client who just won't pay, you may be considering taking them to court.  You do have options before taking the legal route but if those options are exhausted, you may be too. If you're still unsure if it is indeed time to pursue litigation of your nonpaying client, you may be looking for a nudge in the right direction. 

Here are signs that your business should consider taking a client to court.

Client Agreed to Payment Terms

Before working with the client, they signed a contract with payment terms stating they would pay your business for services provided by you. If the services were provided and the client still didn't pay, you may have a case in court.

Your Business Upheld the Contract

The burden is on your company to prove that your business completed the work as stated in the terms of the contract agreement. The client should not be able to demonstrate that you provided substandard work or didn't complete the work at all.

Client is Non-Responsive

If you've contacted your client through friendly reminders and a final demand letter or phone calls and they are still non-responsive, you could have a chance of getting a response in a courtroom.

Client is Refusing to Pay

Again, a signed agreement by both parties would prove that the client owes your business for any products or services provided in the agreement. If the client is refusing to pay and has actually stated as such, the threat of legal action may prompt payment. 

Collections Services Haven't Worked

First party and third party collections have been attempted on the debt but have been unsuccessful.  When unpaid invoices become bad debt, it may be time to consider pursuing legal action against the client. 

Client's Account Has Been Reviewed by Legal Counsel

Before moving forward with a lawsuit, your client's account should be reviewed by legal counsel to see if you have a chance of winning.  A lawsuit will take valuable time and resources away from your business and should be worth pursuing. Legal counsel will determine if:

  • documentation is available to support your case
  • the legal jurisdiction for the case
  • if the debt and lawyer fees are collectible
  • if the client is in bankruptcy or otherwise unable to pay

If you're still unsure if you have a case against a non-paying client, it may be time to consider Enterprise Recovery's Bad Debt Collections and Litigation services. Our B2B commercial collections works under no obligation, unless we collect. If we are unable to collect, our legal services team will review your account to determine if you have a case for a lawsuit. During the litigation process, our team will also help fill out the necessary forms and make the proper documentation available for the trial. 

SCHEDULE LEGAL REVIEW

Your B2B company  has options for collecting unpaid balances. If we can't collect, you'll also have Enterprise Recovery on your side to assist with commercial litigation for your commercial debt collection needs.

 

Topics: Commercial Debt Collection