Can I Sue for Unpaid Invoices? A Guide for Small Businesses
If you’re a small business, you’ve probably run into this situation before. Customers or clients may withhold payments–and sometimes even refuse to pay altogether.
Some clients feel free to pay late while others won’t pay at all. And as a small business or independent contractor, it’s up to you to take the necessary steps to get the pay you deserve.
What can you do if you have unpaid invoices? Should you take it to court? Here are some steps you can take to recover your losses.
1. Follow Up Multiple Times
Before you take any legal action, it’s important to do everything that you can to get your invoice through other means.
First, try sending multiple letters and emails requesting the money. If that doesn’t work, follow up with phone calls or even stop by to visit the business in person. You can also try to reach higher-ups in the organization.
Explain that getting paid for your work is important to your business and that you can’t afford to have unpaid invoices.
Even if these attempts don’t work, they’re still important to keep track of. Keep a record of all your attempts at contacting them.
2. Make a Formal Demand
In order to initiate the legal process, you have to make a formal demand letter. Address it to an individual, business, or both.
Make sure that the tone of this letter is more formal than your previous messages. Demand that they pay the money by a certain date.
You’ll also want to include all the information. Identify when the invoice was due, how much is owed, when the money should be paid. Lastly, advise them that failure to pay the invoice could result in legal action.
3. Sue in Small Claims Court
If the debt isn’t too large, you should consider suing the client in small claims court. Every state has a small claims court that is designed to resolve these kinds of disputes.
The limit is typically between $2,000 to $7,500, but it depends on the state.
These courts are well suited for unpaid invoices because they’re simple, inexpensive, and fairly quickly.
This is the point where you can bring in the evidence of the services you provided, the invoice owed, and the notices given to the defendant about the amount owed. In fact, it’s likely that your client won’t show up on the court date. In these cases, you’ll win by default.
A substantial percentage of defendants in unpaid invoice cases don’t show up because they know they can’t win–which means you have a high likelihood of success in small claims court.
Getting the Payment You Deserve for Unpaid Invoices
As a small business or independent contractor, you’ll probably be facing unpaid invoices at some time in your career. But you don’t have to put up with this behavior.
You deserve to be paid for your work–and there are legal actions you can take to get what you’re owed.
Does your client still refuse to pay up? Contact us for legal guidance and to schedule a meeting with an attorney.