What’s a small business owner to do when a client or customer doesn’t pay invoices? Too often the answer is to write it off. But it doesn’t have to be.
You may have considered bringing your unpaid invoice to small claims court but dismissed the idea as too complicated or too time-consuming. But did you know there may be a way you can make small claims court work for you without ever setting foot inside the court?
The purpose of small claims court is to handle small claims quickly and without the services of attorneys. You function as your own attorney and the person against whom you’re making a claim must act as their own attorney. (Think Judge Judy.)
But your goal is to never actually go to court. Instead, you’ll lay the groundwork and use the threat of court as a lever to get paid.
Here’s what you do:
- Step 1: Gather evidence and supporting materials.
- Step 2: Go to the correct small claims court office and get the appropriate paperwork to file your claim.
- Step 3: Call the person who signed the original agreement, contract or whatever. This is the person who will have to appear in court, and they’re often a very high-level officer of the company. This person is almost certainly not someone who wants to spend an entire day (or longer) sitting in small claims court. Make this person aware that you are preparing the appropriate paperwork and will be filing it in a day or two so you can pursue the matter in small claims court. At this point the person may agree to pay you. If so, skip to step 7.
- Step 4: Prepare everything you need, get the filing fee ready, go back to the small claims court office and file your papers.
- Step 5: Request an officer of the court or similar official (such as a sheriff) to serve a summons to the person who signed the agreement that is not being honored. Often the embarrassment of an official or law enforcement officer is enough to get your claim settled in short order. If it works, go to step 7.
- Step 6: Contact the court to find out when you are to appear and make sure you are thoroughly prepared with a complete paper trail to support your claim.
- Step 7: Insist on payment in the form of a certified check, not a company check or personal check.
In many cases the simple threat of a day in small claims court is enough to get your payment, but make sure you can afford the time to file, sit in court, and collect when you win.
Remember, there is a strong possibility that the person you’re filing against is completely unaware their company has not paid you. This is why the courtesy call in step 3 is so important—it keeps you from burning your bridges unnecessarily.
Know that while you can’t normally have an attorney represent you in small claims court you should consult a qualified attorney (one who knows small-business law and finance) before beginning this claims process. Every state has different laws, limits, and processes.
Note: The preceding is not legal advice. Always consult appropriate legal counsel.
Janet Arrowood is managing director of Write Source. She can be reached at email@example.com.