This Guide will help your business to know how to recover money that is owed to it from other businesses.
Negotiate well so that you have your rights clearly established
Every relationship, business especially, is a based on a negotiation. Who is going to give what to whom, when and how? What happens if one party fails to follow through? How will you resolve your disputes? What will you be able to recover if you have to sue. You can and should negotiate all of these terms in all of your business relationships - whether customer, vendor or other service.
Write it down
All agreements should be in writing. Make sure that you have included all of the terms you have negotiated. In particular, make sure you have a provision that you are entitled to recover your attorneys' fees if there is a dispute. Without such written language, it is unlikely you will recover your fees in pursuit of your claim.
Evaluate your claim
That evaluation should include how much it will cost you to recover the money you are owed. When I say "cost," in addition to the financial burden of taking legal action, you will have to expend time and energy to pursue your claim. Additionally, you should evaluate whether the other party will have the ability to pay any judgment you are able to actually recover. If they aren't paying you today, will they have the resources to pay you a year from now?
Where are you going to bring your claim
You may have a provision in your agreement that requires mediation or arbitration. If you do not, then depending on how much you are owed, you will either bring your claim in Small Claims Court or District Court. Small Claims Court can be faster, but you cannot recover attorneys' fees in Small Claims Court. Even if you are in District Court, depending on the amount of the claim, you may still be forced into non-binding arbitration.
Once you win, what do you have?
Once you get through the Court processes (and have, likely spent thousands and thousands of dollars) and you have a judgment, what do you get? A piece of paper. There may still be things you have to do before you recover a single dime. You can record the judgment; you can garnish bank accounts (with some limitations); and/or you can attach other property.
What is the bottom line?
Fully negotiate and write down your agreements. You will have greater certainty and less likelihood of having to chase people for money.
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