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Estate and Business Planning Legal Blog

Monday, September 11, 2017

How to Prevent Collection Problems


It is indeed troubling when you experience a payment problem after having exerted your best efforts to render valuable services or deliver high quality goods to a customer.  Aside from the annoyance caused by non-payment, there are obvious financial repercussions as well. Fortunately, there are a number of steps one can take to minimize payment problems.

Of course, requiring potential customers to sign a simple contract with you before goods are delivered or services are rendered will help in avoiding disputes.  A contract also serves to remind the customer of his or her payment obligation and conveys to the customer that you treat your business (and payment) seriously.  If a contract is not appealing, for whatever personal or business reason, one should at least use a detailed invoice form which specifies the nature and quantity of the goods or services, the price which the customer is obligated to pay, and when payment is to be made. 

A clause in your contract or invoice which states that New York law governs and mandates consent to personal jurisdiction in New York is essential when dealing with out-of-state customers.  In the event there is a dispute, you will then be able to commence litigation in New York, rather than in some other state.  A provision which requires the losing party to pay the legal fees of the prevailing party may also discourage non-payment.

A properly drafted contract or invoice, although helpful, will not guarantee payment in every instance; therefore, one must be prepared to deal with payment problems effectively.  First, it is extremely important that you attempt to resolve a payment problem as quickly and aggressively as possible.  Unfortunately, the more time that passes, the less likely one will be paid.  In order to avoid alienating long-time customers or friends, tactful yet stern demands for payment should be made by clerical or accounts receivable personnel, not by the business owner or executive.

There will be occasions when your collection attempts will not be successful.  In that event, you may prefer to broker a settlement rather than commencing litigation; however, you need to convey your seriousness and willingness to resort to litigation if it should become necessary.

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At the Law Office of Angela Siegel, we are pleased to offer legal assistance to clients located in Nassau, Suffolk, Queens, Kings and New York Counties specifically but not limited to Garden City, Jericho, East Meadow, Mineola, Syosset, Roslyn, Cedarhurst, Woodmere, Hicksville, Plainview, Merrick, Wantagh, Bellmore, Rockville Center, West Hempstead, Little Neck, Douglaston, Bayside, Flushing, Forest Hills, Astoria, etc., as well as clients located within the state of Florida.



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