Los Angeles Times


Wednesday, March 18, 1998

Small Business
Collecting Debt: Contract, Quick Action Are Key
By KAREN E. KLEIN, Special to The Times


Want to print?
A printer-friendly version of this story.

Q: Last year I did some engineering work for an incorporated client with whom I had successfully worked on a cash-on-delivery basis for a number of years. We had a good business relationship, so I extended him $3,000 credit. I billed him in February and August of 1997 and he still hasn't paid. When I ask him about payment, he tells me about his financial hardship and personal integrity and angrily demands that I trust him. What are my options for getting at least part of the money? I have carefully documented our communications.
--Paul Nicholas, Burbank
* * *

A: I specialize in debt-collection matters and sit as a judge pro tem in Small Claims Court and in Superior Court on small-claims appeals. I have learned that rule No. 1 for any small business is never work without a written contract that specifies the terms and conditions of your employment and compensation. That way, if things do not work out, you have an enforceable document. Also, it puts your clients on notice that they are dealing with a business relationship rather than a personal one. They will tend to approach their obligations differently when they know that.
If you did have a written contract with this client, it should have specified the method by which you were supposed to get paid and a plan for what would happen if you were not paid on a timely basis. Typically, contracts state that if you are not paid by a certain date (say, 30 days after completion of the job) interest charges are attached. Such contracts also include a clause stating that attorneys' fees will apply if you have to resort to legal measures to get payment.


Search the archives of the Los Angeles Times for similar stories. You will not be charged to look for stories, only to retrieve one.

Copyright Los Angeles Times



For help, click here Previous Match Search Results Search Panel Next Match