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Mitchell Law Office, LLC |
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Commercial Collections |
The time to start collecting for your work is before you begin performing your work. Whether you are selling goods or performing construction work, there are some jobs that are more trouble than they are worth. There is nothing worse than not being paid for your work and then saying to yourself, "I knew I should never have taken on this project."
First of all, check out your customer: Does he have sufficient funding to pay you? Is he requiring one-sided contract terms? What does your "gut" say about your customer? Second, if your work is associated with a construction project, determine whether you have claim rights (lien claims on private projects and bond claims on most public projects). If you may have those rights, determine whether you need to take any preliminary steps to protect those rights (such as sending a pre-claim notice). Only after addressing both of those issues should you agree to perform the work. Once the work begins, monitor the payments as compared to your performance. If payments are unreasonably delayed, you should consider taking steps such as suspending performance. Caution: Suspending performance is an area full of "traps for the unwary." Before suspending performance, therefore, you need to carefully analyze all relevant factual and legal issues. You should carefully consider whether you need legal assistance before you take this step. Should you be thinking about terminating your performance, the above cautions are even more important. A general rule is that you should rarely if ever terminate your performance without prior legal consultation. If you have fully performed your work (or were forced to terminate your work) and are not timely paid, you are now in the "collections" phase. One of the initial issues in collections is whether you are a secured creditor or an unsecured creditor. Not surprisingly, the former tend to have a greater probability of receiving payment. A secured creditor is someone who has correctly taken the necessary steps to perfect a security interest in some property. Examples of secured creditors are those with perfected lien rights or perfected public works bond claim rights. Unsecured creditors are those who have not taken any special steps to perfect a security interest. An example of an unsecured creditor is a material supplier who sells goods but does not take any other steps. Before you arrive at the "collections" phase, you should have thought about what options might be available and how you want to avail yourself of those options. For example, do you plan to collect the debt yourself or do you plan to use an attorney or a collection agency? If you get to the point where you need legal assistance to collect what you are owed, please complete our Collections Checklist and send it to our office together with copies of your records. |