When clients refuse to pay for delivered goods, it can be a frustrating and challenging situation for businesses. In such cases, taking the right steps is crucial to recover the owed funds and protect your interests. This article outlines the key actions to take when faced with clients who refuse to pay.
Key Takeaways
- Thorough investigation of the case is essential to assess the possibility of recovery.
- Consider recommendations for closure or litigation based on the investigation results.
- Be prepared for legal action, including upfront costs such as court fees and filing expenses.
- Understand the rates and recovery system in place to determine the collection process.
- Follow a structured recovery system with clear phases to maximize the chances of recovering the funds.
Steps to Take When Clients Refuse to Pay
Thorough Investigation of the Case
Before taking any further steps, a thorough investigation of the case is crucial. This involves a detailed examination of the facts and the debtor’s assets to assess the likelihood of recovery. If the investigation suggests that recovery is unlikely, closure of the case may be recommended, sparing you unnecessary expenses.
A meticulous investigation sets the stage for informed decision-making, ensuring that you only proceed with litigation when there’s a tangible chance of success.
If the outcome of the investigation points towards a reasonable chance of recovery, litigation may be the next course of action. However, this comes with the need to understand the upfront costs involved, such as court costs and filing fees, which typically range from $600 to $700. It’s essential to weigh these costs against the potential benefits of legal action.
The decision to litigate should be made with a clear understanding of the rates and recovery system. Here’s a brief overview of the rates:
- Accounts under 1 year: 30% (1-9 claims) or 27% (10+ claims) of the amount collected.
- Accounts over 1 year: 40% (1-9 claims) or 35% (10+ claims) of the amount collected.
- Accounts under $1000: 50% of the amount collected, regardless of the number of claims.
- Accounts placed with an attorney: 50% of the amount collected, irrespective of other factors.
Recommendation for Closure or Litigation
After a meticulous review, our firm will advise on the most prudent course of action. If the likelihood of recovery is slim, closure may be the best option, sparing you further costs. Conversely, should litigation seem viable, you’re at a crossroads.
Choosing not to litigate allows you to retract the claim at no cost, or continue with standard collection efforts—calls, emails, faxes. Opting for litigation necessitates upfront legal fees, typically between $600 to $700, depending on the debtor’s location. These fees cover court costs, filing fees, and more.
Should litigation not yield results, rest assured, you owe nothing further.
Our rates are competitive and vary based on the number of claims and their age. Here’s a snapshot of our fee structure:
For 1-9 claims:
- Under 1 year: 30%
- Over 1 year: 40%
- Under $1000: 50%
- With an attorney: 50%
For 10+ claims:
- Under 1 year: 27%
- Over 1 year: 35%
- Under $1000: 40%
- With an attorney: 50%
Deciding to proceed with legal action is significant. Weigh the potential for recovery against the upfront costs and possible outcomes before moving forward.
Legal Action and Upfront Costs
When litigation is the chosen path, be prepared for initial expenses. These upfront costs cover court fees, filing charges, and other legal necessities. Typically, you’re looking at an outlay of $600 to $700, depending on the debtor’s location.
Once you’ve funded these costs, our affiliated attorney swings into action, filing a lawsuit to recover the full amount due, including the cost of legal action itself.
Remember, these costs are an investment towards reclaiming what’s rightfully yours. If litigation doesn’t result in recovery, you’re not left out of pocket for our services. Here’s a quick breakdown of potential recovery rates:
- Accounts under 1 year: 30% (1-9 claims) or 27% (10+ claims)
- Accounts over 1 year: 40% (1-9 claims) or 35% (10+ claims)
- Accounts under $1000: 50% regardless of claim count
- Accounts requiring attorney involvement: 50% across the board
Recovery isn’t just about getting back what you lost; it’s about ensuring the effort and resources you invest yield tangible results.
Rates and Recovery System
Understanding the rates and recovery system is crucial when dealing with non-paying clients. The cost of recovery should be weighed against the potential return. Here’s a breakdown of our competitive collection rates:
For 1-9 claims:
- Accounts under 1 year old: 30% of the amount collected.
- Accounts over 1 year old: 40% of the amount collected.
- Accounts under $1000.00: 50% of the amount collected.
- Accounts placed with an attorney: 50% of the amount collected.
For 10 or more claims:
- Accounts under 1 year old: 27% of the amount collected.
- Accounts over 1 year old: 35% of the amount collected.
- Accounts under $1000.00: 40% of the amount collected.
- Accounts placed with an attorney: 50% of the amount collected.
It’s essential to consider these rates in light of the age and size of the debt, as well as the decision to engage an attorney. Remember, the goal is to maximize recovery while minimizing costs.
Our three-phase Recovery System ensures persistent and professional pursuit of your funds. From initial contact within 24 hours to potential legal action, we are committed to recovering what is rightfully yours. Each phase escalates the pressure on the debtor, increasing the likelihood of payment.
Frequently Asked Questions
What happens if the investigation shows that the possibility of recovery is not likely?
If the investigation reveals that the possibility of recovery is not likely, we will recommend closure of the case, and you will not owe anything to our firm or our affiliated attorney.
What are the options if litigation is recommended?
If litigation is recommended, you have the choice to proceed with legal action by paying upfront legal costs or to withdraw the claim with no obligation to pay our firm or our affiliated attorney.
What are the upfront legal costs for proceeding with legal action?
The upfront legal costs for proceeding with legal action typically range from $600.00 to $700.00, covering court costs, filing fees, and other related expenses.
What are the rates for the recovery system based on the number of claims submitted?
The rates for the recovery system vary based on the number of claims submitted, with different percentages for accounts under 1 year in age, accounts over 1 year in age, accounts under $1000.00, and accounts placed with an attorney.
What happens if the attempts to collect via litigation fail?
If the attempts to collect via litigation fail, the case will be closed, and you will not owe anything to our firm or our affiliated attorney.
What is the process of the 3-phase Recovery System for recovering Company funds?
The 3-phase Recovery System involves sending letters to debtors, skip-tracing, contacting debtors for resolution, forwarding cases to affiliated attorneys, drafting demand letters, and making attempts to resolve accounts before recommending the next steps.
