In March, we covered the common signs that you need to hire a commercial collection agency. Now that you’ve hired a commercial collection agency, the next question is when should your business go to litigation (e.g. taking legal action). In this article, we will review four signs that you need to go to litigation to get money owed to you.

the Client Signed a Financial Policy

It’s important to have all clients of your business sign a written financial policy or payment term contract stating that they’ll pay you back for your services to them. On the contract it should state all the payment options they can pay you. Once the client signs that contract, they are agreeing that they will pay you back or you can take them to court.

Your Services to the client are Complete

If the client signed a financial policy, then it’s your job to make sure that all services included in the contract have been completed and with successful results. This is your moment to review the performance of the services and if you need to redo anything that might be deemed unworthy. If your client doesn’t agree that the services provided are adequate, then they try to argue that they don’t have to pay the contracted amount. If you find that your services matched what you and the client agreed on in the contract, then you are well within your right to continue to litigation.

The Client is Nonexistent

Is the client non-responsive or refusing payment? Sometimes clients pretend that they “didn’t get the message” or argue that they can’t pay at the moment. It’s important to stay professional and let the client know that if they continue to refuse payment regardless of the reason, that you will let the court decide when they pay. Sometimes the threat of legal action will be enough to trigger payment for your services.

litigation is approved by Legal counsel

Once you’ve made the decision to proceed with legal action against the client, it’s best to get the account reviewed by a legal representative. Litigation procedures can be costly and take considerable time. If you’re not 100 percent sure taking the client’s account to litigation will end in your favor, spend the extra time and money and get the account reviewed by legal counsel.