Recent economic trends have caused many contractors and other businesses to deal with accounts receivable issues. Five years ago, when the economy was better as a whole, there was less concern with enforcing a contractual right to payment because bills were being timely paid.
For those contractors dealing with collection issues, not much can be done to “squeeze blood from a turnip”—if your customer has no money, collection efforts are often futile.
But to best assure your ability to collect debts, a few steps can be taken at the contract stage and during your work to best assure your ability to collect.
As a litigation attorney, I can advise you that these are the circumstances that best allow me to collect debts owed to my clients:
- Clear and certain scope of work terms set forth within a signed contract, including signed change orders confirming any revisions to the scope of work or the contract price (don’t forget to make sure your home improvement contract meets the legal requirements of Business & Professions Code section 7159, otherwise collection will be even more difficult);
- Attorneys’ fees provisions in a contract that help you leverage payment short of incurring attorneys’ fees;
- Service charge provisions in a contract that further help you leverage payment of at least the principal balance owed; Read More→
