it is, sometimes you need to tell the client even though you've become friends that you can not do any additional work until your invoices are paid in full.
As a small business owner, you are responsible for the running of your business and, as a result, there are times when you need to make tough decisions that are best for your business. You can't afford to work without compensation and your client should understand that.
5. Get tough.
You've tried being gentle. You've tried being personal. And you've squeaked so many times that you're tired of hearing your own voice. Now it's time to put that prepaid legal plan to use!
Have your attorney send a formal letter stating that if you are not paid, in full, within X number of days, that you will either take the client to small claims court (the normal limit is between $2,000 and $7,500 it varies by state in the U.S.) or to arbitration. Whether you sue or go to arbitration depends on the contract you have with your client as some state that disputes will be arbitrated.
6. Bigger than small claims.
If the client owes you substantially more than the small claims process will allow you to sue for, you may wish to sue in a formal state trial court. Debt collection cases are usually simple and few collection cases actually make it to trial as most defendants either settle before trial or fail to show up for court (in which case you would receive a default judgment).
Chances are if you threaten legal action, your client will pay up. If he doesn't, you may have to follow through on your threat. Just remember to make this decision taking into account how much you are owed, your time for the legal action and whether or not you ever wish to work with this client in the future.
Note that if the client never pays you, you *may* be able to deduct the amount as a "bad debt". See your tax advisor for more information regarding the bad debt rule.
You want to take collection actions that you are comfortable with while thinking about how they will affect your future relationship with the client. Keep in mind however that you are a small business owner and should be promptly paid for services rendered and accepted. After all, you didn't go into business for yourself to work for free!
Article Source: http://www.articlemap.com
Online Business Manager & Entrepreneur, Sandra Martini teaches small business owners how to create more success in their business while maintaining their sanity and having fun. Sandra's coaching programs are available via teleconferencing, emails and telephone calls. For more information and to receive the FREE special report, "7 Wealth-Building Secrets of Successful Entrepreneurs", go to www.Online-Biz-Coach.com.
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