When is the Right Time to Litigate A/R?



The “I Can Do It” Trap

When collecting past-due accounts receivable (A/R), there is a point of diminishing returns at which the efforts of a lay person just can’t produce the results that can be attained by a qualified collections attorney. It’s not uncommon for clients to hold off on litigation and think “I can do it,” not because it’s easy or even realistic, but because court costs and contingency fees can reduce net income when the claim does eventually get paid. But even a portion is more than nothing, and bumping your head against a wall with no results gets tiresome and costly as well. So how do you evaluate when is the right time to outsource, find a collection attorney, and litigate collection matters?


Six Signs It’s Time to Engage a Collection Attorney

  • Check Your Cashflow. Sometimes a dollar in the bank is worth more than two dollars still past due. If your balance sheet is suffering, it might be time to litigate and monetize your claim sooner, rather than continue spending your own time and resources with possibly nothing to show for it down the road.
  • Prioritize Your Time. Even if your collection efforts might ultimately prove successful in the long run, how much time and labor will it cost you? And what else could you be doing with your time that might be more productive? If you keep putting more and more time into a claim and there’s no end in sight, then it might be time to litigate. Don’t have the time or staff to project manage a legal claim? You can outsource that too.
  • Don’t Get Strung Along. When someone promises to pay a past-due debt and then they don’t follow through, it can be frustrating. Lay people like bookkeepers and collection agents don’t have the authority of the courts to enforce a judgement, including liens and garnishments, but collection attorneys can deliver. If you’re dealing with someone who hasn’t kept their word, it may be time to litigate.
  • Don’t Wait Too Long. Collection matters are typically under a statute of limitations that might vary from one jurisdiction to the next. Because the litigation process can sometimes take several months, or even longer, it’s essential to make the decision to litigate well in advance of creditors’ rights expiring.
  • Don’t Draw the Short Straw. Be aware that even with litigation, defendants that declare bankruptcy may have limited assets to be divided up among multiple creditors. After all, you’re not the only one looking for payment. If you wait too long to litigate, those assets may already be long gone by the time you receive judgement in your favor.
  • Don’t Sweat the Small Stuff. Understand the normal court costs of filing suit in the relevant jurisdiction and compare that to the amount due on the claim. Unless you’re aggregating multiple claims together in bulk, most attorneys won’t take on a claim valued at less than $1,000, and often they have even higher limits. That’s to protect you as well as them from spending more than you might make back. If you’re a first-party creditor, contact The NL for referrals for collection agencies and debt buyers that might help. Otherwise consider Small Claims Court, or check with your accountant if it might make more sense to simply write off small amounts like that.


When the Time Is Right

In an ideal world, everyone would get fairly paid without resorting to litigation. But in the real world, it’s important to know how and when to utilize the legal option. If one or more of the above situations applies to you, then it might be time to litigate. And when you do, the premier legal network of The NL is here to help in every jurisdiction of the country. The attorneys in our premier, nation-wide network accept claims on a contingency-fee basis, so there are no attorney fees until you collect. Simply file a claim to get started, and stop beating your head against the wall.  

Have you ever thought about outsourcing the collection process before? Join the discussion on our LinkedIn and let us know!


About the NL

The NL is the online B2B hub where business clients across multiple industries and market segments connect with our premier network of vetted contingency-fee attorneys to get paid what they’re fairly due. We humanize our technology, develop tailored strategies, and act as a trusted third party to facilitate profitable long-term business relationships in today’s market. 

Categories: ARM Industry, business debt, collect overdue receivables, Collection Attorney Profession, Commercial collections, Debt Collection, forwarders, Nl Advantage, NL Enterprise, NL Insider, NL Professional, old debt

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