The prospect of actually filing a lawsuit against a customer is a tough decision. Sometimes, it is not such a black and white situation. Perhaps there are disputes surrounding the services/products offered.
Maybe it’s not a guarantee a court would side with you.
Perhaps you don’t want the distraction of litigation or make a policy never to sue customers.
At this point, if you are trying your hardest to avoid the court system; right before the step of having lawyers file a complaint in court, you can discuss the numbers with your accountant. In some cases, you can absorb the loss by writing off the amount in tax savings.
In a round about way, you will have been made whole by saving money that would have went out the door anyway.
In that situation, you decide to ‘write the debt off’ in taxes, and you end your collections activity and move on.
Hopefully by beefing up your formal procedures and including new strategies throughout the entire cycle of your outstanding business credit, you should greatly reduce the volume and impact of non-paying customers.
If you ever have any questions on how to handle a particular situation of non-payment from a client or customer, contact an experience business law firm.