Should You Sue a Client to Get Paid

By QuickBooks Canada Team

3 min read

You’ve invoiced for your work and sent statements. You’ve followed up with emails and phone calls. You’ve escalated the issue as much as you can. At this point, it’s clear that your customer has no intention to pay you what you’re owed. You do have the option to sue your client (likely in small claims court) for nonpayment of fees — but is it worth it? Before you take action, ask yourself a few questions to determine if small claims is the right remedy for you.

Small Claims Basics

As far as legal remedies go, small claims court is an inexpensive and relatively quick option. You don’t need a lawyer to represent you and the judge will make a decision within a few days of the trial. Small claims court is specifically designed for smaller-ticket disputes. The most you can sue for is $25,000 or less excluding interest and costs.

Can You Sue Them?

You can sue either individuals or businesses using Small Claims Court.  Be prepared to write a short, clear summarization of the events that occurred leading up to the filing of the Plaintiff’s Claim.  You will also need to gather and have made available the documentation needed to support your claim.  If your contract or agreement was verbal you can still utilize Small Claims Court, you just might have a harder time proving the situation.  And remember, there is a time limitation for filing.  In most cases, the limitation is two years since the incident.

Is It Worth the Time and Energy?

Small claims court isn’t expensive to pursue, but it does take time away from revenue-producing activities. To begin the action, you must file paperwork with the court clerk and wait for a hearing date. Before the court date, you need to gather and organize all the documentation that supports your case — like contracts, canceled checks and emails — to provide to the judge. You’ll be asked to explain your side, so you should prepare what you want to say beforehand.

Aside from the value of your time, there’s a mental cost to pay. Working on your case will be a constant reminder of the anger and frustration the client caused you, which won’t leave you in a healthy state of mind.

Do You Have a Good Case?

To succeed in small claims court, you need evidence of a breach of contract. If your contract is vague, confusing or not in writing, it will be more difficult to prove that the contract’s been broken. You’re also responsible for proving that you completed and provided the work required of you under the terms of the contract. If the defendant felt that your work was substandard or you delivered the product late, it may be harder to win.

Can You Collect?

Just because a small claims court issues a judgment in your favor doesn’t mean that you’ll get paid. You’re responsible for collecting the judgment; the court won’t do it for you. If the defendant doesn’t pay, you can contact an enforcement agency and request a wage garnishment or that the defendant’s assets be seized.

What Will It Do for Business?

Taking a deadbeat client to small claims court is empowering, and you’re well within your rights to do it. However, you also have to consider the effect it will have on your business. Perhaps taking your client to small claims court will show other clients that they can’t push you around. It’s also possible that the client you sue will bad-mouth you and harm your reputation. Even if you were in the right, other folks may get a skewed version of the facts. Potential clients may be hesitant to work with you knowing that you have a sued a previous client, even if you were within your rights to do it.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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