Unpaid Invoice - Florida, USA
Main options for chasing payment from a client who is not paying?
You have been contracted by a Florida based company for services or for goods. You have fulfilled your part of the agreement or contract, however your customer has not paid you, so what do you do?
You are not alone, non payment of invoices is a major problem in the US and especially Florida. Some 16% of invoices in the US are not paid within 90 days. 4% are never paid.
Summary of Options
- Direct negotiation
- Go public by filing on www.disputesregister.org
- Collection Agency
- Legal action
Other options are also available, for example if you work in the Construction industry.
1 Direct negotiationThe first step before trying any of the other options is to engage directly with your client. Try speaking face to face or on the phone. Most people fear confrontation, and will probably acquiesce when approached directly. You should also send a reminder in writing, not only does this often work but it is also an important first step in the event that you decide to escalate to legal action.
The reminder should be friendly, business like and short. Make sure you remind how much is outstanding, quote the invoice number and attach the original invoice. For example
“Dear [Client], I hope you are well. It seems that are invoice, number XXX, for $YYYY has not been paid yet within our standard 28 day terms. I attach the original invoice for you convenience, and I would be grateful if you can settle it very soon.”You may decide to send a second reminder if there is still no payment. This time, you should use slightly more aggressive language. For example:
“Dear [Client], I have sent you X payment reminders for the overdue invoice, number XXX, for $YYY.These seem t have been ignored and sadly leave me with no choice but to escalate this matter to [handing over to our collection agency] / [filing an unpaid invoice dispute on disputesregister.org]/ [taking legal action ], unless the full amount is pay by [enter date]. It would be great if we could avoid such escalation and resume our normal business relationship.”
2. MediationMediation is an option if you feel that the reason for non payment of your invoice is because your client has some legitimate reasons to contest the amount to be paid. For example. there was a major change in scope of your work, and the invoiced amount is no longer related to the service or goods you provided.
The mediator is chosen by both sides. Their job is to understand the position(s) of both parties. The mediator attempts to bring them together by pointing out the strengths and weaknesses of either side. The mediator’s role is to be objective and neutral. They use the positions of both sides to help resolve the conflict. Mediation, more than other forms of dispute resolution, it assists the parties in finding a solution that both sides accept, possibly saving any business relationships at the same time.
If you decide to take your client to court, there is a very good chance that the court judge will first order you try mediation first. Mediation is common in small claims courts and often there is no charge.
3. Go PublicIf you feel your case is clear cut and therefore mediation is not relevant, then straightforward and simple action to take is to file your unpaid invoice public on the www.disputesregister.org (The Business Disputes Register). The filing fee is $20. You simply type a few details about your unpaid invoice and then your dispute is then automatically published on the internet. Your client then receives an email notification about your publication of the unpaid invoice dispute and is urged to contact you to negotiate its removal from the Disputes Register. The dispute quickly gets indexed by search engines, and people will come across your unpaid invoice dispute when they search for your client’s name. Effectively, you have gone public with your dispute and your client will be want to resolve the situation. You have the power to remove the dispute from the register once you are satisfied.
|TOROS & VINOS, LLC||United States - Florida||EUR||5,609||Unpaid invoice|
|DIRECT WINE & SPIRITS, LLC||United States - Florida||USD||67,572||Unpaid invoice|
|3RE MANAGEMENT, LLC||United States - Florida||USD||10,500||Unpaid invoice|
|LILY'S BAKERY FACTORY, LLC||United States - Florida||USD||5,017||Unpaid invoice|
|Grand nail and spa||United States - Florida||AUD||17,000||Unpaid invoice|
|FRONTLINE FALL PROTECTION INC.||United States - Florida||USD||18,365||Unpaid invoice|
|AHMAD TRANSPORTATION, INC||United States - Florida||USD||1,035||Unpaid invoice|
4. Collection AgencyIf the above options did not work then you can try a Collection Agency. Collection agencies often rely on making phone calls to the debtor to request payment, a method you have likely already tried yourself but gave up due to not getting any results. Collection agencies tend to be more persistent resourceful and aggressive. They usually charge on a success fee basis which varies between 15 and 30%. They tend to approach debt collection in several phase:
- Phase 1 (2 to 3 weeks): Send several demand letters to the debtor via U.S. mail and daily phone. They will also contact friends and colleagues of the debtor with the excuse of trying to locate the debtor, but the real reason is to embarrass the debtor
- Phase 2: An attorney local to the debtor is used to write several more letters of demand and additional phone calls.
- Phase 3: If the first 2 phases have not yielded results then a decision is made whether to pursue the matter with legal action. The Recovery agency will advise on your chances of success and my charge additional fixed fees at this stage.
5. Legal ActionBefore considering legal action, the main question to ask yourself is whether to employ an attorney or not. If the sum involved is $8,000 or less, you can use a small claims court and you can choose to represent yourself. If the sum is higher then you will file for a County Civil Case or even a Circuit Civil Case in which case it is definitely recommended to hire an attorney.
You could also hire an attorney without initially seeking to ho to court, whereby the attorney essentially fulfils the role of the debt collection agency.
Hiring an AttorneyThe attorney will first send a demand letter to your client demanding payment. If the debtor (your client) does not respond, your attorney will then commence legal action by filing a lawsuit against them. The collection attorney understands the complexities of such cases and will aggressively pursue your case to get you the money you are owed.
LitigationLitigation is the slowest, most expensive, and most uncertain form of dispute resolution. Attorneys fees, filing fees, and costs for depositions, if needed, add up quickly. Litigation expenses can end up costing more than one hundred thousand dollars ($100,000.00), and in the end, the outcome can be uncertain.
Court proceedings (debtor in Florida)Ideally you file a lawsuit in the Florida county where the debtor’s principal place of business.
You can also file in another US state (your home state), but there is an extra step after judgment is awarded: the judgment will need to be “domesticated”, recorded and docketed in Florida.
It is also technically possible. Although rare, to file in a court outside of the US (your home country) provided certain conditions are met such as the debtor receiving proper notice and afforded a fair opportunity to defend its interests. The judgment of the foreign court can then be domesticated in Florida.
These are the main steps for court proceedings:
- File a lawsuit with the clerk of the court
- Serve the debtor with the lawsuit by an authorized process server
- The debtor, now “defendant” has 20 to respond or will be “defaulted”
- Discovery phase: sworn testimonies [BOTH SIDES?]and other witnesses covering the facs of the case
- Mediation: nearly always the parties are obliged to sit down to try to resolve the case with a professional mediator
- Trial: if mediation fails then trial will take place and either a Judge of a jury of citizens will make a decision.
- If you win, the defendant pay the judgment immediately or appeal.
At any time during this process, the defendant (your client), may pay you and settle the claim. However, obtaining a judgment against them does not necessarily mean you will collect. Postjudgment legal procedures are often required prior to any collection. You may find it necessary to retain an attorney to assist you in postjudgment procedures.
Small Claims CourtA party represented by an attorney cannot impose discovery of a party not represented by an attorney.
You will need to file a Statement of Claim.
A statement of claim is a cause of action for a set of facts to justify a right to sue to obtain money, property, or the enforcement of a right against another party
The location of the court can be where the contract was entered into, where the work took place, where your client resides or any location agreed to in a contract. Find your local court clerk here: https://www.flclerks.com/page/FindaClerk.
All Claims less than $100.00 $ 55.00
All Claims of $100.00 or more, but not more than $500 $ 80.00
All Claims of more than $500.00, but not more than $2,500 $ 175.00
All Claims for more than $2,500.00, but not more than $5,000 $ 300.00
All Claims for more than $5,000.00, but not more than $8,000 $ 300.00
Summons Issue Fee per Summons $ 10.00
Sheriff Service Fee per Summons $ 40.00
For filing court documents, You do not need to visit a court, as this can be done online through the “DIY Florida” project (https://www.myflcourtaccess.com/) . You will need to register first. You go through an online “interview” to generate a DIY document which is a process that helps you file a legal documents such as a Statement of Claim.
These screen shots give you an idea of the interview process: