One of the biggest challenges for business owners is managing cash flow. Running a business is expensive, and while none of your creditors want to wait to be paid, sometimes collecting from your customers can be a real challenge. What can a business owner do to collect money owed by their customers?

You have to take action. You have to rebel against the Nova Scotia ‘nice guy’ persona so deeply engrained in us.  We are brought up to be so neighbourly that I’ve noticed clients sometimes feel like standing up and demanding to get what they are entitled to somehow feels rude. However, if you do nothing, most delinquent accounts will never get paid.

I’m here to tell you it’s not rude to stand up for yourself.  If something bad has happened, go see a lawyer.  You owe it to yourself, and the business you’ve worked so hard for, to at least find out what your options are.  Many law firms offer this sort of initial consult at a reduced fixed rate.  You get to explain what has happened and get an opinion on where you stand in the eyes of the law.  Walking into a law firm for a consult is a long way from actually suing someone and you may walk out with some suggestions on how to resolve the situation without any further need for a lawyer’s assistance.

And please, rest assured - you’re not alone.  When clients finally do come in, many reveal that the reason they delayed coming in was that they were embarrassed to have landed in the situation.  None of us are born knowing how to run every element of a business and we all make mistakes.  Burying your head in the sand and pretending the situation didn’t happen is never a smart business decision. 

In most cases, you’ll have a choice of several routes to take. Sometimes the first step is just going back to your customer armed with better information to insist on payment. Often, a good first step is a formal ‘Demand Letter’.  This is where you hire a lawyer who writes a letter which says, ‘I’ve reviewed the file.  I think my client is right, so pay within ‘X’ days or we’ll sue’.  This letter will cause many customers to stop playing games and pay in full.  They realize you’re not going to let it drop and they don’t want a lawsuit they know they won’t win.  At the very least, it may start a conversation that could lead to an acceptable resolution.

If you’re not owed a huge amount, Small Claims Court is often a great option.  In many places you can be in front of the judge in as little as two months. You often get a decision the same day as your hearing.  In Nova Scotia, it costs less than $100 to file a claim seeking less than $5,000 and just under $200 to seek more than $5,000.  You can represent yourself from start to finish or enlist the help of a lawyer.  You can claim up to $25,000.  Also, even if you are owed more than $25,000, you can reduce your claim to be heard in Small Claims Court.  You would choose this route if the savings on legal fees would be more than the amount you reduce your claim by.  Your issue also gets resolved significantly faster than taking the matter to Supreme Court.

For a Supreme Court action, you’ll need a lawyer.  Supreme Court is laden with red tape and costly, required procedures.  Be sure your lawyer is very clear upfront about the legal costs, how long it will take to get a decision and your realistic chances of success.  Just as important, be sure to discuss the likelihood of actually collecting if you win.  In debt collection, winning is only half the battle.  You also have to enforce the order.

Once a judge has determined you’re right, the next, often more challenging, step is actually collecting.  Most debtors will not simply write you a cheque – you have to enforce against them.  Your lawyer can register the judgment at the Registry of Deeds.  This will prevent them from selling/mortgaging their property and after a year you can actually force the sale of their property.  Your lawyer can also enlist the help of the Sheriff’s department to garnish wages and empty their bank accounts.  In extreme cases, you can repossess their personal property. 

The bottom line on your bottom line is, you have options and doing nothing isn’t your best one.  Take the plunge, talk to a lawyer and learn what they are so you can make an educated decision.

If you're looking for information on your options for debt collection on overdue accounts receivables in Nova Scotia our law firm would be happy to help.  You can call us at (902) 826-3070 or email us at info@highlanderlaw.ca to set up a meeting with one of our lawyers at our Tantallon law firm. You can also schedule a no commitment Issue Review Consult for $250+HST where you have the opportunity to explain your situation to a lawyer and get basic advice before deciding whether or not you'd like to retain us.

If you have any questions about this subject,

By: Dianna M. Rievaj, MBA, LLB

Managing Lawyer at Highlander Law Group

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. Nothing contained on this blog is legal advice or constitutes a legal opinion. While it is our goal to provide information which is current, legislative changes and court decisions, among other matters, may result in some information no longer being current or accurate. You should consult a lawyer before relying on any information. The views expressed herein by individual contributing lawyers posting entries to the blog are solely those of the authors and should not necessarily be attributed to or considered representative of the firm of Highlander Law Group Lawyers.