What Do You Do When a Client Does Not Pay: Recovering Outstanding Debts for Goods or Services and Open Accounts
Of the many hardships faced by small business owners, collecting on outstanding accounts for the goods or services they have provided when their customers have not paid those invoices, is among the most frustrating. It’s a double whammy, not only have you not been paid, but you have already outlaid your time and money and you may not have an entire billing department dedicated to collecting on outstanding invoices. As a small business, we know first hand the frustrations of having open accounts. Thankfully, Louisiana Law provides some measure of protection for your unpaid invoice, or “Open Account,” which even allows you to recover the attorney fees directly from the debtor rather than you having to pay those fees.
Louisiana Law broadly defines an “open account” as any account on which purchasers customarily purchase goods and services on credit. Specifically, Louisiana Revised Statute § 9:2781 provides the following extremely broad definition:
“Open account” includes any account for which a part or all of the balance is past due, whether or not the account reflects one or more transactions and whether or not at the time of contracting the parties expected future transactions. “Open account” shall include debts incurred for professional services, including but not limited to legal and medical services.
So long as the outstanding debt falls within that broad definition, you are entitled to the protections of § 9:2781. That distinction is important, because it allows you to recover most or all of your attorney’s fees from the debtor, or person that failed to pay, rather than having to pay those fees out of your own pockets.
Broadly speaking, the statute requires that you make an amicable written demand on the debtor. If the debtor does not pay that amount within thirty (30) days, you are entitled to recover reasonable attorney’s fees incurred in recovering the outstanding amount or “open account.”
Though it is simple in theory, there are a number of exceptions and specials rules that apply depending on the type of debt. Failure to comply with those provisions can drastically effect your ability to recover or amount of recovery. Because of these rules, it is importation to consult an attorney to discuss your open accounts as soon as possible.
If you or someone you know has outstanding balances and would like to speak with someone about trying to recover those amounts as an “Open Account,” please give us a call today for a free consultation.
- Chris M. Short is an associate attorney at Kiefer & Kiefer.
This is provided for informational purposes only and not for the purpose of providing legal advice