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Question added to topic Legal Basics For StartupsJuly 11, 2009

How can I ensure a general contractor pays me?

I recently started my own cleaning company and was subcontracting for another company. We decided not to work with them anymore. We didn't have any written contract with them, but we still have invoices and checks--they owe us $9,400 dollars and are now avoiding us. What can I do to get the money that is owed? Is small claims court the answer?
There are two parts to the answer: what you can do in this particular situation, and what you can do to prevent it from happening in the future.

To the first point, the amount outstanding may be too large for small claims court in your jurisdiction. If that's the case, you could be looking at a more drawn-out process for resolving this in your local courts. Consider speaking to a collections agent or collections attorney about how to handle it. You'll lose about 1/3 of the money in their contingency fee, but you'll be able to get this off your plate and get back to business.

For the future, give some thought to having a written contract, and to making your non-payment policies clear. You shouldn't have to keep performing cleaning services if you're not getting paid. A local attorney can help you figure out how best to do that.

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.

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