Receivables Management

Under US law, an account receivable is a chose in action—a right to sue for a debt that must be maintained with evidentiary precision. 

To be legally enforceable, a receivable must be based on a valid contract where the goods or services were delivered as promised. We treat every line item on your AR aging report as a potential exhibit in a collection litigation, ensuring that the foundational documents are unassailable. This legal perspective shifts the focus from "hoping for payment" to "preparing for enforcement."

Accounting management tracks the flow of funds, whereas legal receivables management secures the right to those funds. 

While a Finance Director monitors the DSO (Days Sales Outstanding), a legal partner monitors the statute of limitations and the integrity of the venue selection clauses. SJKP LLP acts as a professional safeguard, bridging the gap between your balance sheet and the civil court system to ensure that your financial interests are protected by the rule of law.

The legal strength of a receivable is determined at the moment the credit terms are accepted by the customer. 

This stage involves the drafting of master service agreements or purchase orders that clearly define payment obligations, late fee provisions, and acceleration clauses. If your contracts lack these specific legal triggers, your ability to recover interest or attorney fees during a future default is significantly compromised.

When a receivable becomes delinquent, the focus shifts from relationship management to pre-litigation enforcement. 

This is the critical window where a demand for payment, issued on law firm letterhead, can often achieve a negotiated resolution without the need for a lawsuit. We assist our clients in identifying these "red flag" accounts early, deploying structured follow-up procedures that document the default and preserve the right to a future claim.

Once a receivable has bypassed all pre-litigation attempts at recovery, it must be converted into a formal legal claim. 

This stage involves the filing of a summons and complaint for breach of contract. The goal is to obtain a default judgment or a summary judgment that grants the business the power to utilize enforcement remedies such as bank levies or liens. Outcomes depend on the specific facts of each transaction, and we manage this transition with the clinical precision required to minimize time-to-recovery.

A well-drafted commercial contract acts as a self-executing enforcement tool by including specific clauses that penalize non-payment. 

Key provisions include:

• Acceleration Clauses: Allowing the business to demand the entire contract balance immediately upon a single missed payment.
• Late Fee and Interest Provisions: Establishing a clear financial penalty for delays, which serves as a deterrent against "payment floating."
• Attorney Fee Shifting: Mandating that the debtor pays for your legal costs if you are forced to sue for payment.
• Personal Guarantees: For business-to-business transactions, securing the guarantee of a corporate officer ensures that the debt remains collectible even if the entity dissolves.

Receivables Management requires a strategic choice of where and how a dispute will be litigated. By including "forum selection" and "governing law" clauses in your credit terms, you ensure that any litigation occurs in a jurisdiction favorable to your business. This prevents the debtor from utilizing "distance" as a defense and ensures that your legal team can operate with maximum efficiency within familiar court systems. SJKP LLP specializes in these jurisdictional audits, ensuring that your contracts provide you with a "home-field advantage" in every collection matter.

A demand for payment issued by a law firm carries a jurisdictional weight that a standard collection agency notice cannot match. It signals to the debtor that the business has already retained counsel and is prepared to escalate to a Bank Levy or Wage Garnishment if the default is not cured. This "professional pressure" often moves your invoice to the top of the debtor's payment priority list, achieving a recovery without the cost of a full trial.

In many cases, a negotiated resolution that provides for a structured repayment plan is superior to a prolonged legal battle. 

However, these plans must be documented with a "confession of judgment" or a similar legal instrument that allows the business to skip the trial phase if the debtor defaults on the new plan. SJKP LLP drafts these settlement frameworks with absolute technical precision, ensuring that you do not inadvertently waive your original rights in the pursuit of a compromised payoff.

In the commercial arena, the court assumes that both parties are sophisticated actors, allowing for more aggressive enforcement of contract terms. 

We utilize the UCC to establish security interests in the goods sold, providing the business with "secured creditor" status. This status is critical in the event of a debtor's bankruptcy, as it places your claim ahead of unsecured creditors in the distribution of assets. SJKP LLP manages these UCC filings to ensure your commercial receivables are backed by tangible collateral whenever possible.

When a business manages receivables from individual consumers, the risk of "counter-litigation" for FDCPA violations is a primary concern. Even an accidental violation of consumer protection laws can lead to statutory penalties that exceed the value of the original debt. We provide the detailed regulatory review needed to ensure that your consumer collection practices are fully compliant, allowing you to recover your capital without exposing the business to the risk of class-action lawsuits or regulatory sanctions.