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Non-payment is one of the most common legal problems small and mid-size businesses face, and it's also one of the most preventable — at the contract stage, not after the invoice is overdue. Louisiana gives businesses several tools for collecting unpaid amounts, but the effectiveness of those tools depends almost entirely on what the underlying contract says. A business owner who invoiced on a handshake, or whose contract is silent on late fees, attorney's fees, and collection rights, is in a materially weaker position than one whose agreement addressed non-payment before the work started.

What Your Contract Should Say Before Work Begins

The contract provisions that matter most in a collection situation are the ones you negotiate before the client owes you anything. Specify the exact amount due, the exact due date, and acceptable payment methods. "Net 30" is common but means different things to different parties — spell out that payment is due 30 days after invoice date.

Include a late fee provision with a defined rate — typically 1.5 percent per month on overdue balances. Include an attorney's fees provision stating the client is responsible for reasonable attorney's fees if collection action becomes necessary. Louisiana courts will enforce these provisions when clearly stated. They will not award attorney's fees if the contract doesn't include them, regardless of how clear-cut the debt is.

The Collection Process in Louisiana: What You Can Do

When a client doesn't pay, the practical escalation ladder is: demand letter, small claims court for amounts up to $5,000, district court lawsuit, and judgment enforcement. 

A formal demand letter from an attorney often prompts payment without litigation. In Louisiana district court, a suit on an open account allows recovery of the principal, a reasonable attorney's fee of up to 25 percent of the principal and interest, and court costs — but only if your contract or invoices meet Louisiana's statutory requirements for open account.

The Louisiana Privilege System and Secured Claims

For certain industries, Louisiana law provides a privilege — a statutory lien — that secures payment obligations without a separate agreement. Contractors and subcontractors have the Louisiana Private Works Act lien. These privileges can be more powerful than a contract claim because they attach directly to property.

If your business is in a category with a statutory privilege, understanding the notice and filing requirements is essential — these privileges are lost if the required steps aren't taken within defined windows.

Judgment Enforcement: Getting Paid After You Win

Winning a lawsuit doesn't automatically mean getting paid. If the client has assets in Louisiana, a money judgment can be enforced through bank account seizure and judicial mortgage on real property — which attaches when the judgment is filed in the mortgage records of the parish where the property is located.

Before you sue, assess whether the client has assets worth pursuing. A judgment against an insolvent LLC with no assets is an expensive piece of paper. The evaluation of collectability is part of the initial collection strategy, not something to assess after you've spent money on litigation.

Frequently Asked Questions

Q: What is the statute of limitations for collecting a business debt in Louisiana?

For written contracts, Louisiana's prescriptive period is generally 10 years — but this interacts with open account claims, which prescribe in three years under Article 3494. Don't assume you have 10 years to act; assess the specific claim type and file before the shorter period could run.

Q: Can I charge interest on unpaid invoices in Louisiana?

Yes, with limitations. A contract provision specifying 1.5 percent per month on overdue balances is common and generally enforceable. Without a contractual rate, you're entitled to legal interest on a judgment — currently a lower rate set annually by the Louisiana Commissioner of Financial Institutions.

Q: What is an open account under Louisiana law?

A Louisiana open account is a series of transactions between the same parties where there's a running balance. Open account treatment matters because R.S. 9:2781 provides for recovery of attorney's fees up to 25 percent if the debtor is properly demanded and fails to pay within 30 days.

Q: What if the client is located in another state?

If the client has assets in Louisiana, you can sue in Louisiana and enforce a Louisiana judgment against those assets. A forum selection clause in your contract — designating Louisiana courts for all disputes — avoids jurisdictional questions entirely for future agreements.

If you have outstanding client debts or you want to make sure your contracts are structured to protect you before the next non-payment situation, schedule a consultation with BLG.