When an invoice goes unpaid, work through it in steps and keep it calm and written down. Start with a plain reminder, then a call, then a letter of demand if those haven't moved things. Beyond that, a tribunal or small claims court is an option, or you decide to write it off. The rules differ by country and state, so check the official bodies linked below.
This is general information only, not legal advice, and I'm not a lawyer. What I can tell you is how the steps tend to run in practice, and where to go to check what applies to you.
Why it helps to think of it as a ladder
Most people treat an unpaid invoice as one big decision: do I chase, or do I let it go? That's what makes it stressful. It's easier as a series of small steps, each one a bit firmer than the last, where you decide at each rung whether to climb.
The steps, in order:
- A reminder
- A call
- A letter of demand
- A tribunal or small claims court
- Writing it off
You won't use every rung every time. Plenty of invoices get sorted at the first one. But knowing what the next rung is stops you freezing on the one you're standing on.
Step 0: check your own side first
Before you chase anything, spend five minutes checking your own paperwork. It's common to find an "overdue" invoice that was addressed to the wrong person, sent to the wrong email, or missing the PO number the client's system needed.
- Did it reach the right person, and was it sent to the right address?
- Are the amount, the invoice number and the due date right?
- Does your contract, quote or invoice say anything about when payment is due and what happens when it's late?
- Is there any chance the client thinks the work isn't finished or isn't right?
If any of that is off, fix it first. It's a much easier conversation when your side is clean.
Step 1: a reminder
A plain, friendly reminder. The invoice number, the amount, the due date, how to pay, and a link to a copy of the invoice. No drama, no edge. A lot of late invoices are just forgotten invoices.
It helps to send reminders on a schedule instead of when you remember, because it stops being personal. The payment reminder emails template has five by stage, from just before the due date to well overdue, ready to fill in.
If you'd rather not be the one deciding when to send the next one, Handl sends invoice reminders on a set schedule. That's all I'll say about that here.
Step 2: a call
If a couple of reminders have gone quiet, pick up the phone, or send a direct message to the person who actually pays the bills. This is where you find out what's really going on.
Ask, don't accuse. Something like: "I wanted to check the invoice reached you, and see if there's anything I can help with." The answer is often one of three things: it's with the wrong person, it's waiting on an approval, or there's a problem with the work.
Afterwards, send a short email recording what you agreed: "Thanks for the call. As discussed, you'll pay invoice [number] by [date]." It gives you a dated record, and it gives them a clear next step.
Step 3: a letter of demand
If the reminders and the call haven't led to payment, a letter of demand is the next written step. It's a plain, formal request: it lists the invoices and the amount owed, gives a date to pay by, and says what you may consider next.
A few things I'd keep in mind:
- Keep it factual and polite. Amounts, invoice numbers, dates, a date to pay by. No insults, no threats.
- Give them a way to tell you what's wrong. If they think the invoice is wrong, you want to know in writing.
- Put a calendar date on it. "By 14 March" is clearer than "within a few days".
- Keep a copy, and note how and when you sent it.
- Don't expect more from it than it is. It sets out the facts in writing. It can't guarantee payment or any particular result.
I've put a plain version together: the letter of demand template is a free Word file with bracketed fields and a short email version. It's general information only, not legal advice, and it may not suit your situation.
Deciding how long to give them is your call, and I'm not going to suggest a legal deadline, because I can't tell you what applies to you. Check your contract and invoice terms, and the official bodies below.
Step 4: a tribunal or small claims court
If a letter doesn't resolve it and the amount matters to you, the next rung is looking at the official route where you are. That might be a tribunal or a small claims court. Which one applies, and whether it takes this kind of claim at all, depends on where you are, who the parties are and the type of claim.
I'm not going to try to summarise the rules, because they change and they differ by place. Instead, here are the official starting points. Check with them directly.
Australia
- NSW Fair Trading, the NSW consumer protection regulator
- NCAT, the NSW Civil and Administrative Tribunal
- NSW Local Court
- VCAT (Victoria)
- QCAT (Queensland)
- State Administrative Tribunal (Western Australia)
- ACAT (Australian Capital Territory)
- NTCAT (Northern Territory)
United States
- USA.gov: state and local courts, which points you to the courts that serve your area
- USA.gov: free and low-cost legal help
- Small claims are run state by state. California's court self-help guide is one example of an official one.
Two honest points. First, going this way takes time and effort, and it can cost you something even if things go your way, so it's a real decision, not a formality. Second, this is exactly the point where it's worth talking to a lawyer, or your local small business or consumer body, about your specific situation. They can tell you what I can't.
Step 5: writing it off
Sometimes the right move is to stop. If the amount is small, or the client has gone quiet for good, or the time and stress of going further isn't worth it, you can decide to write it off.
That's a legitimate business decision, not a failure. Before you do:
- Make sure you're not leaving a simple fix on the table, like an invoice that went to the wrong person.
- Think about whether to keep working with the client. If not, stop new work until it's sorted.
- Ask your accountant how a write-off is treated where you are. That's a tax question, and it's theirs to answer.
Then draw the line, note what you learned, and move on.
Making the next one easier
Most of the above only comes up because an invoice went late with no steady follow-up. A few habits make it less likely:
- Put payment terms in writing, up front, in the contract or quote and on the invoice.
- Take a deposit on new work if that suits the kind of work you do.
- Send the invoice the day the work is done, to a named person.
- Send reminders on the same schedule every time, whoever the client is.
- Keep a simple record of what's due, from whom, and when. The invoice tracker is a free spreadsheet for that.
None of that guarantees anyone pays. It just means you'll see a problem sooner, and you'll be on the first rung of the ladder rather than the fourth.
Frequently asked questions
How long should I wait before sending a letter of demand? There's no single answer. A lot depends on your contract and how many reminders you've sent. Check your terms and the official bodies above.
Do I need a lawyer? Many people write and send a letter themselves. If the amount is large, the client disputes the invoice, or you're unsure what applies, it's worth getting advice.
Will a letter of demand get me paid? I can't promise that, and nobody honestly can. It puts the facts in writing and gives the client a clear date and a clear choice.
General information only, not legal advice.