What to do when a client does not pay your invoice

Step 1: check the basics

• Is the invoice actually overdue? Check the due date against the agreed terms.
• Did it reach the right person? Confirm the address and that nothing bounced.
• Is there a dispute? A customer who disputes part of an invoice usually still owes the undisputed part.
• Did the customer ask for a purchase order number or tax details you did not include?

Step 2: a friendly, factual reminder

Send a short message the day after the due date: the invoice number, amount, due date, how to pay, and the invoice attached again. Keep the tone neutral. Phone if you can, then confirm in writing. Record every contact with a date.

Step 3: a formal overdue notice

If a week or two passes, send a firmer letter or email: state the amount owed, any late fee or interest your agreement provides for, and a final date (often 7 or 14 days). Mention that you will start formal recovery if the date passes. Your late-fee terms only help if they were agreed before the work started.

Step 4: pause work and secure what you can

Check your contract. Many agreements allow you to suspend further work or to keep ownership of deliverables until you are paid in full. Do not withhold anything you are legally required to hand over without taking advice.

Step 5: formal recovery options

Options vary by country, and a lawyer or local business advice service can tell you which suits the amount.

• United Kingdom: businesses can claim statutory interest and fixed compensation under the Late Payment of Commercial Debts (Interest) Act 1998 (calculator). A letter before action leads to a county court claim, often through Money Claim Online. GOV.UK explains the process.
• United States: a demand letter is the usual next step, followed by small claims court (limits are set by each state) or a collections agency.
• Canada, Australia, New Zealand and Ireland: a formal letter of demand, then a small-claims or civil tribunal. Monetary limits and procedure differ by province, state or country.
• European Union: Directive 2011/7/EU sets rules on late payment in commercial transactions, including interest and a minimum compensation amount, implemented differently by each member state.

Consider mediation or a payment plan. A signed plan for part-payments often recovers more, faster, than a contested claim.

Bad debt and tax

Some countries allow you to claim relief for a debt that is genuinely unrecoverable, including VAT or GST already paid on the invoice. The conditions (time since the due date, steps taken to recover) are strict. Check your tax authority’s guidance and keep evidence of your recovery attempts.

Prevent it next time

1. Take a deposit and stage payments on larger jobs.
2. Check unfamiliar customers before you start.
3. Put payment and late-payment terms in writing.
4. Invoice promptly and send reminders on a schedule. See how to get paid faster.

Related topics

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