What legal action for unpaid invoices can I take if a customer refuses to pay?
Before you take legal action for unpaid invoices, find out why the customer is refusing.
If a customer refuses to pay, you can send a formal demand letter, place the account with a collection agency, or pursue legal action such as small claims court or a lawsuit. What works best depends on the amount, your documentation, whether the refusal is a genuine dispute, and whether the customer can actually pay.
Before legal action for unpaid invoices, find out why
A refusal is sometimes a dispute about quality, scope or billing. Ask for the objection in writing and respond with your documents. If part of the invoice is disputed, insist on payment of the undisputed amount.
Then escalate
If there’s no legitimate dispute, move through a demand letter, a collection agency, and if needed small claims or an attorney. A court judgment confirms the debt but still has to be enforced.
More answers
- Customer won’t pay invoice: what do I do?
- Can you write off unpaid invoices?
- How much do collection agencies charge?
- Who pays collection agency fees: me or the debtor?
- How do I write a payment demand letter?
- Is small claims court for unpaid invoices better than a collection agency?
- Can I hire a collection agency to collect a debt that’s small?
- How to hire a collection agency: what are the steps?
- How to send someone to collections: what are the steps?
What happens if a business doesn’t pay an invoice?
The invoice becomes past due, you may add contractual late fees, and you can escalate: reminders, a demand letter, a collection agency, small claims or a lawsuit. The longer it sits, the lower the odds of collecting[source].
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