If a customer refuses to pay, immediately verify the invoice, then formally communicate to identify the issue, offering a payment plan if necessary. If they remain non-compliant, send a formal demand letter, pause all work, consider using a collection agency, or initiate small claims court proceedings.
Getting a Client to Pay an Invoice after Nonpayment
Be polite yet assertive in getting to the root of the problem. Formalize the Demand: If reminders don't work, escalate to a formal demand letter detailing the owed amount, due date, and potential consequences of non-payment.
Consider sending a certified letter detailing the unpaid invoice. Something about official mail tends to get people's attention faster than texts or emails. Document every single interaction - texts, emails, service records - as evidence.
Let's explore five practical ways to handle a disputed invoice.
Payment - obligations
Unless you agree a payment date, the customer must pay you within 30 days of getting your invoice or the goods or service. You can use a statutory demand to formally request payment of what you're owed.
How to chase late payments
Filing a Lawsuit for Breach of Contract
If your client agreed to pay for goods or services and failed to follow through, they may be in breach of contract. You have the right to sue for the amount owed, and possibly additional damages, depending on your contract and the impact of the missed payment.
A business owner can set their own payment terms when it comes to invoicing. They can choose to offer discounts for early payments and payment upfront. If no agreed-upon payment date has been established, a customer must pay a company within 30 days of receiving an invoice or the goods or service.
Let the customer know that you mean business by setting a firm deadline for payment. Make it known that if the bill remains unpaid beyond this deadline, there will be consequences – such as suspending further services or taking legal action if necessary. Being firm doesn't mean being rude.
There are several steps you can take for a client who won't pay:
What to Do When a Customer Refuses to Pay For Work Done
With clients, the key is to:
It is, in effect a statute of limitations that applies to the payment of invoices and how long a creditor can chase a debtor for non-payment of an invoice. It might surprise many companies that unpaid invoices, under a simple contract, can be legitimately chased for up to 6 years.
While it can be frustrating, there are a few things you can do to collect payment:
Aim for a clear and polite tone. Include your branding and the invoice number so it's easy for your client to identify. In a payment reminder email, it's important to be clear and courteous. Mention the overdue balance, invoice number, and due date clearly while being respectful.
What to do if a customer doesn't pay
If no specific payment deadline has been communicated or agreed upon, most customers are generally expected to pay within 30 days of receiving the invoice or the goods or services provided. This 30-day standard is a common default in many business transactions, but it is not legally fixed.
According to California Code of Civil Procedure § 337(1), the statute of limitations for a written contract is four years. Under § 339(1), the limit for an oral contract is two years.
The "777 rule" in debt collection, also known as the 7-in-7 rule, is a CFPB regulation (Regulation F) limiting calls: collectors can't call more than 7 times in 7 days for a specific debt, nor call within 7 days of a conversation about that debt. It aims to prevent harassment, applying to calls, texts, and emails, though exceptions exist, and the presumption of compliance can be rebutted by aggressive call patterns like rapid succession or highly concentrated calls.
Subject: [Invoice#123] Past due notice
“Hello [Client], Hope you're doing well. It seems that I've yet to receive payment for [Invoice#123], which was due [date]. I would appreciate it if you could inform me about any changes regarding your payment schedule.
Liabilities are things that you have to pay back. This includes debts, taxes, and unpaid invoices. Balance sheets make up the core of bookkeeping. These financial records track every credit or debit for your business, noting them under assets and liabilities.
If the invoice does become overdue, a good rule of thumb is to remind the customer of the day on which payment is due, and every 10 days after that. However, it's always a good idea to set your reminder schedule based on your customer's payment behavior.
Tips for writing an effective payment reminder email
They improve cash flow by ensuring a steady stream of small installment payments over time, for predictable income. They reduce missed or failed payments. If a customer is having difficulty paying their bills, working with them to create a payment plan helps prevent a costly, time-consuming collections process.