Unpaid invoice: what to do when a client won't pay
An unpaid invoice is an invoice that has passed its due date without being paid in full. Most unpaid invoices are not fraud — they are lost emails, a missing purchase order number, a dispute nobody mentioned, or a customer who is short of cash. The way to get paid is a calm, written escalation: check your own records, remind, call, send a statement, send a final notice, then a demand letter, and only then a collection agency or small claims court. Below: a timeline you can follow, an unpaid invoice email, a collection letter and a demand letter you can adapt, what to know about late fees, interest and legal action in the US, and a worked example of one customer's account — including how to keep it in Account Ledger by Ofisx.
Short answer
- Unpaid invoice meaning: an invoice still open after its due date — fully unpaid or partly paid.
- First step: check your ledger and the invoice itself (right customer, amount, due date, PO number, delivery confirmed) and ask whether there is a dispute.
- Escalate in writing: friendly reminder → phone call → statement of account → final notice → demand letter. Keep copies of everything.
- Late fees and interest: charge them only if they were in your agreed terms or invoice, and within your state's limits.
- If they still won't pay: offer a written payment plan, stop further credit, then choose between a collection agency, small claims court (limits vary by state) or an attorney. If the amount cannot be collected, write it off as a bad debt.
Unpaid invoice timeline: what to do and when
This schedule assumes Net 30 terms and a business customer. Shift the days to your own terms; the order matters more than the exact dates.
| When | Step | Channel |
|---|---|---|
| Before the due date | Courtesy reminder with the invoice attached | Email or WhatsApp |
| 1–3 days late | Check your records, then send a polite unpaid invoice email (template below) | |
| 7 days late | Phone the accounts-payable contact; ask if there is a problem and get a payment date | Phone, then confirm by email |
| 14 days late | Send a statement of account showing every open invoice and the total | Email with PDF statement |
| 21–30 days late | Firmer collection letter; put new orders on hold or on cash terms | Email and/or letter |
| 45 days late | Final notice / formal demand letter with a deadline (often 10–14 days) | Letter by mail with proof of delivery, plus email |
| After the deadline | Payment plan, collection agency, small claims court or attorney | — |
| When it is uncollectable | Write it off as a bad debt and keep the record | Your books |
Before you chase: check these five things
- Is the balance right? Open the customer's ledger: payments, partial payments, credit memos and returns may already have reduced it. Chasing a wrong amount loses goodwill and time.
- Did they receive the invoice? Confirm the email address and that it went to accounts payable, not to the person who ordered.
- Is anything missing? Many larger customers will not pay without a purchase order number, a W-9 or a delivery confirmation.
- Is there a dispute? A short shipment or a pricing error is often why one invoice is stuck while others are paid. Fix it with a credit memo and ask for the undisputed part now.
- What did you agree? Your payment terms, any late fee and the signed credit application decide what you can ask for.
Unpaid invoice email (follow-up)
For the first reminders, the payment reminder templates work well. Once an invoice is a week or two overdue, be specific and ask for a date:
*Subject: Unpaid invoice INV-2207 — $1,850.00, due September 30*
*"Hi Dana, our records show invoice INV-2207 for $1,850.00, due September 30, is still unpaid. A copy and your current statement are attached. Could you let me know when we can expect payment, or whether anything is holding it up? You can pay by ACH to the account on the invoice or by check. Thank you — Sam, Northside Building Supply, (614) 555-0100."*
Collection letter and final demand letter templates
A collection letter is a firmer written request for an overdue balance; a demand letter (final notice) is the last letter before outside action, with a deadline and the consequence. Send the demand letter by mail with proof of delivery and by email, and keep a copy — courts and agencies will ask for it.
Collection letter (about 30 days late):
*"Re: Account 1042 — past due balance $1,850.00. Dear Ms. Ruiz, invoice INV-2207 dated August 31 for $1,850.00 was due on September 30 and remains unpaid despite our reminders on October 3 and October 10 and our call on October 8. Please pay the balance by November 7 or contact me to agree a payment schedule. Until the account is current, new orders will be on cash or card terms. Sincerely, Sam Patel, Accounts Receivable."*
Final demand letter (about 45 days late):
*"FINAL NOTICE — Re: Maple Street Remodeling LLC, account 1042. Our records show $1,850.00 past due on invoice INV-2207 (due September 30, 2026). A statement is enclosed. Please pay this amount in full by November 21, 2026. If we do not receive payment or a written payment agreement by that date, we intend to refer the account for collection or file a claim in small claims court without further notice, and to seek the costs allowed under our terms of sale. Sincerely, Sam Patel."*
Only state consequences you are ready to carry out, and keep the tone factual — no threats of arrest, public shaming or contacting the customer's clients.
Late fees, interest and payment plans
- Late fees and interest should be in your terms, on the invoice or in the signed credit application *before* the sale. Adding a fee nobody agreed to usually starts an argument and rarely gets paid. States cap interest rates, so check yours.
- A payment plan often collects more than a lawsuit. Put it in writing: total owed, installment amounts and dates, and what happens if one is missed. For larger amounts a promissory note is the usual document.
- Record every installment as a partial payment against the invoice, so the remaining balance is always clear.
- Stop further credit until the account is current — selling more on account to a customer who is not paying only grows the unpaid invoice.
If the client still won't pay: collection agency, small claims or attorney
Two US points small businesses often ask about: the federal Fair Debt Collection Practices Act (FDCPA) mainly covers third-party collectors of *consumer* debts, not business-to-business invoices — but if your customer is an individual buying for personal use, federal and some state rules apply, so check before you chase. And every state has a statute of limitations for suing on a contract or open account (usually several years); do not let a large unpaid invoice sit untouched for years.
| Option | How it works | Good to know |
|---|---|---|
| Collection agency | The agency contacts the customer and keeps a share of what it collects (usually agreed as a percentage, often only if it collects) | Ask about fees, reporting and whether they handle business-to-business (commercial) accounts |
| Small claims court | You file in the county where the customer is located or where the deal took place; usually no attorney is needed | Dollar limits vary by state, from a few thousand dollars to about $25,000; a judgment still has to be collected |
| Attorney demand letter | A letter on the attorney's letterhead often gets attention without a lawsuit | Flat fees are common for a single letter |
| Lawsuit in civil court | For larger amounts above the small claims limit | Costs and time rise quickly; weigh them against the amount owed |
| Write it off | When collecting would cost more than the invoice or the customer has closed | See bad debt for the write-off entry and tax angle |
Example: one unpaid invoice in the customer's ledger
Maple Street Remodeling has three invoices. Two are paid on time; INV-2207 is not. The ledger shows exactly what is owed at each step:
| Date | Entry | Amount | Balance |
|---|---|---|---|
| Aug 31 | Sale on account — INV-2207, due Sep 30 | $1,850 | $1,850 |
| Sep 12 | Sale on account — INV-2219, due Oct 12 | $920 | $2,770 |
| Oct 10 | Payment — INV-2219 (ACH) | −$920 | $1,850 |
| Oct 24 | Statement sent; customer reports 2 damaged doors | — | $1,850 |
| Oct 27 | Credit memo CM-0133 for damaged doors | −$250 | $1,600 |
| Nov 7 | Partial payment under written plan (1 of 2) | −$800 | $800 |
| Dec 7 | Partial payment under written plan (2 of 2) | −$800 | $0 |
- The "unpaid invoice" was really two problems: a $250 dispute nobody had mentioned, and a cash-flow gap the payment plan solved.
- Because each step was written on the account, the reminder, statement and demand letter always showed the right amount.
Ways to keep track of unpaid invoices compared
| Option | Best for | Seeing what is unpaid | Reminders and statements | Platforms | US App Store ratings (Oct 21, 2026) |
|---|---|---|---|---|---|
| Account Ledger by Ofisx | Small businesses that sell on account and chase balances themselves | Running balance per customer; due-date alerts for upcoming and overdue amounts | WhatsApp balance reminder sent by you; PDF statement per customer | iPhone (US App Store); Android on Google Play in Turkey only | New in the US store — no ratings yet |
| Intuit QuickBooks | Businesses that invoice every sale in QuickBooks | Unpaid and overdue invoices issued in the app | Email reminders for invoices issued in the app | iPhone, Android, web | 273,010 ratings, 4.7 |
| Zoho Books | Small businesses invoicing in Zoho | Unpaid and overdue invoices issued in the app | Email reminders for invoices issued in the app | iPhone, Android, web | 5,264 ratings, 4.8 |
| Wave | Very small businesses that invoice in Wave | Unpaid and overdue invoices issued in the app | Email reminders for invoices issued in the app | iPhone, Android, web | 6,665 ratings, 4.4 |
| Spreadsheet and your own email | A handful of customers | A due-date column, a filter and SUMIFS per customer | The templates on this page, sent by hand | Any | — |
The options in detail
Account Ledger by Ofisx
Account Ledger keeps a ledger for each customer and supplier — sales and purchases on credit with a due date, payments, partial payments and returns — and shows each running balance. Due-date alerts flag what is coming due or overdue; from the customer's card you can send the balance by WhatsApp or share the ledger as a PDF statement to attach to a collection letter.
It does not issue invoices, send automatic email reminder sequences, calculate late fees, or hand accounts to collection agencies.
Intuit QuickBooks
QuickBooks manages payment terms, customer balances and receivables inside full accounting.
Zoho Books
Zoho Books supports payment terms, reminders and customer statements in full accounting.
Wave
Wave combines invoicing and bookkeeping for very small businesses.
Spreadsheet and your own email
Works for a few accounts if someone updates it the day each payment arrives; it gets fragile with partial payments, credits and several people editing.
Rules that get unpaid invoices paid
- Check before you chase — Confirm the balance, the invoice and any dispute first.
- Ask for a date, not just payment — "When can we expect it?" gets a commitment you can follow up on.
- Put it in writing — Every call is followed by an email; every promise is noted on the account.
- Escalate on a schedule — Reminder, call, statement, collection letter, demand letter — on fixed days.
- Stop the bleeding — No new sales on account while an invoice is badly overdue.
- Know when to stop — If collecting costs more than the invoice, write it off and learn from it.
Limits — what Account Ledger does not do
- Account Ledger does not issue invoices, send automatic email reminders, add late fees or interest, or connect to collection agencies or courts.
- It does not read bank feeds; you record each payment yourself.
- In the US the app is on the App Store for iPhone; the Android version is on Google Play in Turkey only for now.
- It is a paid subscription after the free trial; the App Store shows current plans and prices.
Frequently asked questions
What should I do if a client doesn't pay an invoice?
Check your records and the invoice first, then send a polite follow-up email, call the accounts-payable contact, send a statement, send a firmer collection letter, and finally a demand letter with a deadline. If that fails, offer a written payment plan or use a collection agency, small claims court or an attorney.
How do I write an email about an unpaid invoice?
Use a clear subject with the invoice number, amount and due date, attach the invoice and a statement, state that it is unpaid, and ask when you can expect payment or whether anything is holding it up. Keep it short and polite.
How long should I wait before taking action on an unpaid invoice?
Many small businesses send a reminder within a few days of the due date, call after about a week, send a statement at two weeks, a collection letter at three to four weeks and a final demand letter at around 45 days. Adjust to your terms and the size of the amount.
Can I charge interest or a late fee on an unpaid invoice?
Generally only if it was agreed beforehand — in your terms, on the invoice or in a signed credit application — and within your state's legal limits. Check the rules for your state.
What is a demand letter for an unpaid invoice?
A formal final notice that states the amount owed, the invoice details, a deadline for payment and what you will do if it is not paid, such as referring the account to collection or filing in small claims court. Send it with proof of delivery and keep a copy.
Can I take a client to small claims court for an unpaid invoice?
Usually yes, if the amount is within your state's small claims limit. Limits vary by state, from a few thousand dollars to about $25,000. You will need the invoice, your terms, the ledger and copies of your reminders and demand letter.
How long do I have to collect an unpaid invoice?
Each state has a statute of limitations for suing on a contract or open account, usually several years. Check your state, and do not let a large unpaid invoice sit untouched.
Is there an app to track unpaid invoices?
Yes. Account Ledger by Ofisx (iPhone, US App Store) keeps a ledger per customer with sales on account, due dates, payments, partial payments and a running balance, alerts you to overdue amounts, and lets you send the balance by WhatsApp or share a PDF statement. It does not issue invoices or send automatic emails. It is a paid subscription after a free trial.