How to collect unpaid invoices from a business
Updated 2026-10-24
To collect an unpaid invoice from a business: confirm the invoice is correct and was received, call accounts payable to find out why it is unpaid, send a written past-due notice and then a final demand with a deadline, offer a payment plan if cash flow is the problem, and place the account with a commercial collection agency or attorney if it is still unpaid after about 60–90 days.
1. Check your own paperwork first
Many invoices are "late" because they never reached the right person, are missing a PO number, or don't match what was delivered. Before chasing, confirm the customer's legal entity name, the invoice details, the PO or contract reference, and that you have proof of delivery or completed work.
2. Call before you write
A short call to accounts payable usually tells you which of four situations you are in: a process problem (invoice not approved or lost), a dispute, a cash-flow problem, or avoidance. Each needs a different response.
3. Send a clear past-due notice
- Itemize the invoice numbers, dates and amounts
- Attach the invoice and proof of delivery
- Give a specific payment date and a payment link
- Ask the customer to tell you in writing if they dispute anything
4. Send a final demand with a deadline
If the first notice is ignored, send a final demand by email and certified mail with a firm deadline, often 7 to 10 days. Describe your next step accurately, such as placing the account with a collection agency. Only state consequences you actually intend and are entitled to pursue.
5. Offer a payment plan when cash flow is the problem
A signed payment plan with dates, amounts and an acceleration clause (the full balance becomes due if a payment is missed) usually recovers more than waiting for a lump sum.
6. Escalate before the debt gets old
Commercial debts lose collectability fast: roughly 94% are collectible at 30 days past due, about 74% at 90 days and about 27% at one year, according to Commercial Law League of America data. If an account is 60–90 days past due with no plan in place, place it with a commercial collection agency.
7. Consider legal action
If the debtor will not pay and has assets, suit in the debtor's local court can produce a judgment that is enforceable against bank accounts and property. Compare the balance against court costs and the time involved, and watch the statute of limitations for your type of debt and state.
Frequently asked questions
How long should I wait before sending an invoice to collections?
Most businesses place accounts at 60 to 90 days past due, or sooner if the customer stops responding. Waiting longer sharply reduces the odds of recovery.
Can I charge interest on a late business invoice?
Usually only if your contract, credit application or invoice terms provide for it, and within your state's legal limits. Some states also allow statutory interest on judgments.
Is a demand letter legally required before suing a business?
Not always, but sending one is standard practice and some contracts or court rules expect it. It also often produces payment without suit.