How to sue a business for an unpaid invoice

Updated 2026-10-24

To sue a business for an unpaid invoice, confirm the debtor's exact legal entity name, send a final written demand, pick the right court (small claims if the amount and your state's rules allow, otherwise civil court with an attorney), file a complaint with your contract and invoices, serve the company's registered agent, and seek a judgment. A judgment is only the start: collecting it may require bank levies, garnishment or liens.

Before you file: decide whether suit is worth it

A lawsuit is a tool for collecting from a business that has money and will not pay. It is a poor tool against a business that has none. Before filing, look at what you know about the debtor: is it still operating, does it have a bank account you know of, does it own equipment, vehicles or real estate, and are there existing judgments or tax liens ahead of you? A quick search of state business records, court dockets and UCC filings can tell you a lot.

Then compare the balance to the likely costs: filing fees, service of process, attorney fees and your own time. Check your contract for an attorney fee clause, because it changes the math. Also check the statute of limitations for your type of claim in the relevant state so you do not lose the right to sue by waiting.

Step 1: Identify the correct defendant

Sue the legal entity that owes you, not a trade name or a person. Look up the customer's exact name and entity type with the Secretary of State where it was formed and where it operates. 'Acme Supply' might legally be 'Acme Supply Holdings, LLC', and a judgment against the wrong name can be hard to enforce.

If someone signed a personal guarantee, the guarantor can usually be named as an additional defendant. Note the registered agent and address shown in state records; that is typically where the lawsuit is served.

Step 2: Send a final demand

Send a written demand that itemizes the invoices, states the total, gives a deadline and says you will file suit if it is not paid. Some contracts require a notice or a cure period before suit, and some courts expect evidence that you tried to resolve the matter. A demand also gives the debtor a last chance to raise any dispute, which helps you prepare.

Step 3: Choose the court

Where to file usually depends on where the debtor is located, where the work was performed, or the forum named in your contract or credit application. Small claims court is faster and cheaper, but dollar limits vary widely by state, and some states limit whether businesses can appear without an attorney or how often they can file. Above the small claims limit, you will generally file in a state civil court, and a corporation or LLC will typically need a licensed attorney to represent it.

If your contract has an arbitration clause, you may be required to arbitrate instead of sue. Review it with your attorney before filing anywhere.

Step 4: File and serve the complaint

• Complaint or claim form stating the amount owed and the legal basis, such as breach of contract or account stated
• Copies of the signed contract, credit application, purchase orders, invoices and proof of delivery
• Statement of account showing payments, credits and the balance
• Filing fee, which varies by court and claim size
• Service on the defendant's registered agent through a sheriff, process server or other method the court allows

Step 5: Default or contested case

Many business defendants that owe the money do not respond. If the deadline to answer passes, you can usually ask the court for a default judgment, which may require proof of the amount owed. If the defendant answers, the case proceeds: there may be an exchange of documents, settlement discussions or mediation, a motion for summary judgment if the facts are not really in dispute, and eventually a hearing or trial.

Settlement is common at every stage. A signed settlement with a payment schedule and a stipulated judgment if payments are missed can be more valuable than a contested trial.

Step 6: Collect the judgment

A judgment does not pay itself. If the debtor still does not pay, the tools available depend on state law but commonly include bank account levies, garnishment of money owed to the debtor by its own customers, judgment liens on real property, seizure of non-exempt business assets and court-ordered examinations where the debtor must answer questions about its assets. If the debtor's assets are in another state, the judgment generally has to be registered there before it can be enforced; most states have adopted a uniform act that simplifies this.

Judgments typically accrue post-judgment interest at a rate set by state law and can last for many years, often with the option to renew. Keep monitoring the debtor; a business with nothing today may have receivables next year.

Getting help with the process

Many creditors let a commercial collection agency try first and move to suit only if the agency reports the debtor has assets and is refusing to pay. We work that way: we collect on contingency, and when suit makes sense we coordinate with a local attorney in the debtor's area and share cost estimates for your approval. We are not a law firm and do not give legal advice, so the decision to sue, and the legal strategy, stays with you and your attorney.

Frequently asked questions