How long should I wait before chasing an unpaid invoice?

Do not wait. Send a short reminder the day after the due date. Most late payments at that stage are administrative, and an early reminder fixes them without awkwardness. Waiting two or three weeks teaches the client that your due dates are suggestions.

Can I stop work if a client has not paid?

You can if your contract gives you a right to suspend services for non-payment, usually after written notice. Without that clause, stopping work can put you in breach yourself. Check the contract, give the notice it requires, and state the date work will pause.

Can I charge late fees on an overdue invoice?

In the US, generally only if the contract or accepted payment terms provide for them, and the rate must stay within your state's limits. In the UK, businesses have a statutory right to interest on late commercial payments even when the contract is silent. EU member states have similar rules.

Should I withhold deliverables until the client pays?

If your contract says ownership or the license transfers only on full payment, you can hold back unpaid work and say so. Never lock a client out of systems they already own or take down a live site unless the contract clearly allows it and a lawyer has confirmed it.

Is it worth going to small claims court over an unpaid invoice?

For amounts under your state's small claims limit, often yes. Filing fees are low, you usually do not need a lawyer, and the filing itself prompts many debtors to settle. For larger amounts, compare a lawyer's cost with a collection agency's contingency fee.

Client not paying an invoice: the escalation ladder, with wording

The typical unpaid invoice goes like this. The due date passes and nobody notices for a week. The owner sends a friendly note. The client says it is “with accounts”. Three more weeks go by while the team keeps working. By day 60 the client owes two invoices, has received all the work, and the owner is writing a fourth polite email with less bargaining power than they had on day 1.

The mistake is the lack of a schedule. Collection works when each step happens on a known day and each message is firmer than the last. This article gives the ladder, the wording, and the contract clauses that make most of it unnecessary. It belongs to the Clients hub, alongside the pillar on how to get clients, which matters here because owners with a thin pipeline chase most timidly.

First, find out which kind of non-payment this is

There are three kinds. Your first two steps are designed to find out which one you have.

Administrative. The invoice went to the wrong person, lacks a purchase order number, or missed the payment run. This is the majority. A reminder and a phone call resolve it.

Cash trouble. The client intends to pay and cannot right now. You will hear vague timing and repeated promises. A payment plan is the practical answer.

Dispute. The client is unhappy with something and is holding back payment to force the issue, sometimes without telling you. Silence after a delivery is the usual sign.

The escalation ladder

Assume net 15 terms. Day counts are days past the due date.

Day past due	Step	Who it goes to	Tone
Minus 3	Courtesy note that the invoice falls due this week	Billing contact	Routine
1	Reminder with invoice attached	Billing contact	Friendly, factual
7	Phone call, then a written recap	Accounts payable	Helpful, specific
14	Escalation to the decision-maker, with notice that work will pause	Budget holder	Firm
21	Suspension of work takes effect	Budget holder and day-to-day contact	Plain
30	Final notice, late fees applied, deliverables withheld	Budget holder	Formal
45	Demand letter with a deadline	Company officer, by email and post	Formal, legal
60 and beyond	Small claims, collections or a lawyer	Outside party	Out of your hands

If your terms are net 30, the same ladder applies from the due date.

Day 1: the reminder

Subject: Invoice 1047, due yesterday

Hi [NAME],

Invoice 1047 for $12,400 was due on the 15th and I do not see it in our account yet. A copy is attached.

Could you let me know the date it is scheduled for payment? If anything is missing on our side, such as a purchase order number, tell me and I will fix it today.

It asks for a date. A request for a date produces a date, or a revealing absence of one.

Day 7: the phone call

Call the person who actually makes payments. A call usually surfaces the real reason within two minutes. Ask three questions: has the invoice been approved, which payment run is it in, and is anything blocking it. Then confirm the promised payment date in a one-line email.

If accounts payable says the invoice has not been approved, it is stuck with your client contact, and you may be looking at a dispute.

Day 14: escalate, and give notice of suspension

Go to the person who owns the budget. This is also the moment to give notice that work will pause, if your contract allows it.

Subject: Invoice 1047, 14 days overdue

Hi [NAME],

Invoice 1047 for $12,400 is now 14 days past due. I have followed up with [BILLING CONTACT] on the 16th and the 22nd and do not yet have a confirmed payment date.

I would like to resolve this without disrupting the project. If there is a concern about the work or the invoice, please tell me this week and we will deal with it directly.

Under section [NUMBER] of our agreement, we will pause work on the 5th if the invoice remains unpaid. We will resume within two working days of payment arriving. The delivery dates will move by the length of the pause.

Day 21: stop work

If the date arrives and the money has not, stop. This is the step owners skip, and it is the one that works.

As set out in my email of the 28th, we have paused work on the project as of today. Everything completed so far is saved and documented. We will restart within two working days of receiving payment for invoice 1047.

Move the team to other work the same day, with no small fixes during the pause. Do the arithmetic if you are tempted to continue. A four-person team at $700 a day each is $2,800 a day. Two more weeks of work adds $28,000 to an exposure that started at $12,400.

Day 30: final notice

Subject: Final notice, invoice 1047

Invoice 1047 for $12,400 is now 30 days past due. In line with section [NUMBER] of our agreement, interest of 1.5 percent per month has been applied, bringing the balance to $12,586.

Under section [NUMBER], ownership of the deliverables covered by this invoice has not transferred and will not transfer until the balance is paid.

If payment or a written payment proposal is not received by [DATE], we will take formal steps to recover the debt.

Day 45: the demand letter

A demand letter states what is owed, the basis for it, a deadline, and what you will do if the deadline passes. You can write it yourself. A version on a law firm’s letterhead gets noticeably more attention.

Re: Outstanding balance of $12,679 under the agreement dated [DATE]

[CLIENT LEGAL NAME] owes [AGENCY LEGAL NAME] $12,679, comprising invoice 1047 dated [DATE] for $12,400 and contractual interest of $279 for one and a half months. The services were delivered on [DATES] and no dispute has been raised.

We require payment in full within ten (10) business days of the date of this letter. If payment is not received by [DATE], we will pursue recovery through the courts or a collection agency without further notice, and will seek interest and costs as the agreement permits.

Send it by email and by tracked post to the company’s registered address, addressed to an officer of the company.

If the client says they cannot pay

Take a payment plan over a fight. A client who is short of cash and still talking to you will usually pay in the end. Put the plan in writing and get an acknowledgment of the debt, which removes any later argument about whether the money was owed.

To confirm what we agreed: you acknowledge the balance of $12,400 on invoice 1047. You will pay $4,400 on the 1st, $4,000 on the 15th and $4,000 on the 30th. Work remains paused until the first payment arrives. If any payment is missed, the full remaining balance becomes due immediately.

If the client disputes the work

Separate the disputed part from the rest. If they object to one $2,000 item on a $12,400 invoice, ask them to pay the undisputed $10,400 now while you resolve the remainder. A client acting in good faith will agree. One who refuses is using the dispute as cover, and you should keep climbing the ladder.

Many payment disputes are scope disputes underneath. A signed statement of work and a written change request process settle these quickly.

Late fees

In the US you can generally charge interest on overdue invoices only if the client agreed to it, in the contract or in payment terms they accepted, and the rate has to stay within your state’s limits. A figure of 1 to 1.5 percent per month is common in commercial agreements, though you should confirm what your state permits.

In the UK, a business has a statutory right to claim interest and a fixed sum for recovery costs on late commercial payments, even where the contract says nothing. EU member states have comparable rules. Late fees also make a good bargaining chip. Offering to waive the interest in return for payment by Friday costs you little and gives the client a reason to act.

After day 60: the three outside options

Small claims court. Designed for people without lawyers. Limits vary by state, from a few thousand dollars to the low five figures. Filing fees are modest, and filing often prompts payment, because the client now has to appear or lose by default. A judgment still has to be collected. The UK and most EU countries have equivalent simplified procedures.

A collection agency. Agencies typically work on contingency and keep a meaningful share of what they recover. You lose a slice and almost certainly the relationship. That is acceptable for a debt you had otherwise written off.

A lawyer. For larger sums, a lawyer’s letter followed by a filed claim is the usual route. Check whether your contract lets you recover legal costs from the other side.

For a $4,000 debt, use small claims. For $12,000 with a silent client, a lawyer’s letter and then small claims or collections depending on the limit. For $60,000, a lawyer from day 45.

The clauses that prevent it

Nearly everything above is easier, or unnecessary, with four clauses in your master services agreement.

A deposit. 25 to 50 percent before work starts, or the first month of a retainer in advance. Collecting it is part of the client onboarding process.

Short terms and milestone billing. Net 15, with invoices every two weeks or at each milestone.

A right to suspend.

If any undisputed invoice remains unpaid more than ten (10) days after its due date, Agency may suspend the Services on five (5) days’ written notice until all overdue amounts are paid. Delivery dates will be extended by the period of suspension, and Agency will not be liable for any delay resulting from it.

Payment before transfer.

Ownership of the Deliverables transfers to Client on receipt of payment in full of all fees due under the applicable Statement of Work. Until then, Client has no license to use the Deliverables beyond review and testing.

This is the strongest of the four, because a client who cannot lawfully use the work until it is paid for has a reason to pay. The detail is covered in the article on who owns the code.

One caution. Never take down a live site or lock a client out of their own accounts to force payment unless your contract clearly allows it and a lawyer has confirmed it. That kind of self-help can turn a simple debt claim into a counterclaim against you.

When the same client does it twice

A second late payment, after you have run the ladder once, is a pattern. Move that client to payment in advance. If they refuse, you are dealing with the slow payer described in the article on difficult clients, and the honest next step is the one set out in how to fire a client.