When a customer will not pay

When invoice reminders stop producing a response, compare a final demand, legal help, a collection agency and court action with the amount you could recover. Check lien and notice deadlines immediately if the work may qualify. A disputed bill needs evidence of the agreement and performance, not just stronger reminders.

Price the recovery before you chase it

Every route below costs money, time, or both. On small balances the cure can cost more than the debt.

For an illustrative $4,200 invoice, an agency charging a hypothetical 35 percent nets you about $2,730 if it collects in full and nothing if it does not. Small claims costs a filing fee, a process server, and a working day, and you keep the whole judgment — if you can enforce it. On a smaller balance, compare the same costs before deciding whether to escalate.

Two questions belong in the math before any of it. Is the debt undisputed, or is the customer withholding because they say the work was wrong? And is there money to collect at all? A judgment against someone with no assets and no wages is an expensive piece of paper.

Send one final demand letter

A demand letter records your claim and gives the customer a clear chance to respond before escalation. Check whether the next remedy requires a particular notice or delivery method.

Keep it short and unemotional: the amount, the invoice number and date, the work, any late fee your signed agreement authorizes, a deadline, and what happens the day after.

Invoice 2026-0736, dated May 4, 2026, for $4,200 remains unpaid. The work was completed on April 29 and accepted without objection. Payment in full is due by September 8, 2026. If I have not received payment by that date, I will refer this account for collection and pursue the remedies available to me, including suit for the balance plus any interest and costs the contract and applicable law allow.

For an ordinary demand, keep the sent email and a trackable mailed copy. Follow any statutory delivery rule for a required notice; ordinary certified mail is not a substitute for every form of legal service. Set a reasonable response date without waiting past a lien or lawsuit deadline.

Ask an attorney what review and a demand letter would cost before comparing that route with an agency or court claim.

Check lawsuit, lien and preliminary-notice deadlines

Two deadlines are set by state law, not by you.

Statute of limitations. A claim on a written contract has to be filed within the period set by the applicable state law. The period can differ for oral agreements or open accounts. Get the actual deadline before relying on it.

Lien and notice deadlines. Identify the notice requirement, triggering event, delivery method and filing deadline for your role and project. The trigger may involve first furnishing, last furnishing or project completion. California’s CSLB lien guide illustrates why notices and lien rights must be checked separately; use the rules for your project state.

Get the real periods for your state from an attorney licensed there, before you need them rather than the week you decide to act.

Collection agency: what it costs, what you hand over

An agency takes over contact with the customer and remits what it recovers minus its cut. Get the fee schedule in writing before you assign anything, and read what happens if the customer pays you directly afterward. Some agreements still charge a commission.

What an agency does not have is legal power. Without a judgment it can seize nothing and garnish nothing, same as you. What it has is time, scripts, and a name the customer does not recognize.

Federal Regulation F governs covered debt collectors collecting consumer debts. Confirm the agency’s compliance process and any state license it needs where the customer lives; state rules may cover conduct beyond federal law.

Small claims court, and what a judgment is worth

Small claims offers a court process for eligible claims below a local dollar limit. Check filing, service, evidence and representation requirements before choosing it.

Check the court’s official instructions for the cap, fee and who can appear for your business. For example, California’s small-claims guidance distinguishes individual and business limits. Do not use another state’s limit or assume your company can appear through you.

Bring the documents, not the story: the signed estimate or quote, signed change orders, the invoice, the delivery receipt for your demand letter, photos of the finished work, and any message where the customer acknowledged the work or promised to pay.

Winning does not itself transfer money. California Courts’ collection guide describes further procedures for enforcing a judgment. Your state’s remedies, exemptions and costs determine what you can actually recover.

Mechanic's lien, when the work was on real property

Unpaid construction work may support a mechanic’s lien against private property. Eligibility depends on your work, licensing, role and compliance with the project state’s notice rules. Public work may require a payment-bond claim instead.

It is also the most technical. The filing has required content, notarization in many states, recording in the county where the property sits, a short deadline, and a separate, also-short deadline to sue before the lien lapses. Miss a formality and you may lose the right entirely; overstate the claim and you can create liability of your own. This is a construction attorney, not a downloaded template.

The file every one of these routes needs

The approved scope helps establish what the customer authorized. Keep completion evidence and the customer’s complaints too: approval does not rule out a later workmanship or billing dispute.

Keep the quote and its recorded approval in DoneQuote. Describe extra work, its price and schedule impact in writing and obtain approval before it starts. Keep invoices, payment records and completion evidence alongside that supporting quote in your job file.

One last thing to ask your CPA before you write a balance off: under the cash method, an unpaid fee generally has not been included in income and normally cannot be deducted as a bad debt. IRS Publication 334 explains the accounting-method distinction. The write-off is not the consolation prize people expect.