How to Deal with an Unpaid Invoice

We understand how stressful and time consuming it can be if your invoice hasn’t been paid on time. If you have an invoice which hasn’t been paid, here are some steps you can take to try and resolve the situation: 

1. Check the Payment Terms 

  • Go over your original invoice and contract to confirm the payment terms, due date, and any late fee policies you may have included. 
  • Make sure there are no errors in the invoice that might have delayed processing. 

2. Send a Polite Reminder 

  • A gentle email or message reminding your customer about the outstanding invoice can often resolve the issue. 
  • Keep the tone professional and friendly, including invoice details such as the amount, due date, and payment instructions. 

3. Contact the Client Directly 

  • If there’s no response to the reminder, call or meet with them to discuss the issue. 
  • Sometimes there are legitimate reasons for delays, such as financial difficulties or administrative errors. 

4. Resend the Invoice 

  • If your customer claims they never received the invoice or they misplaced it, you should resend it with a clear subject line like “Resending Invoice #[number] – Payment Overdue.” 
  • Double-check that all payment details, including bank account information, are accurate. 

5. Charge Late Fees 

  • Gently remind your customer that statutory interest and compensation can be applied on unpaid invoices. The amount you can charge depends on the amount outstanding, and what’s written in your contract. 
  • Our Interest Calculator can help assist in calculating what you can charge. You can use our interest calculator here. 

6. Set Up a Payment Plan 

  • If the client is struggling with cash flow, you could offer to break the payment into manageable instalments. 
  • Ensure all terms are clearly outlined and documented in writing and shared by email to avoid future disputes. 

7. Issue a Final Demand Letter 

  • If the invoice remains unpaid, a formal demand letter detailing the outstanding amount, deadline for payment, and potential consequences of non-payment may be necessary. 
  • This serves as an official notice before considering legal action. 

There is a step you can try before considering legal action – you can contact us at the Office of the Small Business Commissioner, as we may be able to assist you with recovering late payments.  

Details how we can help can be found here: How to Raise an Enquiry Regarding Late Payments to OSBC – Small Business Commissioner 

  • As a last resort, you can engage a collections agency or take legal action for debt recovery. 
  • Before proceeding, consider the costs and potential impact on the relationship with the client. 

There’s additional guidance on our website on legal action you can take. This can be found here: Legal action you can take – Small Business Commissioner