How to Collect Money from Clients Who Won't Pay

When reminders haven't worked, escalate in order: check that the invoice is right and the client isn't disputing it, send a final written request with a deadline, offer a payment plan, and pause new work if your contract allows it. After that, the options are a collection agency or court, and both depend on the law where you and the client are, so check local rules and ask a lawyer before you use them. If the money can't be collected, ask your accountant how to treat it for tax.

Billed publishes this page. It's general information, not legal or tax advice. The US rules below are quoted from the Consumer Financial Protection Bureau (CFPB, last reviewed December 9, 2024), the Federal Trade Commission (FTC, Debt Collection FAQs, dated March 2023) and the IRS (Topic No. 453, last reviewed September 24, 2026), all opened on October 30, 2026. This page starts where the reminders stop: for the reminder steps, see how to follow up on unpaid invoices and how to write invoice payment reminders.

Before you escalate: rule out a problem with the invoice

Ask the client directly whether anything is wrong with the invoice: the amount, the work, the due date or who it was sent to. A client who disputes the work needs a different conversation from one who hasn't paid; see invoice disputes and how to resolve them. For what counts as overdue and how to track it, see what is an overdue invoice.

Step 1: Send a final written request

Put it in writing, by email or letter, and include:

• the invoice number, the amount still owed and the original due date;
• a new date by which you need payment;
• how to pay;
• what you'll do next if it isn't paid, and only steps you're prepared to take.

Keep a copy of every message and a note of every call. If the matter goes further, that record is what you, an agency or a lawyer will work from.

Step 2: Offer a payment plan

A client who can't pay all at once may pay in parts. Agree on the amounts and dates in writing, and send an invoice or statement for each part so both sides can see what's left. For asking for payment in a way that keeps the relationship, see how to ask for payment professionally.

Step 3: Pause new work, if your contract allows it

Stopping work on an unpaid account limits how much more you're owed. Whether you can stop, and how much notice you must give, depends on your contract, so read it first and ask a lawyer if it isn't clear. If you decide to end the relationship, see how to fire a client professionally and how to handle difficult clients.

Late fees and interest are a separate question; what you can charge depends on your contract and local law. See how to add late fees to invoices and late payment policies.

Step 4: Collection agencies and the FDCPA (US)

A collection agency collects the debt for you; agree on its fees and terms in writing before it starts. In the US, the CFPB calls the Fair Debt Collection Practices Act (FDCPA) "the main federal law that governs debt collection practices." Its scope is limited:

• The CFPB says: "The FDCPA covers the collection of debts that are primarily for personal, family, or household purposes. It doesn't cover business debts, and it also doesn't generally cover collection by the original creditor or business you owed money to."
• The FTC says: "Business debts are not covered by the FDCPA."
• On state law, the CFPB says: "Most states have laws about debt collection practices, many of which are similar to the FDCPA. Some of those state laws cover the original creditor, while others don't."

So whether a law limits how you, or an agency you hire, may contact a client depends on whether the client is a consumer or a business and on your state. Check local rules and ask a lawyer before you or an agency contacts a consumer about a debt.

Step 5: Court

If the amount justifies it, you can take the client to court, including a small claims court where your area has one. Limits, fees and procedures are set locally, so check your local court's rules and ask a lawyer.

If you can't collect: bad debt (US)

Whether you can deduct an unpaid invoice depends on your accounting method and on whether you've already counted the amount as income; what is bad debt in business quotes the IRS rules. One part ties back to the steps above. IRS Topic No. 453, Bad debt deduction, says, for US federal tax: "To show that a debt is worthless, you must establish that you've taken reasonable steps to collect the debt."

The written record from steps 1 to 5 is part of showing those steps. Ask your accountant whether and when you can deduct an unpaid invoice.

Sample: from overdue to a payment plan

The business, client and figures here are a sample, invented for this example.

A designer's invoice #1088 for $2,400 was due on March 1, 2026. Reminders went out, and nothing was paid.

1. April 15, 2026: the invoice is 45 days overdue (March 1 + 45 days = April 15). The designer sends a final written request asking for payment by April 30.
2. April 20: the client replies that it can't pay in one go. They agree on three payments of $800: April 30, May 29 and June 30. $800 × 3 = $2,400, the full amount.
3. April 30 and May 29: two payments arrive. $2,400 − $800 − $800 = $800 still owed.
4. June 30: the last payment arrives. $800 − $800 = $0 owed, and the invoice is closed.

If the June payment hadn't arrived, the designer would have $800 outstanding and a written record of every step to take to an agency, a lawyer or an accountant.

Where Billed fits

Billed's client management page says you can "Keep a comprehensive record of all payments in one place, easily track payment history, stay informed about outstanding balances, and send payment reminders using Billed client management." Its financial reporting page says: "See your partially paid, past due and paid invoices in a glance with Invoice reports." If you take payments online, see what are integrated payments.

Related Articles

• How to Follow Up on Unpaid Invoices
• How to Write Invoice Payment Reminders
• What Is an Overdue Invoice?
• Invoice Disputes and How to Resolve Them

Frequently Asked Questions

What can I do when a client won't pay an invoice?

Check that the invoice is correct and not disputed, send a final written request with a deadline, offer a payment plan, and pause new work if your contract allows it. A collection agency or court comes after that; check local rules and ask a lawyer first.

Does the FDCPA apply when I collect a business debt?

The CFPB says the FDCPA "doesn't cover business debts, and it also doesn't generally cover collection by the original creditor or business you owed money to." State laws differ, so check local rules and ask a lawyer.

Can I write off an unpaid invoice for tax?

It depends on your accounting method and on whether you've already counted the amount as income. In the US, IRS Topic No. 453 also says: "To show that a debt is worthless, you must establish that you've taken reasonable steps to collect the debt." Ask your accountant how this applies to your invoice.

Should I stop work for a client who hasn't paid?

It limits how much more you're owed, but whether you can stop, and with how much notice, depends on your contract. Read it first and ask a lawyer if it isn't clear.