When Should I Send an Unpaid Invoice to Collections?

There is no single legal deadline for sending an invoice to collections. The right moment is a judgment call, but a good rule of thumb is this: when an invoice is around 60 days past due, you have made real attempts to reach the customer, and they have neither paid nor given you a credible plan, it is time to hand it off.

This guide lays out a practical timeline, what to do before you escalate, the warning signs that mean you should move faster, and what to weigh when deciding.

What is the usual timeline for an overdue invoice?

The numbers below are a common small-business pattern, not a legal requirement. Adjust them for your industry, your payment terms, and how well you know the customer.

• Before the due date: a friendly heads-up a few days ahead.
• 1 to 3 days past due: a short, polite check-in. Many late payments are oversights.
• 4 to 30 days past due: firmer follow-ups on more than one channel (email, text, a phone call). Offer a payment plan or partial payment if cash is tight.
• 30 to 60 days past due: a direct phone call to a decision-maker, followed by a written final notice that states the amount, the original due date, and the date you will escalate.
• 60+ days past due: hand the invoice to collections or take legal steps.

The longer an invoice sits, the less likely it is to be paid in full. Customers also tend to prioritize the vendors who keep asking, so silence after 60 days quietly moves you to the bottom of their list.

What should I do before sending an invoice to collections?

Collections should be the step after you have run out of reasonable options, not the first reaction to a late payment. Work through this checklist first.

1. Confirm the invoice is correct. Check the amount, the customer name, the PO number if one is required, and that the invoice actually reached the right person. A wrong email address explains a surprising number of unpaid invoices.
2. Check the paper trail. Make sure you have the signed quote or contract, proof the work was delivered or completed, and the invoice itself. If you ever need to escalate, this is your evidence.
3. Ask whether there is a dispute. If the customer says the work was incomplete or the price was wrong, that is a conversation to resolve, not a debt to hand off. Collectors and courts both look harder at disputed invoices.
4. Contact them through more than one channel. If you have only sent emails, call. If you have only called, send a written notice. See how to collect overdue payments from customers for the full escalation ladder.
5. Offer a way out. A payment plan or a partial payment now often recovers money that a hard-line stance would not. Put any plan in writing.
6. Send a final written notice. State the balance, give a firm deadline (7 to 10 days is typical), and say what happens next if it is not paid.

A final notice you can adapt

Subject: Final notice: Invoice #1042, $4,800 past due Hi Dana, Invoice #1042 for $4,800, issued March 3 and due April 2, is now 61 days past due. We have reached out several times by email and phone without a resolution. Please pay in full by [date, 7 days out], or call me by then to set up a payment plan. If we do not hear from you, we will refer the account to collections and may pursue other remedies available to us. You can pay online here: [link]. I would much rather settle this directly, so please reach out. Thank you, [Name], [Business]

Keep the tone factual and calm. Never threaten anything you are not prepared to do, and never threaten arrest or anything that sounds like a criminal penalty for an unpaid business debt.

What are the warning signs to move faster?

Not every late invoice deserves a 60-day wait. Escalate sooner when you see any of these:

• The customer is avoiding you. Unanswered calls, bounced emails, and a disconnected number after you had been in regular contact.
• Business trouble. News of layoffs, closure, bankruptcy, or an eviction notice. Unsecured creditors are often paid last, so speed matters.
• Repeated broken promises. Two or more missed payment-plan dates is a pattern.
• A growing balance. If the customer keeps ordering while old invoices sit unpaid, stop extending credit and escalate the old balance.
• A large amount. A big invoice justifies moving faster because the cost of waiting is higher.

On the other side, slow down a little if the customer has a good payment history, is in regular contact, and has a credible reason and date for payment.

Should I use a collection agency, or go to small claims court?

Collections is not your only option. Weigh these paths:

• Collections team or agency: takes the calling and follow-up off your plate. Agencies commonly work on a contingency basis, meaning they take a share of what they recover, but fees vary widely, so ask before you sign.
• Small claims court: often a good fit for smaller balances. Dollar limits and filing fees differ by state, so check your state court's website. You do the work yourself, and winning a judgment does not guarantee you get paid.
• An attorney demand letter: a letter on law-firm letterhead can prompt payment on its own and costs less than a lawsuit.
• Writing it off: sometimes the cost of pursuing a small balance exceeds what you would recover. Talk to your accountant about how bad debts are treated for taxes.

A useful test: estimate what you would net after fees and time, and compare it to doing nothing.

Do debt collection laws apply to business invoices?

The federal Fair Debt Collection Practices Act (FDCPA) is generally understood to govern third-party collectors pursuing consumer debts, meaning personal, family, or household debts. Invoices between businesses usually fall outside it, but state laws and licensing rules still can apply, and the details depend on who the customer is and who is collecting.

If your customer is an individual homeowner or patient rather than a company, the consumer rules are far more likely to matter. Also keep in mind:

• Time limits: every state has a statute of limitations for suing over unpaid debts, and it varies by state and by type of contract. Do not let a very old invoice expire.
• Texting and calling: consent rules for automated texts and calls (the TCPA) can apply, so get permission and honor opt-outs.
• Harassment: be honest, avoid threats you cannot carry out, and keep communication professional.

This is general information, not legal advice. If a balance is large or a customer is disputing it, consult a local attorney.

How do I decide for a specific invoice?

Use this quick test. If you can answer yes to most of these, send it to collections:

1. Is it at least 60 days past due?
2. Is the amount accurate, with documentation backing it up?
3. Have I contacted the customer on more than one channel?
4. Did I send a written final notice with a deadline, and has that deadline passed?
5. Has the customer ignored me or broken a payment promise, rather than raised a genuine dispute?

If the answers are mostly no, spend another week or two on steps you have not tried yet. For help with the earlier stages, see how to ask a client for payment politely and what a payment reminder email should say.

How Casey handles this for you

Casey is an AI accounts receivable assistant that works the whole timeline above. It sends your invoice with a pay link, reminds the customer 3 days before the due date, and follows up automatically from 4 days past due on the channel and at the time each customer responds to, offering payment plans and partial payments along the way.

At 60+ days past due, one tap sends the invoice to Casey's collections team (AI plus people), who handle calls, formal demand letters, legal notices, and settlements, with your approval on anything sensitive. You pay 20% of what is recovered, and nothing if nothing is recovered. See pricing for details.

This article is general information, not legal or tax advice.