How to collect an unpaid B2B invoice
The steps from a late invoice to cash, in the order most finance teams take them, and what to have ready at each one.
Seven steps, cheapest first.
Each step costs more time, money or goodwill than the one before it. Move on when the customer stops responding or misses a date they gave you.
- 1. Confirm the invoice can be paid
- Many late invoices are stuck in accounts payable, not refused. Check that the invoice went to the right AP contact and legal entity, carries the purchase order number the customer requires, and matches what was delivered. Fix any of those before you escalate.
- 2. Send a reminder, then call
- Send the invoice again soon after the due date. Then call AP and ask three questions: did you receive it, is it approved, and when is it scheduled to pay? Write down the name of the person and the date they give you.
- 3. Escalate inside the customer
- If the date passes, contact the controller or owner. Put the past-due notice in writing: invoice number, amount, original due date, how to pay, and the date you expect payment.
- 4. Offer a payment plan if they cannot pay in full
- A customer with a cash problem may pay in installments. Agree the amounts and dates in writing, and treat a missed installment as a reason to move to the next step.
- 5. Send a final demand
- State the balance, a deadline, and what happens after it: placement with a collection agency or referral to an attorney. Name only the steps you will actually take.
- 6. Place it with a commercial collection agency
- A third-party agency contacts the debtor under its own name. Most commercial agencies work on contingency, so you pay only on what is recovered. Choose one that handles business debt, and ask who holds collected funds, how you see each contact with your customer, and how disputes are handled.
- 7. Consider legal action
- A demand letter from an attorney, small claims court or a lawsuit can follow. Small-claims limits and the deadline for suing on a contract vary by state, so check with an attorney. Weigh the cost against the balance and whether the debtor can pay a judgment.
What to gather before you escalate.
An agency or attorney will ask for these. Having them ready shortens the time before anyone contacts the debtor.
- The invoice and any statements sent after it
- The contract, purchase order or signed quote
- Proof of delivery or completed work
- Emails and notes from calls about the invoice
- Names, emails and phone numbers for AP and the decision maker
- Any partial payments received
Where Modern Collections fits.
Modern Collections is a third-party collection agency for business invoices. You place an overdue invoice from the dashboard, the API, or an AI assistant connected to your account. AI voice and email agents contact the debtor's accounts payable team under the Modern Collections name, and you see each call, email, dispute and payment on the file. Recovered funds are remitted to you.
We collect commercial debt only. The fee is a percentage of what is recovered; the rates are on the pricing page.
Questions finance teams ask.
This guide is general information, not legal advice. Collection rules vary by state and by contract.