How to collect an unpaid invoice in the US

GuideUSChecked 29 October 202617 primary sources8 min readUK version

The short answer

In the US, no federal law adds interest to a private business invoice, so your contract's late fee or interest clause does the work, within your state's usury limits. Send a reminder, a firm deadline and a written demand letter, then file in small claims court. On construction work, check your mechanics lien deadline first.

What is the right order for collecting an unpaid invoice?

Escalate in writing, one step at a time, and keep proof of each step. On work that improved real property, check your lien deadline first: that clock is already running.

  1. Invoice promptly, with the due date and your terms, which should also be on the estimate (see how to price an estimate).
  2. A plain reminder when it falls due. Assume an oversight.
  3. A firm follow-up with a specific date and what happens after it. If your contract sets a late fee or interest rate, cite it.
  4. A formal demand letter: the amount, what it is for, the deadline and your next step. Send it in a way you can prove delivery.
  5. Small claims court, or a lien or bond claim on construction work.

Can I charge interest or a late fee?

Yes, if your contract says so. No federal statute sets interest on a private business invoice, so put a late fee or interest rate in your terms, within your state's usury limits.

Without an agreed rate, some states add interest to a contract claim: California contract claims accrue 10% a year after breach (Cal. Civ. Code sec. 3289(b)), and New York's rate is 9% a year, or 2% on a consumer debt owed by an individual (CPLR 5004). As of Oct 2026.

$25,000 invoice paid 60 days late in California, no agreed rate (example, As of Oct 2026)Amount
Interest: $25,000 x 10% x 60 / 365$410.96
Each further day: $25,000 x 10% / 365$6.85

Federal agencies must pay a proper invoice by the contract date or, with none, within 30 days, or add interest (Prompt Payment Act, 31 U.S.C. 3902 and 3903). As of Oct 2026.

Should I take a client to small claims court?

Under your state's limit it is the cheapest court route: no attorney needed, low filing fees, and a signed estimate plus proof of the work is the core of your case. Limits vary by state.

  • California: $12,500 for an individual, $6,250 for a business (Code Civ. Proc. secs. 116.220 and 116.221).
  • Texas: $20,000 in justice court (Gov. Code sec. 27.031).
  • Florida: $8,000 (Fla. Sm. Cl. R. 7.010).
  • New York City: $10,000; a corporation, partnership or association files in the Commercial Claims Part (NYC Civil Court Act secs. 1801 and 1801-A).

All As of Oct 2026. File in the right county, usually where the debtor is or the work happened. Above the limit you are in regular civil court, where you should use a state-licensed attorney. A judgment opens the state's collection tools, such as a bank levy, or wage garnishment where allowed.

What about mechanics liens on construction work?

A lien attaches to the property and is often stronger than a lawsuit, but the deadlines are strict and a missed one usually loses it for good.

  • California: preliminary notice within 20 days of first furnishing (Civ. Code sec. 8204); record the lien within 90 days after completion if no notice of completion is recorded (secs. 8412 and 8414).
  • Florida: Notice to Owner within 45 days of first furnishing if you have no contract with the owner (Fla. Stat. sec. 713.06(2)(a)); claim of lien within 90 days of final furnishing (sec. 713.08(5)).
  • New York: file within 8 months of completion, or 4 months for a single-family home (Lien Law sec. 10).
  • Texas: a subcontractor's notice by the 15th day of the third month after each month worked on commercial jobs, or the second month on residential (Prop. Code sec. 53.056(a-1)).

Public property generally cannot be liened, so claim on the payment bond: the Miller Act on federal contracts over $150,000 (FAR 28.102-1), where a second-tier sub or supplier gives notice within 90 days of its last work (40 U.S.C. 3133(b)(2)), and your state's Little Miller Act on state and local jobs. All As of Oct 2026. Have a construction attorney licensed in the state check before you record or sue.

Do prompt payment laws help subcontractors?

Yes, in many states the law sets payment deadlines and penalty interest down the chain. Examples, As of Oct 2026:

  • Texas (Prop. Code ch. 28): the owner pays within 35 days of a request, the contractor pays subs within 7 days of being paid, and late sums carry 1.5% a month.
  • California: subs paid within 7 days of each progress payment unless agreed otherwise in writing, or a 2% a month penalty (Bus. and Prof. Code sec. 7108.5).
  • New York (Gen. Bus. Law art. 35-E, private projects of $150,000 or more, most small residential work excluded): the owner pays 30 days after approving an invoice, and each tier pays the next within 7 days of receiving good funds.
  • Federal jobs: primes pay subs within 7 days of receipt (31 U.S.C. 3905(b)).

Pay-if-paid clauses are unenforceable in California (Wm. R. Clarke Corp. v. Safeco Ins. Co., 15 Cal. 4th 882 (1997)) and New York (West-Fair Elec. Contractors v. Aetna Cas. and Sur. Co., 87 N.Y.2d 148 (1995)). See the lesson on a late GC and your lien rights.

When do debt collection laws apply to me?

The federal Fair Debt Collection Practices Act covers consumer debts, those from transactions primarily for personal, family or household purposes (12 CFR 1006.2(h)), so an ordinary business-to-business invoice is outside it.

An agency you hire to collect consumer debts is a debt collector under the Act (15 U.S.C. 1692a(6)): it sends a validation notice within 5 days of first contact and pauses on a written dispute (1692g). Collecting your own consumer accounts in your own name is generally outside it, but state laws such as California's Rosenthal Act can reach you (Civ. Code sec. 1788.2(c)). As of Oct 2026.

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Questions owners ask

Can I charge a late fee on an overdue invoice in the US?

Yes, if your contract or terms set one, within your state's usury limits. No federal rule adds interest to a private business invoice. Without an agreed rate, some states add interest to a claim, such as 10% a year on California contract claims (Civ. Code sec. 3289(b)). As of Oct 2026.

What is the small claims limit in my state?

It varies. California allows $12,500 for an individual and $6,250 for a business, Texas justice court $20,000, Florida $8,000 and New York City $10,000. As of Oct 2026.

How long do I have to file a mechanics lien?

It depends on the state and your role. California: 90 days after completion if no notice of completion is recorded. Florida: 90 days from final furnishing. New York: 8 months from completion, or 4 months for a single-family home. As of Oct 2026.

Does the FDCPA apply when I collect my own invoices?

Generally not. It covers consumer debts, mainly collected by third parties; a business-to-business invoice is outside it. State laws such as California's Rosenthal Act can reach a business collecting its own consumer debts. As of Oct 2026.

Do I need an attorney to collect an unpaid invoice?

Not usually for small claims court, where no attorney is needed. Use a state-licensed attorney above the small claims limit, and before recording a lien or suing on one.

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