An invoice being late does not immediately mean you have a legal dispute.
People miss emails. Accounts payable runs on a schedule. A client thinks they paid and did not. Your invoice may be sitting with the wrong person.
That is why the first step should be simple.
The mistake is staying at the simple step for two months while continuing to work.
A useful collection process gets progressively more formal. Each stage gives the client a reasonable chance to solve the problem before you spend more time, money or goodwill escalating it.
This article is general information, not legal advice. Court rules, limitation periods, collection rules and contract law vary by province and circumstance.
What should you send when an invoice is first overdue?
Start with a short reminder.
Something like:
“Hi Alex, just a quick note that invoice 1184 for $2,450 was due on September 15 and is still showing as outstanding. I’ve attached another copy here. Could you let me know when we should expect payment?”
That message does three useful things.
It identifies the invoice, gives the amount and due date, and asks for a specific answer.
Do not begin by accusing the client of refusing to pay when the invoice is three days late. You want the easiest possible path to payment.
If the client says payment is being processed Friday, note that commitment and check again if Friday passes.
When should the follow-up become firm?
When the polite reminder has been ignored or a promised payment date has passed.
The second message can be direct without becoming dramatic.
State:
- The invoice number
- The amount outstanding
- The original due date
- Any previous reminder or promised date
- A new deadline for response or payment
- What happens next if it remains unresolved
For example, you might say that further work will pause until the account is current.
At this point, stop writing as though the payment is optional.
You completed work under an agreement and issued an invoice. The purpose of the message is to resolve the account.
Should you stop working for a client who has not paid?
Usually, continuing to increase your exposure deserves a very good reason.
If a client owes $4,000 and you keep doing another $6,000 of work because you do not want to make the relationship awkward, you may turn one collection problem into a much larger one.
Your contract should ideally say what happens when payments are overdue, including whether work or delivery can be paused.
Before withholding something important or terminating a contract, make sure your agreement and applicable law allow what you plan to do. For a significant dispute, get legal advice.
Operationally, the principle is simple: do not let an overdue balance grow indefinitely just because the client is still sending requests.
What evidence should you keep for an unpaid invoice?
Keep everything that shows the agreement, the work and the payment history.
Useful evidence can include:
- The signed contract
- The accepted quote
- The invoice
- Emails or messages approving the work
- Change orders
- Proof the work was delivered
- Meeting notes
- Payment records
- Reminders you sent
- The client’s responses
- Any admission that the amount is owing
If the scope changed, keep the approval for the change.
If the client complains about the work, preserve the complaint and your response rather than trying to keep only the messages that help you.
A clean chronology is useful whether the matter is resolved by a phone call, a demand letter, a collection agency or court.
When should you send a demand letter?
A demand letter makes sense when normal collection attempts have failed and you are prepared to take a more formal next step.
It typically identifies the debt, explains why it is owed, sets a deadline and states what action may follow if payment is not made.
The tone should be factual.
A demand letter is not improved by insults, threats you cannot legally carry out, or a list of every frustrating thing the client has done.
For a meaningful amount, having a lawyer draft or review the letter can be worthwhile. The cost may be small relative to the claim, and it helps make sure the letter fits the law and your agreement.
Do not threaten court “tomorrow” if you have no intention of filing. Escalation works better when each step is real.
Should you send an unpaid invoice to collections?
A collection agency can save you from spending your own time chasing a debt, but you give up part of the recovery and some control over the client relationship.
Fees and arrangements vary. Some agencies work on contingency and retain a percentage of what they collect. Others may have different fee structures.
Before assigning an account, understand:
- What the agency charges
- What collection methods it uses
- When you are paid
- Whether you can withdraw the account
- What documentation it needs
- How disputes are handled
Provincial rules regulate collection activity, so use a properly authorised agency where required.
Collections can make sense when the amount is large enough to pursue but not large enough to justify spending your own time on litigation.
Can you charge interest on an overdue invoice in Canada?
You can agree to interest terms, but the wording matters.
Section 4 of the federal Interest Act contains a rule that catches a lot of casual invoice language.
Except for the real property mortgage and hypothec situations addressed by the section, if a written contract makes interest payable at a daily, weekly, monthly or other rate for a period shorter than a year, interest above 5% per year is not chargeable, payable or recoverable unless the contract contains an express statement of the equivalent yearly rate or percentage.
So writing only “2% per month” can create a problem. If you want to state a monthly rate, the agreement should also expressly state the equivalent annual rate.
Do not add a new interest charge after the invoice is already overdue if the client never agreed to it and assume it will automatically be enforceable.
For contract language that matters to your business, have a lawyer review it.
What are the small claims court limits in Canada?
The monetary limit depends on the province, and the forum is not named or structured identically everywhere.
As of September 2026, official government or court sources show these general monetary limits:
| Province | General small claims or lower civil claim limit |
|---|---|
| Alberta | $100,000 |
| British Columbia | $35,000 in Provincial Court Small Claims, with many claims up to $5,000 generally within Civil Resolution Tribunal jurisdiction |
| Manitoba | $20,000 |
| New Brunswick | $20,000 |
| Newfoundland and Labrador | $25,000 |
| Nova Scotia | $25,000 |
| Ontario | $50,000 |
| Prince Edward Island | $16,000 |
| Quebec | $15,000 |
| Saskatchewan | $50,000 |
These figures are a starting point, not a filing instruction. Jurisdiction can depend on the type of claim as well as the amount, and procedural rules can change.
For example, British Columbia’s Civil Resolution Tribunal has jurisdiction over many small claims up to $5,000, while Provincial Court Small Claims has a $35,000 monetary limit. Alberta calls its forum the Civil Division of the Alberta Court of Justice and currently has a $100,000 monetary jurisdiction.
Check the current court information for your province before filing.
Is small claims court worth it for an unpaid invoice?
Sometimes.
Compare the debt with:
- Filing and service costs
- Your time preparing the claim
- Time away from paid work
- The strength of your evidence
- The likelihood the client can actually pay
- The possibility of settlement
- The work required to enforce a judgment
Winning a judgment and collecting the money are not always the same event.
For a $400 invoice, spending days on a court process may make little economic sense even if you are clearly right. For a $20,000 debt with strong documentation, the calculation is very different.
There is also a relationship cost, although by the time a legitimate invoice reaches court, the commercial relationship may already be over.
What should you do before filing a claim?
Build a clean file.
Put the documents in chronological order. Create a short timeline. Calculate exactly what you are claiming. Separate the original invoice amount from interest, costs or other amounts.
Read the current rules for the correct court or tribunal.
Confirm the legal name of the person or business you intend to claim against. “Bob’s Renovations” on an Instagram profile may not be the legal entity that signed your agreement.
Check limitation periods. Waiting too long can affect your ability to sue.
If the amount is significant or the facts are disputed, get legal advice before filing.
How do you prevent the next unpaid invoice?
You cannot eliminate credit risk, but you can reduce it.
Use deposits when appropriate. Put payment terms in writing. Invoice promptly. Make due dates obvious. Pause work when agreed milestones are not paid. Keep client records organised.
And watch ageing.
Ledger keeps outstanding invoices visible so you can see how long a balance has been sitting unpaid. That matters because a 45 day old invoice should not disappear into the same list as one you sent yesterday.
For preventive steps, see getting clients to pay on time.
Escalate in steps, not emotions
A good unpaid invoice process looks almost boring:
- Friendly reminder
- Firm follow-up
- Pause further work where permitted
- Formal demand
- Collections or legal process where justified
Keep the evidence. Keep the tone factual. Do not invent penalties after the fact. Do not continue extending unlimited credit because asking for payment feels uncomfortable.
Most late invoices will never reach the final steps. A clear process is useful precisely because it tells you when one has.
Sources: Interest Act, section 4. Small claims monetary limits, current as of September 2026: Alberta, $100,000, British Columbia, $35,000 (or $5,000 in the Civil Resolution Tribunal), Manitoba, $20,000, New Brunswick, $20,000, Newfoundland and Labrador, $25,000, Nova Scotia, $25,000, Ontario, $50,000, Prince Edward Island, $16,000, Quebec, $15,000, and Saskatchewan, $50,000. Confirm the current limit for your province before filing, since these change.