How to Send Someone to Collections for an Unpaid Invoice
Updated December 19th 2025
Table of Contents
- Introduction
- Why a Clear Collections Process Matters
- Step 1: Verify the Debt Before Taking Action
- Step 2: Attempt Internal Collection First
- Step 3: Issue a Formal Demand Letter
- Step 4: Decide When to Escalate to Collections
- Step 5: Understand Commercial Collection Options
- Step 6: Ensure Legal and Contractual Readiness
- Step 7: Selecting the Right Collection Partner
- How Retrievables Supports Smarter Commercial Collections
- Step 8: Prepare Documentation for Transfer
- Step 9: Stay Engaged During the Collection Process
- Step 10: Strengthen Processes to Prevent Future Issues
- Common Errors to Avoid
- Conclusion: Make Collections a Strategic Capability
How to Send Someone to Collections for an Unpaid Invoice
Unpaid invoices are an unavoidable reality in business. Even well-run organizations with strong customer relationships encounter late or missing payments. For entrepreneurs, business owners, and managers of large enterprises, the challenge is not only recovering the money owed—but doing so in a way that is efficient, compliant, and aligned with long-term business goals.
Understanding how to send someone to collections for an unpaid invoice allows you to protect cash flow, reduce financial risk, and set clear expectations with customers. This article outlines a practical, professional approach to commercial collections, from early-stage follow-up to engaging the right collection partner.
Why a Clear Collections Process Matters
When invoices remain unpaid, the impact extends beyond accounting. Delinquent receivables can restrict liquidity, complicate forecasting, and divert internal resources toward manual follow-up. Over time, a lack of enforcement can also send the wrong signal—suggesting that payment terms are flexible or optional.
For larger organizations, unpaid invoices may affect financial reporting, audit readiness, and internal controls. A consistent collections process ensures that payment issues are addressed promptly and fairly, without unnecessary escalation or reputational damage.
Step 1: Verify the Debt Before Taking Action
Before considering collections, confirm that the invoice is valid, accurate, and enforceable.
Key checks to complete:
- The invoice reflects the correct amount and services or goods delivered
- Payment terms were clearly defined and accepted
- The invoice was sent to the correct contact and address
- No unresolved disputes or service issues exist
Escalating an incorrect or disputed invoice can delay recovery and weaken your position if legal action becomes necessary.
Step 2: Attempt Internal Collection First
Most unpaid invoices should go through structured internal follow-up before being sent to collections. Many late payments are the result of oversight rather than refusal.
Recommended internal sequence:
- Initial reminder: A polite notice shortly after the due date
- Second follow-up: A firmer message reiterating terms and balance
- Final internal notice: A clear warning that the account may be escalated
All communication should be documented and professional. For enterprise teams, automation can help, but human oversight remains important for tone and accuracy.
Step 3: Issue a Formal Demand Letter
A demand letter marks a shift from routine follow-up to formal action. It demonstrates seriousness while giving the debtor a final opportunity to resolve the matter without third-party involvement.
A strong demand letter includes:
- A clear statement of the amount owed
- Reference to relevant invoices and agreements
- A specific payment deadline
- Notice of next steps if payment is not received
In commercial contexts, demand letters often prompt payment—especially when sent on official letterhead or by legal counsel.
Step 4: Decide When to Escalate to Collections
Timing plays a critical role in recovery success. Waiting too long reduces the likelihood of collecting the full balance, while escalating too early can strain valuable business relationships.
Common escalation timelines:
- 60–90 days past due for standard B2B invoices
- Earlier escalation for high-value or non-responsive accounts
- Faster action for repeat late payers
The goal is to act decisively once it becomes clear that internal efforts are no longer effective.
Step 5: Understand Commercial Collection Options
When you decide to send an unpaid invoice to collections, you generally have two professional options.
Collection Agencies
Commercial collection agencies focus on recovering debts through negotiation, structured follow-up, and payment plans. They typically work on a contingency basis and are well suited for undisputed invoices.
Collection Attorneys
Collection attorneys are appropriate for higher-value, complex, or disputed debts. In addition to collection efforts, they can pursue legal remedies if necessary.
Choosing the right option depends on the size, age, and nature of the debt.
Step 6: Ensure Legal and Contractual Readiness
Although commercial collections are not governed by consumer debt laws, they are still subject to contract law and state-specific regulations.
Before proceeding, confirm that:
- The debt is within the applicable statute of limitations
- Your contract supports collection or legal action
- Documentation is complete and accurate
- Your approach complies with professional and ethical standards
For companies operating across jurisdictions, this step is particularly important.
Step 7: Selecting the Right Collection Partner
One of the most common challenges businesses face is identifying a collection partner with the right expertise. Many firms specialize in consumer debt and lack the experience required for commercial or enterprise-level collections.
An effective commercial collection partner should offer:
- Proven experience with B2B debt
- Industry and jurisdictional knowledge
- Transparent pricing and reporting
- A professional approach that protects your brand
This selection process can be time-consuming—especially for organizations managing multiple overdue accounts.
How Retrievables Supports Smarter Commercial Collections
Retrievables addresses this challenge by helping businesses connect with the most appropriate collection attorney or agency for their specific situation.
Rather than using a one-size-fits-all approach, Retrievables focuses exclusively on commercial debt collection and prioritizes fit and effectiveness.
How Retrievables adds value:
- Commercial specialization: Built for B2B and enterprise debt, not consumer collections
- Targeted matching: Connects businesses with professionals suited to the debt’s size, complexity, industry, and location
- Efficiency: Reduces time spent researching, vetting, and onboarding collection partners
- Scalability: Supports both individual recovery efforts and ongoing portfolio management
For entrepreneurs, Retrievables offers clarity and confidence. For large enterprises, it provides consistency, speed, and operational efficiency.
Step 8: Prepare Documentation for Transfer
Once a collection partner is selected, proper documentation is essential.
Typically required materials include:
- Executed contracts or agreements
- Invoices and account statements
- Proof of delivery or service completion
- Records of prior payment requests
Well-prepared documentation reduces delays and strengthens the collector’s position.
Step 9: Stay Engaged During the Collection Process
While third parties handle direct outreach, businesses should remain informed.
Best practices include:
- Reviewing periodic status updates
- Understanding escalation milestones
- Aligning collections activity with finance and legal teams
Active oversight ensures collections remain aligned with company values and financial objectives.
Step 10: Strengthen Processes to Prevent Future Issues
After resolution, evaluate what can be improved internally.
Questions to consider:
- Were payment terms appropriate and clearly communicated?
- Was credit approval sufficient?
- Should this customer’s terms be adjusted going forward?
Refining invoicing and credit policies reduces future exposure and reliance on collections.
Common Errors to Avoid
Businesses often undermine their own recovery efforts by:
- Delaying escalation too long
- Using consumer-focused collectors for commercial debt
- Proceeding without proper documentation
- Failing to maintain professional communication
Avoiding these mistakes protects both recovery outcomes and business relationships.
Conclusion: Make Collections a Strategic Capability
Knowing how to send someone to collections for an unpaid invoice is not about confrontation—it is about discipline, fairness, and financial responsibility.
With a structured approach and the right partners, businesses can recover overdue payments efficiently while preserving professionalism. Platforms like Retrievables make this process easier by connecting companies with collection professionals who understand commercial debt and enterprise needs.
When unpaid invoices threaten cash flow, a thoughtful collections strategy turns a reactive problem into a controlled, strategic function.
Updated December 19th 2025
Author: Jeremy Crane
Find an attorney and get your invoices paid
Register on the platform and enter information about past due accounts
Related articles
How to Chase a Debtor When They Have No Current Address
Start with Digital Communication One of the easiest ways to start the search for a debtor is by utilizing digital means. In today’s connected world, almost everyone has an...
August 27th 2024 Author: Brendan Gilbert
Accounts Receivable Management and Debt Collection: A Complete Guide for Businesses
Imagine closing a million-dollar deal—only to realize six months later that half the payment is still “in process.” On paper, the sale looks impressive. In reality, the company is...
October 2nd 2025 Author: Jeremy Crane
Understanding Debt Collector Attorney Fees: What You Need to Know
Do I Need a Lawyer for Debt Collection? Whether you've already decided to send a customer to collections or are simply exploring options to recover unpaid invoices, begin with...
September 19th 2024 Author: Jeremy Crane
How to Calculate the ROI of Outsourcing Collections
Late payments may seem like a small nuisance at first, but over time they quietly erode cash flow, strain operations, and distract teams from growth. Many business leaders recognize the...
October 16th 2025 Author: Jeremy Crane
How does the legal collections process work?
When individuals or businesses are unable to repay their debts, creditors often resort to legal collections as a method of recovering the money owed to them. The legal collections...
September 28th 2023 Author: Brendan Gilbert
How to Negotiate Payment Plans with Debtors
Late payments are an unavoidable reality in business. Even well-intentioned clients sometimes hit financial turbulence, leaving unpaid invoices that disrupt your cash flow and strain relationships. For growing companies...
October 24th 2025 Author: Jeremy Crane
Debt collection is a crucial part of any business. As such, it's essential to keep track of your debt collection KPIs. They can help you monitor your financial situation...
October 5th 2023 Author: Jeremy Crane
Florida Debt Collection Lawyer: Streamline Your Collections Process
What is a Florida Debt Collection Lawyer? A Florida collections attorney specializes in helping businesses recover unpaid debts through legal means. While many businesses attempt to resolve payment issues...
October 15th 2024 Author: Brendan Gilbert
How to Train Your Internal Team to Handle Early-Stage Collections
Early-stage collections play a critical role in protecting your company’s cash flow and keeping operations running smoothly. When customers fall behind, even by a few days, it can ripple...
November 20th 2025 Author: Jeremy Crane
Business Debts: How Much Money are Businesses Owed Every Year?
You know that cash flow is crucial to the success of your company, but what happens if your customers don't pay their debts on time? Unfortunately, this is a...
October 11th 2023 Author: Brendan Gilbert
Debt Collection Agency in California: Streamline Your Debt Recovery
What is a Debt Collection Agency and Why Do You Need One? A debt collection agency is a third-party company specializing in recovering unpaid invoices and overdue payments. Businesses...
October 22nd 2024 Author: Brendan Gilbert
What Are the Legal Options for Collecting Unpaid Invoices
Unpaid invoices are among the most common and frustrating challenges for entrepreneurs, business owners, and enterprise-level managers. When clients delay payments—or worse, avoid them entirely—your cash flow suffers, operational...
November 28th 2025 Author: Jeremy Crane
How do software companies handle collecting unpaid invoices
In the world of software, collecting unpaid invoices is a crucial part of running a business. The ability to manage your cash flow and turn unpaid invoices into actual...
October 19th 2023 Author: Brendan Gilbert
What Are Debt Collectors? A Guide for Entrepreneurs and Business Owners
How a Debt Collector Can Help Your Business A debt collector plays a crucial role in recovering past-due debts for businesses. By collecting outstanding payments, they help maintain a...
November 19th 2024 Author: Brendan Gilbert
Unlocking the Secrets to Successful Debt Collection Techniques
Debt collection is a capability that every business needs to develop. If you're running a small business and don't have the time or money to hire a professional debt...
November 7th 2023 Author: Brendan Gilbert
How to Send Debt to Collections Effectively
Understanding Debt Collections What is Debt Collection? Debt collection involves recovering unpaid debts from individuals or businesses on behalf of a creditor. It’s a structured process that often requires...
December 17th 2024 Author: Jeremy Crane
The Purpose and Importance of Dunning Letters Dunning letters serve a purpose beyond mere reminders for payment; they are an integral part of financial oversight and client relations. Their...
February 27th 2024 Author: Brendan Gilbert
Introduction to Debt Recovery Specialists
Introduction Imagine running a successful business, only to find your cash flow disrupted by unpaid debts that threaten your financial stability. Debt recovery specialists come into play as the...
March 25th 2025 Author: Brendan Gilbert
Transport Companies Commercial Collections
Understanding Commercial Collections Commercial collections refers to the process of pursuing outstanding invoices from other businesses. Unlike consumer collections, which deal with individuals, commercial collections often involve larger sums...
April 9th 2024 Author: Brendan Gilbert
For businesses, timely payments are the lifeblood of financial stability, yet unpaid invoices remain a persistent challenge. Debt collection services offer a professional solution, enabling companies to recover funds...
April 11th 2025 Author: Brendan Gilbert
The Hidden Perils of Phantom Debt Every Business Owner Should Know
How to Identify Phantom Debt Identifying phantom debt can be challenging, but recognizing the warning signs can help you stay vigilant. One clear indicator is receiving debt collection calls...
July 19th 2024 Author: Brendan Gilbert
Is It Worth Getting a Lawyer for Debt Collection?
Unpaid invoices are still much more than just a financial burden—they can also disrupt operations, put a strain on cash flow, and damage client relationships. For business owners, entrepreneurs...
August 14th 2025 Author: Brendan Gilbert
What is the Smallest Debt a Collection Agency Can Chase
Business Debts The threshold for engaging a collection agency can depend on the type of business and the debt amount. For instance, a supplier may be owed $500 for...
July 24th 2024 Author: Brendan Gilbert
15 Powerful Picks: TOP Debt Collection Platforms in 2025
Debt collection has become cloud-first, analytics-heavy, and human-centered. Platforms now combine configurable workflows with machine-learning decisioning, omnichannel engagement, and embedded payments. Buyers expect end-to-end orchestration—from early delinquency to recoveries—with...
August 25th 2025 Author: Brendan Gilbert
