Guide

When Should You Send an Unpaid Invoice to Collections?

Updated October 15, 2026 · CollectionPlacement editorial team

Short answer: Many businesses send an unpaid invoice to collections once it is about 90 days past due and internal follow-up has failed, and sooner if the customer stops responding, makes repeated broken promises, or shows signs of financial distress. Because recovery generally becomes harder as a debt ages, a clear internal deadline is usually better than waiting indefinitely.

Why does timing matter so much?

Collection professionals widely agree that the age of a debt is one of the strongest predictors of whether it gets paid. Over time, debtors prioritize other creditors, contact details go stale, businesses close or change hands, and memories of what was ordered fade, which makes disputes harder to resolve. Older accounts also tend to cost more to place because agencies price in the extra difficulty, as explained in how much collection agencies charge.

There is also a legal clock. Every state has statutes of limitations that limit how long you have to sue. Waiting too long can take litigation off the table.

What should I do before an invoice goes to collections?

A consistent internal process both improves collections and shows the agency you have done your part. A typical sequence looks like this:

• Due date to 15 days late: a friendly reminder and a copy of the invoice. Many late payments are simply oversights.
• 15 to 30 days late: a phone call to your contact and, if needed, to accounts payable. Confirm there is no dispute and ask for a payment date.
• 30 to 60 days late: a firmer written notice, consideration of a credit hold on new orders, and escalation to a senior contact.
• 60 to 90 days late: a final demand stating that the account will be referred for collection by a specific date if not resolved.

Keep notes of every contact. That record is valuable if the account later goes to an agency or attorney.

What are the warning signs that I should act sooner?

Some accounts should not wait for the 90-day mark. Consider placing earlier if you see:

• The customer has stopped returning calls or emails.
• Repeated promises to pay that are not kept, or checks that bounce.
• A sudden, vague dispute raised only after you asked for payment.
• News of layoffs, closures, lawsuits, liens or a sale of the business.
• The customer is asking for more credit while older invoices remain unpaid.

If you believe the customer may be heading toward insolvency, speed matters. Creditors who act early are generally in a better position than those who wait.

Should I offer a payment plan first?

A realistic payment plan can be a good outcome, especially with a customer you want to keep. Put it in writing, set specific dates and amounts, and decide in advance what happens if a payment is missed. If the plan fails, you have a documented acknowledgment of the debt, which helps when the account is placed. Be aware that in some states a payment or written acknowledgment can affect the limitations period, which is one more reason to keep good records.

Collection agency or attorney: which comes first?

For most invoices, a collection agency is the logical next step. Agencies send demand letters, make calls, locate debtors and negotiate settlements, usually on contingency. Larger balances, contested claims, or debtors with assets but no willingness to pay may justify going straight to a collection attorney who can file suit. Our guide to a collection agency vs. a collection attorney walks through the trade-offs.

How do I place the account once I decide?

Gather your documentation (contract or credit application, invoices, statements, proof of delivery and your communication log), then choose a partner that handles your debt type and the debtor's location. Our checklist on what to prepare before placing an account covers the details. For business-to-business balances, see how to place commercial debt. Once placed, route any debtor contact to the agency and tell them promptly about payments you receive directly.

How can I reduce the number of invoices that reach collections?

Prevention is cheaper than recovery. Use a credit application that captures the legal entity, ownership and references, and consider personal guarantees for higher-risk customers. Put clear payment terms, late fees and collection-cost clauses in writing. Invoice promptly and accurately, offer convenient payment methods, and automate reminders. Monitor customer payment behavior, set credit limits, and be willing to require deposits or shorter terms when a customer slows down. A documented process also makes placement smoother when an account does fall through.

Will sending an invoice to collections hurt the customer relationship?

It can, which is why the steps above matter: customers who have received clear reminders and a final notice are rarely surprised. Many professional agencies, particularly commercial specialists, aim to recover the money while keeping the door open for future business. If the relationship is important, tell the agency so and ask how they approach first contact. Often, though, a customer who has ignored 90 days of reminders has already made a choice about the relationship.

Not legal advice. This article is general information, not legal advice, and laws vary by state and change over time. CollectionPlacement is a referral service, not a law firm or collection agency. Consult a licensed attorney about your situation.

Related guides

• How Much Do Collection Agencies Charge? Contingency Rates Explained
• Collection Agency vs. Collection Attorney: Which Should You Use?
• How to Place Commercial Debt with a Collection Agency (Step by Step)
• What to Prepare Before Placing an Account for Collection: A Checklist
• Medical Debt Placement: A Guide for Practices and Healthcare Providers
• How Long Does Debt Collection Take? Typical Timelines for Creditors
• Can You Collect on Old Debt? A Statute of Limitations Overview for Creditors