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Customer Refusing to Pay for Work Done: 3 Steps to Take

Camila Lopez - Unpaid Invoices - July 9, 2024

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    It is extremely frustrating when a customer refuses to pay for work done. After all, you completed the work with the expectation that you were going to get paid. In this article, we will go over 3 steps you can take when a customer refuses to pay for the work you completed: 

    1. Email the Customer

    2. Send a Demand Letter

    3. Sue in Small Claims Court

    Did you know that we have a free tool powered by AI that helps you create a demand letter to a customer who refuses to pay you? Check out our demand letter tool. 

    Step 1- Email Your Customer

    Even though your client has already told you they won’t be paying you, you should still email your customer as:

    • Your client will understand that you are serious and persistent about getting paid back. 

    • Writing may clear up any misunderstandings about what was agreed upon and the work you performed.

    • Having written evidence of your efforts to collect from your client is good evidence if you later have to sue in court as you will be able to show the judge that you tried to resolve the payment dispute out of court. 

    You ideally want to keep the communications between you and your client in writing as this will help you prove your case later on. 

    Sample Email to the Customer 

    Dear [Customer Name], 

    I hope this email finds you well. As we have discussed previously, attached to this email you will find the service order with the scope of the work we agreed upon in addition to pictures of the completed work. The work my team performed is exactly as described in the service order. We covered all the furniture, painted the entire house, and completed the job on time. I understand that you are upset with the color, but unfortunately, this is something that is outside of our control as we purchased the exact color you requested on the service order. 

    I hope to hear from you in the next week so that we can continue our conversation. 



    Step 2- Send a Demand Letter 

    If you don’t receive a response to your email or your client responds and states that they won’t be paying, it is time to escalate by sending a formal demand letter. A demand letter is a letter that outlines why you are owed payment and the next steps you will take if your customer continues to refuse to pay. It is a final warning before you take your client to court for not paying you. 

    You can also consider letting your customers know that you are willing to accept a reduced payment if they pay before you escalate the problem to court. Even though it isn’t ideal for you to not receive full payment, you will be spending time and money going to court over the unpaid invoice. 

    Here are some important points to note: 

    • Do you need a lawyer? You can hire a lawyer to write and send your demand letter, but you are not required to. It will depend on how much you are owed and how much a lawyer will charge you. Demand letters on attorney letterhead are more intimidating, nevertheless, a letter is intimidating even if it isn’t on attorney letterhead. 

    • How to send the letter? The best practice is to send your letter via certified mail as some states may require this before suing. In addition to mailing your letter, you can also consider emailing it. 

    • What attachments to include? Be sure to include any contracts, service agreements, and change orders. This will help clear up any confusion. 

    Sample Demand Letter 

    Below is a sample demand letter to a customer refusing to pay for work done. 


    [Client Name] 

    [Client Address] 

    Re: Demand for Payment - Invoice [Invoice Number]

    Dear [Client Name], 

    This letter is a formal demand for payment of Invoice [Invoice Number] for the services our company provided on [Date Services Were Provided]. This invoice is now [Number of Days Past Due] days past due, with an outstanding balance of [Amount Owed]. 

    You have been previously notified via email regarding this payment and we have yet to receive any payment or communication from you regarding this invoice. Even though we fulfilled all the obligations of the agreement and delivered high-quality services, we are willing to accept [X] amount if you submit payment by [a date 14 days in the future] in an effort to resolve this out of court. 

    If we do not receive any response from you by the date referenced above, we will be forced to pursue legal action. If you have any further questions or concerns, do not hesitate to contact me via email at [email address]. 



    Did you know that we have a free tool powered by AI that helps you create a demand letter to a customer who refuses to pay you? Check out our demand letter tool. 

    Here is a video on how our demand letter tool works:

    Learn more in our guide on how to write a demand letter

    Step 3- Sue in Small Claims Court

    If after emailing or sending a demand letter your customer is still refusing to pay, then you may want to consider filing a lawsuit in small claims court. Small claims courts were created by each state as a way for people to affordably resolve civil legal problems. Part of the reason the US has a strong economy is because our judicial system enforces contracts. At the hearing, the judge will review your contract and the work you perform and will issue a judgment (a court order) stating that your client has to pay. 

    Resolve Your Case Before the Hearing

    Once your lawsuit is filed, your lawsuit will need to be “served.” The serving rules vary by state but many times either the court or a 3rd party will serve your lawsuit for you. Simply serving the customer with the filed lawsuit is sometimes enough to get them to pay because most people are not interested in going before a judge if they are likely to lose. If your customer pays you before the hearing, you can close your case with the court. 

    Small Claims Limits

    Whether you can take your customer to small claims will depend on whether the amount owed to you is within your state’s small claims limit. Review our 50-State Guide to Small Claims Court Limits to see if your dispute qualifies. For example, in California, if your business is a corporation or LLC, you can sue for $6,250 or less. 

    Amount Owed Exceeds Small Claims Limits

    If you are owed more than you can sue for in your state, you can still sue for the maximum amount allowed if you agree to waive the additional amount over the limit. For example, you are a web designer and own a business that creates websites for people and one of your customers owes you $11,000 in outstanding invoices. In New York City small claims, the limit is $10,000, therefore you can sue in small claims court for $10,000 and waive the remaining $1,000. 

    It may be worth waiving any amount over the small claims limit as it will cost you more to sue outside of small claims court. 

    Costs of Suing a Client In Small Claims

    Small claims court is generally quicker, and more affordable than filing your lawsuit in other types of court. You can expect to pay between $15-$75 to file a small claims case in most courts. 

    Deadline to Sue Your Customer For an Unpaid Invoice

    There are deadlines for when you can sue a client over an unpaid invoice. Unpaid invoices generally fall under the statute of limitations for breach of contract. Breach of contract statute of limitations vary by state and many differ between written and verbal contracts. Review our guide on statutes of limitations. Do not wait to file your case. If you wait, you begin to lose evidence and credibility and run the risk of missing the statute of limitations. 

    Did you know we can help you navigate small claims? Learn more.


    Camila Lopez

    Legal Educator @ People Clerk. Camila holds a law degree and is a certified mediator. Her passion is breaking down complicated legal processes so that people without an attorney can get justice.

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