What do I do when a customer refuses to pay?

Find out why first. If they dispute part of the work, agree a credit note for that part; if they are short of cash, offer a written payment plan; if they ignore you, send a final notice with a date and then take advice on a letter of demand or a claim.

When should I write off a bad debt?

When you have taken reasonable steps and the debt cannot be collected — the business has closed or cannot be traced, or chasing it would cost more than it is worth. Your accountant can tell you when your tax rules allow relief. See Overdue and outstanding.

Does writing off a debt cancel it?

No. It takes the amount off your receivables, but the customer still owes it and their statements still show it. If they pay later, record a recovery.

Should I cancel the invoice instead of writing it off?

No. Cancelling says the charge was a mistake and issues a credit note to the customer. A write-off says the charge was right but cannot be collected. See Fixing mistakes.

Can I charge interest on late payment?

Put a late-payment rate in your quotation and invoice terms before the work starts. Without one, what you can claim depends on the law where you trade; ask a lawyer.

How do I record a payment plan in easySales?

Record each instalment as a payment on the invoice when it arrives, and post a task for the next instalment date. See Record a payment.

Is a letter of demand the same as a final notice?

Not quite. A final notice is your own last reminder. A letter of demand says you will start legal proceedings if you are not paid by a date; it is often sent by a lawyer and can matter in court. Ask a lawyer before you send one.

Long-overdue debts

Copy for AI

When an invoice is more than a month late and friendly reminders have not worked, the question changes from “have they forgotten?” to “will they pay, and how?”. This page covers the steps between a reminder and a write-off: pausing work, a final notice, a payment plan and, when nothing else works, writing the debt off. The earlier reminders are in Get paid faster.

This is a general guide, not legal advice. Before a letter of demand, a claim or a debt collector, ask a lawyer, or read the guides published by the small claims court or tribunal in your country.

Good practice

Find out why before you push harder. A customer who has gone quiet may have a dispute about the work, a cash-flow problem, or the invoice may be with the wrong person. A phone call to the person who approves payments tells you which, and each needs a different answer.

Fix a dispute with a credit note, not by waiting. If part of the work was wrong or late and you agree to charge less, issue a credit note for that part. The customer then owes a clear, agreed amount, and there is no reason left to hold the rest.

Pause new work while the debt stands. Finishing a new job for a customer who is not paying adds to what is at risk. Tell them plainly that new orders wait until the account is up to date, and agree it with whoever approves discounts and credit in your company.

Offer a payment plan in writing. A customer short of cash may pay in instalments when they would not pay the whole amount. Agree the amounts and dates in writing, record each payment as it arrives, and follow up the day an instalment is missed.

Send a final notice with a date. A final notice states the amount, the invoices, the date by which you need payment and what you will do next if it does not arrive. Only name a step you are ready to take.

Know when to stop. When the business has closed, cannot be traced, or the debt is smaller than the cost of chasing it, write it off in your books. Writing off does not forgive the debt: you can still collect it if the customer pays later.

A sensible order: 30 days late, call and pause new work; 45 days, send a final notice; 60 days, agree a payment plan or take advice on a letter of demand or a claim; after that, decide whether to pursue or write off.

Do it in easySales

See the whole account. Open the customer’s account. The Receivables card shows Outstanding, Overdue and Ageing by due date — Current, 1–30, 31–60, 61–90 and 90+ days past due. See Overdue and outstanding.
Send a statement with the final notice. Statement… on the account gives a PDF of every invoice, payment and credit for the Period you choose, so the customer sees the same figures you do.
Record every call and letter. Log each call as a communication on the invoice or account, and each letter as a note, with what was agreed. If you later write the debt off, the form asks for the Steps taken to recover the debt, and these records are your answer. See Events and communications.
Book each instalment date. Post a task on the invoice due on the next instalment date. When the money arrives, record the payment and select Done & schedule next to book the following date. The invoice reads Partial Paid until it is settled.
Correct a disputed amount with a credit note for the part you agreed to take off.
Write off what cannot be collected. On the invoice, select Write off as bad debt… in the ··· menu, choose a Reason, describe the steps you took and select Write off. The Bad debt relief panel shows whether the tax on it may be claimable under your country’s rules. No credit note is issued and the customer is not told; their statements still show the debt.
If they pay after all, select Record recovery on the invoice’s Bad debt tab.

Templates you can use

A call script, about 30 days late

Hello [Name], this is Mei from Lim & Co. I’m calling about invoice INV-10000290 for SGD 1,090.00, which was due on 15 August. Is there anything holding it up on your side — a question about the work, or the invoice going to the wrong person? … When can we expect payment?

Pausing new work

Dear [Name], we would be glad to start the second phase. As invoices INV-10000290 and INV-10000301 (SGD 2,180.00 in total) are now more than 30 days overdue, we will schedule the new work once the account is up to date. If payment is difficult at the moment, please call me so we can agree a plan.

A payment plan, confirmed in writing

Dear [Name], thank you for agreeing the following plan for the SGD 2,180.00 outstanding: SGD 730.00 by 31 October, SGD 725.00 by 30 November and SGD 725.00 by 31 December. If an instalment is missed, the full balance becomes due at once. Please reply to confirm.

A final notice

Dear [Name], despite our reminders of 22 August, 29 August and 14 September, invoice INV-10000290 for SGD 1,090.00 remains unpaid. Please pay the full amount by 31 October. If we do not receive payment or hear from you by then, we will consider further steps to recover the debt. A statement of your account is attached.

Common questions

What do I do when a customer refuses to pay? Find out why first. If they dispute part of the work, agree a credit note for that part; if they are short of cash, offer a written payment plan; if they ignore you, send a final notice with a date and then take advice on a letter of demand or a claim.
When should I write off a bad debt? When you have taken reasonable steps and the debt cannot be collected — the business has closed or cannot be traced, or chasing it would cost more than it is worth. Your accountant can tell you when your tax rules allow relief. See Overdue and outstanding.
Does writing off a debt cancel it? No. It takes the amount off your receivables, but the customer still owes it and their statements still show it. If they pay later, record a recovery.
Should I cancel the invoice instead of writing it off? No. Cancelling says the charge was a mistake and issues a credit note to the customer. A write-off says the charge was right but cannot be collected. See Fixing mistakes.
Can I charge interest on late payment? Put a late-payment rate in your quotation and invoice terms before the work starts. Without one, what you can claim depends on the law where you trade; ask a lawyer.
How do I record a payment plan in easySales? Record each instalment as a payment on the invoice when it arrives, and post a task for the next instalment date. See Record a payment.
Is a letter of demand the same as a final notice? Not quite. A final notice is your own last reminder. A letter of demand says you will start legal proceedings if you are not paid by a date; it is often sent by a lawyer and can matter in court. Ask a lawyer before you send one.