How do I collect an overdue invoice from a small business?
How to collect an overdue invoice from a small business
Short answer
Collecting from a small business debtor is often more personal and more complicated than collecting from a consumer. The owner is usually the decision-maker, the cash-flow is genuinely tighter, and the business relationship has personal stakes on both sides.
**Key differences from consumer collection:** - You're dealing with the owner directly, not a billing department - The business may have legitimate cash-flow timing issues (not unwillingness to pay) - A personal guarantee may exist — if so, the owner is personally liable - You have lien rights in many industries (construction, services on property) - Small businesses close, change ownership, or go insolvent — early action matters
**Most effective approach by invoice age:**
**Under 30 days:** Phone call to the owner directly. Ask if there's a cash-flow issue. A payment plan conversation at day 15 is far more productive than a confrontational demand at day 45. Most small business owners respond to a direct, professional call from a peer.
**30–60 days:** Formal demand letter + credit hold on new work. State a specific deadline. A small business owner knows that collections referral will damage their credit — the threat of escalation is often enough.
**60–90 days:** Check for a personal guarantee in your contract. If one exists, make clear in writing that you'll pursue both the business AND the owner personally. This often accelerates payment significantly.
**90+ days:** Consider whether the business is still operating. Check Google Maps, their website, and social media. A business winding down may have assets you can reach through legal action before they're distributed. File in small claims or pursue your lien rights before the window closes.
**Important:** The FDCPA applies only to consumer debt collection, not B2B. When collecting a business invoice, you are not bound by FDCPA restrictions — you can call whenever business hours allow and use direct, assertive language.