How do I collect an unpaid invoice from a foreign company?
Collecting an unpaid invoice from a foreign company — your practical options
Short answer
First, check your contract for a governing-law and jurisdiction clause — if it specifies US courts and US law, you can sue in the US and potentially enforce a judgment abroad under treaty. Without that clause, you are litigating in the foreign country under their law. For invoices under $25,000, a US-based international collection agency is usually the fastest route; they take 30–45% but have local contacts and legal relationships. For larger balances, a US attorney with international commercial experience can send a demand letter under the contract's governing law, which often produces payment faster than you expect.
The governing-law clause in your contract determines which legal system applies to the dispute. If your contract specifies 'the laws of [your state], USA' and a US venue for disputes, you can sue in US courts and potentially enforce a resulting judgment abroad. The US has treaties with many countries for recognition of foreign judgments, though enforcement timelines vary widely. Without this clause, a US court judgment has no automatic force in the foreign country — you would need to re-litigate there.
For transactions between US and foreign businesses, the UN Convention on Contracts for the International Sale of Goods (CISG) may apply automatically to goods contracts (not pure services) unless your contract explicitly excludes it. The CISG has different rules from the UCC on contract formation, breach, and remedies. Service contracts are generally outside the CISG, but if you deliver any physical goods as part of the engagement, check whether CISG applies.
The collection agency route is the most practical for mid-size invoices. US-based agencies that specialize in international collections operate networks of local attorneys and collection firms in dozens of countries. They typically take 30–45% of recovered amounts — higher than domestic rates — because they split the fee with a local partner. For invoices under $25,000, this is usually the best trade-off between cost and probability of recovery.
Direct escalation works in many cases before involving an agency or attorney. A formal demand letter on your letterhead, sent by email and courier to the registered address of the foreign company's legal representative, citing the specific invoice and referencing the governing-law clause, gets a response from the foreign company's own legal department far more often than informal follow-up emails do. Most legitimate foreign companies do not want a US lawsuit in their customer files. This step costs nothing and converts roughly 40–60% of non-responsive foreign debtors in the first 30 days.
Prevention is significantly easier than cure. For new international clients above a certain threshold, require a portion upfront (25–50%), use a letter of credit or trade credit insurance for large jobs, and ensure your contract has both a governing-law clause (US law, your state) and a venue clause (your county). These measures do not prevent the occasional non-payer, but they ensure that if collection becomes necessary, your legal position is as strong as possible.