How do I collect an unpaid invoice from a government client?
How to collect an unpaid invoice from a government client
Short answer
Collecting from a government client (federal agency, state government, municipality, school district) requires different tools than collecting from a private business. Direct lawsuits against government entities face sovereign immunity hurdles, but you have other powerful options.
**Prompt payment laws:** Most government clients are bound by prompt payment laws that require payment within a set timeline (federal: 30 days; many states: 30–45 days). When they exceed that timeline, you are automatically entitled to interest without even asking. Keep records of when your invoice was submitted.
**Federal government (Prompt Payment Act):** Federal agencies must pay within 30 days of receiving a proper invoice. Interest accrues automatically from day 31 at the Treasury Department rate. For construction contracts, the Miller Act requires contractors to carry payment bonds — subcontractors can file claims on that bond if the GC isn't paying.
**State and local government:** - Check your state's prompt payment laws (most mirror the federal structure) - For construction: file a bond claim against the payment bond (required on most public projects over $100,000) - For services: escalate to the contracting officer or agency controller in writing, citing the prompt payment law and accrued interest
**How to escalate:** 1. Submit a formal written claim citing the invoice number, amount, submission date, and days overdue 2. Reference the applicable prompt payment law and calculate the accrued interest 3. Escalate to the agency's accounts payable supervisor, then to the contracting officer 4. For large amounts, consult a government contracts attorney
**What you cannot do:** - You generally cannot sue a government entity without exhausting administrative remedies first - Small claims court typically does not have jurisdiction over government defendants
**Prevention:** Always get a purchase order number before starting work. Government invoices without a proper PO often get rejected or lost in the system, restarting your payment clock.