Unpaid Invoice: What to Do? A Step-by-Step Recovery Guide

Got an unpaid invoice? You are far from alone. Across Europe, more than 80% of SMBs face payment delays, and 47% of EU businesses reported experiencing problems because of outstanding invoices in 2024, according to the European Commission’s EU Payment Observatory. The financial impact is staggering: the European Commission estimates that 25% of business bankruptcies are linked to cash flow disruptions caused by late payments.

In France specifically, where the legal and commercial framework around late payments is well developed, the Banque de France’s 2024 Observatoire des délais de paiement report found that PMEs (small and medium enterprises) would have benefited from €15 billion in additional cash flow had late payments not occurred. Despite a legal cap of 60 days on payment terms, the average late payment delay reached 13.6 days in Q4 2024.

For a freelancer, an SMB owner, or a finance manager, a single overdue invoice is a cash flow problem. Several unpaid invoices at once can threaten the business itself. The good news: the vast majority of unpaid invoices resolve through amicable reminders, provided you act systematically and promptly.

This guide walks you through 5 concrete steps to recover your money — from initial verification to judicial proceedings — along with the late payment penalties you are legally entitled to claim. While we reference French law specifically (one of the most comprehensive frameworks in Europe), the principles and escalation logic apply universally.

Step 1 — Verify Before You Act

Before sending any message, take a moment to verify that your invoice is in order and that the payment deadline has genuinely passed. A reminder sent too early, or based on a flawed invoice, can damage the commercial relationship and weaken your legal position.

Is the Invoice Correct and Due?

A legally valid invoice must include certain mandatory information. Check that the following elements are present:

• Your full company details (name, registration number, VAT number)
• The client’s full details
• A unique, sequential invoice number
• Issue date and explicit due date
• Precise description of goods delivered or services rendered
• Net amount, VAT rate, and total amount including tax
• Payment terms and late payment penalty clauses
• Bank details (IBAN/BIC)

A missing element does not invalidate the underlying debt, but it weakens your case in any dispute. Also confirm that the service or delivery was completed and accepted without reservation. A signed delivery note or service acceptance report is valuable supporting evidence.

Has the Payment Deadline Passed?

Under French law (the LME Act of 2008), the statutory payment period between businesses is 30 days from delivery or service completion, unless a different term has been contractually agreed — capped at a maximum of 60 calendar days (or 45 days end of month). Most European countries have similar frameworks under the EU Late Payment Directive (Directive 2011/7/EU).

Calculate the exact number of days overdue by subtracting the invoice due date from today’s date. This figure will serve as the basis for calculating late payment penalties.

Is There an Ongoing Dispute?

Before chasing payment, confirm there is no active dispute. If your client has raised an issue — quality, delivery timeline, quantity, billing error — this is a dispute, not a straightforward non-payment. Treating both identically is a mistake: sending a debt collection reminder to a client who has a legitimate complaint can escalate tensions unnecessarily and compromise your legal position.

Resolve the dispute first. Once an agreement is reached, or the complaint is confirmed to be unfounded in writing, you can proceed with the recovery process.

Step 2 — Amicable Reminders

The amicable phase is by far the most effective and least costly. Between 80% and 90% of unpaid invoices resolve before any legal action, provided you escalate progressively and use the right channel at the right time.

Email Reminder (Day 3)

Three days after the due date, send a first reminder email. At this stage, the tone should remain friendly and neutral — it may simply be an oversight, a spam filter issue, or a change in the client’s finance team.

Your email must include:

• Invoice number and total amount due
• The due date that has passed
• Your bank details to facilitate payment
• A PDF copy of the invoice if possible

Avoid accusatory language. A simple “I wanted to follow up on invoice #XXXX dated XX/XX/XXXX, which appears to be outstanding” is entirely appropriate. For ready-to-use templates, see our article email templates for following up on unpaid invoices.

Phone Call (Day 10)

If the email goes unanswered for a week, a phone call is the next step. Calling has distinct advantages: it humanises the interaction, elicits an immediate response, and helps you understand what is actually happening on the client’s end (cash flow difficulties, internal process delays, an unspoken dispute).

To prepare effectively:

• Have the full file on hand (invoice number, amount, communication history)
• Identify the right contact (accounts payable, CFO, or business owner)
• Use an assertive but respectful tone — you are asking for what you are owed, not a favour
• Take note of any commitments made (promised payment date, wire transfer reference)

If the client commits to paying “in the coming days”, confirm that commitment immediately by email after the call. This creates a paper trail.

SMS Reminder (Day 15)

SMS is an underestimated channel in B2B contexts, yet open rates exceed 95%. At Day 15, a short, professional text message can break a deadlock. Keep it factual — invoice number, amount, due date — and include a payment link if your invoicing tool supports it.

Example: “Hi [First name], invoice #XXXX for [amount] remains outstanding since [date]. Please settle at your earliest convenience: [payment link]. Kind regards, [Your name].”

Registered Letter (Day 30)

At Day 30, if no action has been taken, a registered letter with proof of delivery (equivalent to French LRAR — Lettre Recommandée avec Accusé de Réception) sends a clear signal: you are serious, and you are prepared to go further. This letter is not yet a formal demand, but it marks a decisive change in register.

Restate the facts, include the total amount owed (principal invoice plus accrued late payment interest), and give a payment deadline of 8 to 10 days. For ready-to-use templates, see our article reminder letter templates for unpaid invoices.

Step 3 — Formal Demand Letter (Day 45)

The formal demand letter (known in France as a mise en demeure) marks the transition from commercial to legal territory. It is a formal document sent by registered mail that formally orders your debtor to pay within a specific deadline — typically 8 to 15 days.

Drafting the Demand Letter

A legally effective demand letter must contain:

• Your full details and those of the debtor
• The precise reference of the debt (invoice number, date, principal amount)
• The total amount claimed, including late payment interest and the flat-rate compensation fee
• The explicit mention that this is a formal demand (the words must appear clearly)
• A specific payment deadline (e.g., “within 10 days of receipt of this letter”)
• A statement that you reserve the right to initiate legal proceedings if payment is not received

For templates compliant with French law, see our article demand letter templates for outstanding payments.

Legal Effects of the Demand Letter

A formal demand letter produces several important legal consequences:

Interruption of the statute of limitations: under French law (Article 2241 of the Civil Code), the demand letter interrupts the limitation period for the claim. In commercial matters, this period is 5 years. Without action before the deadline, the debt becomes legally unenforceable.

Starting point for statutory interest: if your general terms do not specify a contractual rate, the demand letter marks the starting point for interest at the applicable statutory rate.

Evidentiary value: the signed proof of delivery provides irrefutable evidence that the debtor was notified — which will be useful in any subsequent legal procedure.

Step 4 — Court Payment Order (Day 60+)

If the formal demand produces no result within the stated deadline, it is time to consider legal proceedings. In France, the injonction de payer (payment order) is the simplest, fastest, and cheapest judicial procedure available.

Conditions and Procedure

The payment order procedure applies to contractual, certain, and liquid debts — precisely what an undisputed unpaid invoice represents. In France it is handled by:

• The Tribunal de commerce (commercial court) for debts between traders — the vast majority of B2B cases
• The Tribunal judiciaire (civil court) for mixed or civil claims

The procedure is straightforward and does not require a lawyer for amounts under €10,000:

1. File a petition with the relevant court registry
2. Attach supporting documents (invoice, purchase order, delivery notes, reminder history, copy of the demand letter)
3. The judge rules without a hearing, on the basis of the documents alone
4. If the order is granted, it is served on the debtor by a bailiff; the debtor has 30 days to oppose
5. Without opposition, the order becomes enforceable and can be handed to a bailiff for seizure proceedings

For a complete walkthrough of the process, see our article payment order procedure in France.

Costs and Timelines

The payment order procedure is remarkably cost-effective relative to the amounts typically at stake:

• Court registry fees: €33.47 (2025 regulated tariff)
• Bailiff service fees: €50 to €100 depending on location and complexity
• Time to obtain the order: 1 to 3 months depending on the court’s workload
• Total timeline (service + opposition period): approximately 3 to 5 months in the best case

By comparison, a direct summons before the commercial court is faster (hearing within 2–3 months in major cities) but generally requires a lawyer, increasing overall costs. It remains preferable for complex disputes or large amounts.

Step 5 — Judicial Debt Recovery

For significant amounts or bad-faith debtors, more comprehensive legal procedures are available.

Summons for Payment

A direct summons (assignation en paiement) is the standard commercial litigation procedure. It involves directly seizing the commercial court via a bailiff’s writ, to obtain a payment order in adversarial proceedings.

This procedure is appropriate when:

• The claim amount is significant (above €10,000, legal representation is strongly recommended and may be mandatory depending on the court)
• The debtor partially contests the claim
• You wish to simultaneously claim additional damages and interest

Provisional Injunction (Référé-provision)

When you need money quickly and the debt is not seriously contestable, the provisional injunction (référé-provision) is often the most effective procedure. It allows you to obtain an interim decision within 1 to 2 months, without waiting for a full trial.

The summary judge can award all or part of the claimed amount as a provisional payment, with the onus on the debtor to demonstrate a genuine reason not to pay. This procedure is ideal for invoices where the service or delivery is well documented and not contested in substance.

The Penalties You Can Claim

An unpaid invoice is not limited to the principal amount. French law — and European law more broadly — grants you specific rights to compensate for the harm caused by late payment.

Late Payment Interest

Late payment interest accrues by right from the day after the due date, without any prior formal notice, provided it is mentioned in your general terms and conditions (Article L. 441-10 of the French Commercial Code, implementing the EU Late Payment Directive).

Two rates apply depending on your contractual conditions:

• Contractual rate: freely set in your general terms, but with a legal floor of 3 times the applicable statutory interest rate. For 2025, this gives a floor of approximately 18.93% per year.
• Statutory rate: applicable by default if your terms make no specific provision.

Calculation example: Invoice of €5,000, 45 days overdue, contractual rate of 18% per year.

Interest = €5,000 × 18% × (45/365) = €111.10

Flat-Rate Compensation of €40

Under Article D. 441-5 of the French Commercial Code (which implements Article 6 of EU Directive 2011/7/EU), a €40 flat-rate compensation is automatically owed for each unpaid invoice in B2B transactions, from the first day of delay — regardless of the delay’s duration or the invoice amount.

With 10 unpaid invoices, you can claim €400 in flat-rate compensation alone, on top of the principal and interest. For full details, see our article on flat-rate compensation for collection costs in France.

Additional Damages

If your actual collection costs exceed the €40 flat rate — lawyer fees, bailiff costs, procedural expenses — you can ask the court for additional damages, provided you can justify these with supporting documents (invoices, receipts). Article L. 441-10 of the French Commercial Code explicitly provides for this possibility. For a full breakdown of what you can claim, see our article late payment penalties: what is legal in France.

Automate Your Invoice Recovery

Manually tracking every invoice, deciding when to follow up, adapting the tone to each client, remembering to escalate at the right stage — all of this takes significant time, which most teams simply do not have.

Billabex is an AI agent specialised in B2B debt collection. It automatically detects overdue payments from Day 1, sends personalised reminders at the right moment via the right channel (email, SMS, post), adapts its tone based on each client’s profile and behaviour, and alerts you when it is time to escalate. The average result: a 15 to 20 day reduction in DSO, without manual intervention on standard cases.

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Conclusion

An unpaid invoice is never inevitable to write off. In the vast majority of cases, a well-structured amicable reminder sequence is enough to unlock the situation. When it fails, French legal procedures — and their European equivalents — offer effective tools that are accessible even to small businesses.

The 5 key steps to remember:

1. Verify that the invoice is correct and the deadline genuinely passed
2. Remind amicably by email (Day 3), phone (Day 10), SMS (Day 15), and registered letter (Day 30)
3. Send a formal demand letter (Day 45) with explicit mention of legal consequences
4. File a payment order petition (Day 60+) — €33.47 in court fees in France
5. Initiate judicial proceedings (summons, provisional injunction) for significant amounts or persistent non-payers

And claim what the law grants you: late payment interest, €40 flat-rate compensation per invoice, and additional recovery costs where applicable. You have the right to be paid. Act methodically, and you will be. To automate this entire process, see our guide on debt collection management and our late payment penalties guide for the full calculation rules.