Call Us: 877-659-5986

How to Send Unpaid Invoices to Collections

Debt is a common situation that comes in many forms, whether you’re a freelancer, business owner, or an employee. You might have a client or customer with an unpaid invoice refusing to respond to your texts, emails, voicemails, letters, and invoices. Maybe they respond with excuses, saying they don’t have the funds to pay or need more time. They may even dispute the bill, claiming that they got an inferior product or service and don’t have to pay. Even worse, you might be confronted with a declined check or bounced credit card.

If any of these apply to you, it may be time to send the bill to collections.

What does it mean to send a bill to collections?

Sending an invoice to collections means working with a debt collection agency to recover an unpaid debt. Going through collections is one of several viable approaches to recovering unpaid bills. Before moving forward, make sure that a collection agency is the best debt collection option for you.

If you are ready to hire a collection agency, this guide will help you prepare and learn all about the process.

If someone owes you money, get a Quick Collection QuoteToday!

What should I do before sending an invoice to collections?

Make sure you have a valid claim. Because debt comes in so many forms, some debts are naturally more legitimately collectible than others. The validity of your debt depends in large part upon the circumstances surrounding it, not least of which is the information you have about the debtor.

In terms of debt collection, you are a creditor if you are owed money and the person or business who owes you is a debtor. To successfully recover a debt, a collection agency will have to be able to reach the debtor. Before working with a collection agency, make sure you have the following information:

  • The debtor’s name, whether an individual or a business
  • The debtor’s address
  • The debtor’s phone number
  • The amount owed
  • The date the debt was incurred
  • An invoice or statement to validate the debt

This information should be considered the bare minimum. The more information you can provide, the stronger your claim will be. Take the time to gather as much as you can about the debtor and your history with them.

If you do not have all the information above, make a detailed inventory of what you do and do not have. Be sure to validate any information that only you can provide, such as the date of service of the balance owed. A debt collection agency can use a process called skip tracing to fill information gaps needed to locate a debtor, such as their address or phone number. If you plan to hire a collection agency and know you have incomplete information, be transparent about what information you do have and ask what skip tracing methods they would use.

Next, make sure your debt is not too old to be collected. Each state has its own statute of limitations, which is the timeline in which a creditor can take action against a debtor. The statute of limitations for each state is further divided by the type of agreement behind the debt: oral, written, promissory, or open.

  • Oral agreements are based strictly on a verbal agreement with no supporting documentation.

  • Written agreements are based on some kind of paperwork, typically a contract, that articulates the terms and conditions of payment.

  • Promissory notes are a certain kind of written agreement in which the debtor agrees to back a loan over time with agreed-upon payments, dates, and interest. Promissory agreements are common for student loans and home loans.

  • Open accounts are agreements in which the debtor can continually pay off the debt and borrow more over time. Credit cards and lines of credit are common examples of open accounts.

If your unpaid bill is beyond the statute of limitations in your state, you no longer have the right to send it to collections. Find your state’s statute of limitations for debt collection below. The chart lists the timelines for the ten most populous states below. If you live in another state, you can see a chart of statutes of limitation for all 50 states here.

Statute of limitations, in years, by agreement type for the ten most populous states:


State Oral Written Promissory Open
California 2 4 4 4
Florida 4 5 5 4
Georgia 4 6 6 6
Illinois 5 10 10 5
Michigan 6 6 6 6
New York 6 6 6 6
North Carolina 3 4 5 3
Ohio 6 8 15 6
Pennsylvania 4 4 4 4
Texas 4 4 4 4


Finally, if you are trying to collect a debt on behalf of your employer, make sure you have the authority to send a bill to collections. Many businesses have collection processes already in place, which may include preferred collection agencies. Even if there is no collection process, your employer most likely has an authorization process for sending bills to collections.

If you are a business owner or independent, you are free to go with whatever collection agency you choose.

If someone owes you money, get a Quick Collection QuoteToday!

Consider taking these steps before escalating

In many debt situations, the creditor and debtor have agreed-upon terms that include payment timelines. Depending on the terms, you may want to wait before sending a bill to collections. For example, if a bill is due in 30 days, it is a common practice to wait 60 or 90 days before escalating to collections. If cash on delivery (COD) payment is expected and the invoice goes unpaid, such as through a bounced check, you can move more quickly.

Send a reminder
You can always give the debtor one more chance to pay the invoice before sending it to collections. Hiring a collection agency is not free, and sending a reminder is quick and costs nothing. By the time you are at the point of considering collections, a last-minute reminder is not likely to yield results, but if it does it can save you money.

Send a demand letter
If you are still unsure about going through a collection agency, you may want to write a demand letter. Similar to sending a reminder, sending a demand letter yourself is free and quick. However, a debt collection agency is far more likely to send a compelling demand letter than someone without debt collection experience, and sending a less impactful letter first could make collections more difficult.

If you are planning to go with a debt collection agency, skip writing a demand letter and let the agency do it for you.

Find a good collection agency

Of course, you can’t send a bill to collections without first finding a good collection agency. Simply put, you want to find a collection agency that will work with you and your specific debt collection situation. For example, if you represent a small business, look for an agency that handles small business debts. You should also make sure they are qualified and licensed to collect in your local jurisdiction. Whatever your situation, you should look for a contingency collection agency, which won’t charge you anything until they successfully collect the debt.

To avoid red flags and ask the right questions when prospecting, read our guide on how to find a good collection agency.

Understand the debt collection process

The most important step in preparing to send a bill to collections is to understand the debt collection process and set expectations accordingly. The collection process establishes a new relationship between the creditor and the collection agency. It also has a major impact on the creditor’s relationship with the debtor. Because of this, you will want to understand what to expect as a creditor and what the debtor will experience.

What to expect as a creditor

Getting started
The first step in the process is to formally submit your claim and information to your chosen collection agency. Most agencies will have an online form you can fill out, whether through an online portal or a place to upload a PDF. Email and Docusign are also common ways to send information. Some agencies are flexible and will take the information however you prefer to send it, while others have specific methods they will ask you to follow to submit your account.

However you submit the information, you will want confirmation that it has been received, so you can document your starting date and measure progress.

Debt collection agencies work on commission, meaning they will charge a percentage of the debt based on the difficulty of collection. Some agencies will ask for payment to get started, while a contingency collection agency won’t charge you anything until they successfully collect the debt. Fees generally range from 15–50%, with more difficult debts and more sophisticated agencies charging more.

Communication & updates
Every agency has a difficult process for keeping clients informed throughout the process. Good agencies have a clear process for sending updates periodically. If the agency does not have an automated process, set yourself reminders to follow up. Some agencies will follow their process and only provide updates when you ask for them.

Each agency has a different process and every debt situation has different needs, so timelines can vary greatly from case to case. Set a reasonable timeline that you are willing to wait for collection and communicate your expectations clearly to the agency. Make sure your preferred timeline aligns with what they offer.

Success rate
Set your expectations accordingly from the beginning. No agency has a 100% success rate for collections. The best agencies have success rates ranging from 60–75%. That means your case may fall under the 25–40% of unsuccessful collections. However, you can still get some value out of the collections process even if it does recover your debt. You should count on a collection agency to give you important information about your debt, such as filling in missing contact information for your delinquent accounts and explaining why you were not getting paid in the first place.

When the agency does collect, there will be a clearance process for the collected funds. It may take them some time, typically up to one month, to pay you. They will also send a statement of their own alongside any payments.

If the collection agency does not successfully collect, or if you are not happy with them, you can go to another collection agency. This is called a second placement debt, and this is not very attractive to collection agencies because they are less likely to collect. For example, a debt that was 80% collectible at first placement will be closer to 50% collectible at second placement. Some agencies won’t even take second placements. Because of this, you should always choose the best collection agency you can find for your first attempt.

What the debtor will experience

The experience of the debtor will vary greatly depending on the service and tactics employed by the collection agency. Lower quality agencies will charge low rates, but will only make phone calls or send emails. Other agencies will go further and use a variety of tactics that may include working with credit bureaus, impacting credit, filing lawsuits, levying bank accounts, garnishing wages, and even seizing property.

Keep in mind that debtors have rights they can use to fight you every step of the way. They are not defenseless and many will stop you.

If you want an aggressive collection agency, you can find one that will pursue all these tactics. If you want a more patient or lenient approach, you can work with an agency that will tailor the process to your needs. It all depends on how you set and communicate your expectations to the agency. Regardless of how you go about it, you will be involved nearly every step of the way, and the collection agency shouldn’t do anything that you do not authorize them to do.


Sending an invoice to collections can be an effective way to recover unpaid debt, but it should not be taken lightly. It is important to gather all the necessary information, find a great collection agency, and manage your expectations for the process. Use this guide to prepare yourself for a better collection experience.

If someone owes you money, get a free collection quote with Empire Credit and Collection today! You will not pay us a dime until we get you paid, guaranteed.