An invoice has gone unpaid, the polite reminders have stopped working, and you are now doing the thing every small business owner hates: deciding how hard to push someone you may still want to work with.
Here is the ladder, from cheapest to most serious. Most invoices get paid two or three rungs up. Almost none need the top.
Before you escalate anything, check that the invoice actually arrived and is actionable. In a business of any size, the most common cause of non-payment is not refusal — it is that the invoice never reached the person who pays.
Phoning to ask "can you confirm you have it and it is in the queue?" resolves a surprising share of overdue invoices without any confrontation at all.
Drop the apologetic tone. Apologising for asking to be paid signals the debt is negotiable. Short, factual, and with a specific action:
Invoice 1042 for $2,400 was due on 14 August and is now 21 days overdue. Could you confirm the payment date this week? If something is holding it up, tell me what and I will sort it.
Send it to your contact and whoever handles payments, together, on the same email. Not to shame anyone — simply so the person who can pay is actually in the conversation.
If work is ongoing, this is your strongest lever and it costs nothing. Pausing further work until the account is current is normal commercial practice, not an act of aggression. Say it plainly and without threat:
"I will hold off on the next milestone until invoice 1042 clears, then pick straight back up."
Check your engagement letter first — if it gives you the right to suspend on non-payment, you are simply doing what you both agreed.
You can only charge interest on an overdue invoice if the client agreed to it beforehand — in your contract, your engagement letter, or on the invoice itself before the work started. Adding it after the fact, on an invoice that never mentioned it, is unlikely to hold up and mostly just annoys people.
If you do have it in writing, apply it and show it as a separate line. A rate of 1.5% per month (18% per year) is common in Canadian professional services. State it in both monthly and annual terms — federal interest rules require an annual rate to be disclosed if you want to charge more than 5%.
A demand letter is the last step before a claim, and it is often the one that works. It should be dull, dated, and specific: what was owed, when it was due, what has been sent already, and what you will do if it is not paid by a stated date.
Only write that last line if you mean it. An empty threat teaches the client that your deadlines are decorative.
Small claims is designed to be used without a lawyer, and for an unpaid invoice with a signed agreement behind it, the facts are usually simple. You file, pay a fee, serve the defendant, and most matters settle before a hearing.
What you can claim there depends on your province, and the limits have moved recently — Ontario's rose in late 2025. Roughly, they run from about $15,000 in Quebec and Manitoba up to $100,000 in Alberta, with Ontario at $50,000 and British Columbia at $35,000 (BC's Civil Resolution Tribunal handles smaller claims online).
Check your province's current limit and filing fee on its own court website before you rely on any figure — they change, and the number that matters is the one on the day you file.
Two practical notes. Quebec does not allow lawyers to represent you in small claims, which keeps costs down. And winning is not collecting: a judgment still has to be enforced, so weigh whether the client has money to pay before spending time on it.
There is a point where chasing costs more than the invoice. If the client has no assets, has closed, or the amount is small enough that a day of your time exceeds it, writing it off is a business decision, not a defeat. You can claim the bad debt against your income, and if you remitted GST/HST on that invoice you may be able to recover it — worth asking your accountant about a bad debt adjustment.
Every rung above is expensive compared to the boring prevention that removes most of it:
More on the prevention side in how to get clients to pay invoices faster, and on getting the document itself right in what is required on an invoice in Canada.
General information for Canadian businesses, not legal advice. Court limits, filing fees and interest rules differ by province and change over time — confirm the current position, or speak to a lawyer, before you act on a specific debt.