When an invoice goes unpaid, work the ladder in order: a polite reminder, a firm demand letter, then the formal tools, a lien or prompt-payment adjudication to secure and speed the money, and small claims court as the backstop. The single most important rule is to protect your lien deadline first, because it is the only step with a hard cut-off that destroys your rights if you miss it. Everything else can wait a few days; the lien clock cannot. Start the ladder early, keep every document, and do not let politeness run the clock down.
Step 1: the reminder
Most late payments are admin, not refusal. A friendly reminder a few days after the due date, by email so it is in writing, clears a surprising number. State the invoice number, the amount, the due date, and ask for a payment date. Keep it short and professional. You are building a paper trail as much as nudging the payer.
Step 2: the demand letter
If the reminder goes nowhere, send a formal letter of demand. Set out the work done, the amount owed, the original due date, and a firm new deadline (often 7 or 14 days). State plainly that if it is not paid you will pursue your legal remedies, which may include registering a lien and commencing proceedings. A demand letter on the record often shakes the money loose because it signals you are serious, and it strengthens your position if you do go to court.
Step 3: preserve your lien (the hard deadline)
This step has a clock that does not forgive. If you supplied work or materials to an improvement on land, you can register a builders lien, but only within the short window after your last day of work, ranging from 30 to 90 days depending on the province (see Lien Deadlines by Province). Do not wait for the demand letter to play out. If the deadline is near, preserve the lien now and negotiate afterwards. In Quebec the equivalent is the legal hypothec, registered within 30 days of the end of the project.
Step 4: adjudication, where it is available
In the prompt-payment provinces (Ontario, federal projects, Saskatchewan, Alberta, Manitoba on new contracts, and the Northwest Territories for payment rules), you can refer a payment dispute to fast-track adjudication. A neutral adjudicator issues a binding determination in about 30 to 46 days, payable within 15 days. It is faster and cheaper than court and is ideal when the other party is solvent and you simply need the cash to move. Adjudication and a lien are complementary: run them together (see Prompt Payment Explained).
Step 5: small claims court
For amounts within the small-claims limit, this is the cheapest court route, designed to be used without a lawyer. The monetary limits differ widely across Canada:
- Ontario $50,000 (raised from $35,000 on 1 October 2025)
- Alberta $100,000 (the highest)
- Saskatchewan $50,000
- British Columbia: Civil Resolution Tribunal up to $5,000, Provincial Court small claims up to $35,000
- Nova Scotia $25,000
- New Brunswick $20,000
- Manitoba $20,000
- Quebec $15,000
- Newfoundland and Labrador $25,000
- Prince Edward Island $16,000
- Northwest Territories $35,000
- Nunavut $20,000
- Yukon $25,000
Above the limit, you are into the superior court, where you should have a lawyer.
Mind the limitation clock
Separate from the lien deadline, every province has a limitation period, the outer deadline to sue at all. In most provinces the basic limitation is 2 years from when you knew you had a claim (Quebec is 3 years; a handful of Atlantic and territorial jurisdictions run longer at 6 years). If you let that run out, the debt becomes legally unenforceable no matter how clearly it is owed. A written acknowledgement of the debt or a part-payment, made before the period expires, can reset the clock, so getting the payer to admit the amount in writing is worth doing.
Common mistakes
- Being too polite for too long. Courtesy is fine, but it must not eat your lien deadline. Preserve first, negotiate second.
- No paper trail. Verbal chases are worthless in court. Put every step in writing.
- Missing the limitation period. Two years (three in Quebec) goes faster than you think once a job is finished.
- Suing for more than the small-claims limit by mistake. Know your province's ceiling before you file.
Common questions
What can I do first when an invoice goes unpaid?
Send a clear written reminder with the invoice, the due date and the amount, then a firm final demand with a deadline. Most late payments are sorted at this stage, and keeping everything in writing gives you the evidence if it escalates.
When should I think about a lien or court?
If a written demand does not work and you did construction work, check your provincial builders' lien deadline, because it runs from your last day on site and can be as short as 30 to 45 days. For smaller debts, small claims court is the cheaper route.
Can I charge interest on a late invoice?
You can if your contract or quote says so. Canada has no single statutory late-payment interest rate, so the interest you can charge comes from your agreed terms. Set a clear interest term on every quote and invoice.
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