How Subcontractors Can Handle Unpaid Invoices — And Get Paid Faster

Dany Ortega
May 7
3 min read

As a subcontractor, getting paid on time isn’t just good business—it’s essential for survival. But what happens when a general contractor or builder delays or refuses to pay for completed work? Late payments can quickly snowball into cash flow crises, delayed payrolls, and missed opportunities. Here’s how to take control and protect your subcontracting business from unpaid invoices.

1. Always Use a Written Contract and Clear POs

Before starting any job, ensure there's a written agreement in place. A contract should define:

The scope of work
Payment terms and deadlines
Penalties for late payments
Dispute resolution steps

Purchase Orders (POs) are critical. They give you legal leverage later if payment issues arise.

2. Invoice Promptly and Clearly

Send invoices immediately after completing the work. Make sure each invoice includes:

PO number or job reference
A detailed breakdown of the work performed
Payment due date
Accepted payment methods

Use invoicing software that sends reminders automatically if a payment becomes overdue.

3. Follow Up Firmly—but Professionally

If an invoice goes unpaid after the due date, send a polite follow-up email or call the contractor directly. Often, non-payment is a result of internal delays rather than bad intentions. But don’t wait too long—follow up again after 7–10 days if there’s still no response.

4. Send a Final Notice of Payment

If the invoice remains unpaid after multiple reminders, it’s time to send a formal Final Notice of Payment. This step puts the contractor on notice that legal action is imminent.

Here’s a sample you can use:

FINAL NOTICE OF PAYMENT DEMAND

[Your Business Name]

[Your Business Address]

[City, State, ZIP Code]

[Email Address] | [Phone Number]

Date: [Insert Date]

To:

[General Contractor and/or Home Builder's Representative]

[General Contractor and/or Home Builder's Company Name]

[Contractor's Address]

RE: Outstanding Payment for Completed Purchase Orders

Dear [General Contractor's Name] and [Builder's Name],

This letter serves as a final formal demand for payment regarding the outstanding balance due for completed work under the following Purchase Orders: [List PO numbers and brief descriptions if applicable].

As of today's date, the total amount of $[Insert Amount] remains unpaid, despite previous attempts to resolve the matter amicably. All work under these Purchase Orders was completed in full and to specification by [Your Business Name], and no disputes regarding the quality or scope of work have been raised.

Unless full payment is received within seven (7) calendar days from the date of this notice, we will be forced to take legal action against both your companies, including but not limited to:

Filing a claim in small claims or civil court,
Initiating a mechanic’s lien against the property,
Seeking recovery of legal fees and interest as permitted by law.

This is our final attempt to resolve this matter without legal intervention. We strongly urge you to treat this issue with the seriousness it warrants and remit full payment immediately.

Please direct any questions or confirmation of payment to [Your Name] at [Phone Number] or [Email Address].

Sincerely,

[Your Full Name]

[Title]

[Your Business Name]

5. Consider Filing a Mechanic’s Lien

If you still don’t get paid, consider filing a mechanic’s lien. This legal tool places a hold on the property, making it difficult for the owner to sell or refinance until you’re paid. Deadlines vary by state, so act quickly and consult an attorney if needed.

6. Don’t Be Afraid to Use Legal Tools

Small claims court or mediation may be your next option. Keep all documentation, including:

Signed contracts and POs
Email or message history
Proof of work completed (photos, logs, reports)
Invoices and payment reminders

The more evidence you have, the stronger your case will be.

How Subcontractors Can Handle Unpaid Invoices - Final Thoughts

Being proactive and assertive is essential for any subcontractor. Put protections in place early, and don’t delay taking action if payments go unpaid. I hope this guide on "How To Handle Unpaid Invoices" gave you ideas and processes to manage these uncomfortable but common situations. You did the work—you deserve to be paid.