Invoice Recovery & Late Payment Tools for Canadian Businesses
Late payments are a serious problem for Canadian freelancers and small businesses — with many invoices sitting unpaid for 60, 90, or even 120 days. Canadian provinces have small claims courts that allow you to recover unpaid commercial invoices without a lawyer, often within a few months. These free tools and this guide help you understand your rights and take action.
Understanding Canadian Invoice Payment Rights
Canada approaches invoice payment law at the provincial level, with federal legislation focusing on specific sectors. Here is what every Canadian freelancer and small business owner should know:
Net 30 Is the Canadian Standard
Net 30 is the default payment expectation for B2B invoices in Canada. However, your contract can specify shorter terms (Net 14, Net 21) — and you should. Research consistently shows that businesses with shorter payment terms get paid faster. Always specify terms on the invoice itself: “Payment due within [X] days of invoice date.”
Prompt Payment for Construction
Ontario, Saskatchewan, Nova Scotia, and other provinces have enacted prompt payment legislation for construction contracts. Ontario's Construction Act (2019) requires payment within 28 days of a proper invoice, with subcontractors paid within 7 days after the owner pays the general contractor. Adjudication is available for disputed payment applications — faster than court.
GST/HST on Your Invoices
If you are GST/HST registered, your invoices must include your Business Number, the applicable GST/HST amount, and clearly identify the taxable supply. When chasing overdue invoices, always reference the total amount including GST/HST. Clients who claim input tax credits on your invoice cannot deny owing you the GST/HST portion.
ON/NB/NL/NS/PE
15% HST
BC
12% HST
AB/NT/NU/YT
5% GST
QC
14.975% QST+GST
CASL and Invoice Reminder Emails
Canada's Anti-Spam Legislation (CASL) governs commercial electronic messages. Payment reminder emails to existing clients about invoices related to your ongoing business relationship are generally exempt from CASL consent requirements — they are “transactional or relationship messages.” Chasing an unpaid invoice from an established client is not spam.
Free Tools for Canadian Invoice Recovery
All tools are free, no signup required.
Late Fee Calculator
Calculate how much a client owes including late payment interest at your contractual rate. Supports daily, monthly, and annual interest calculation.
Payment Reminder Email Generator
Generate professional payment reminders in 5 tones — from a polite nudge to a final notice. No signup required.
Invoice Follow-Up Schedule Planner
Plan your full payment chase timeline from the invoice due date. Generates reminder dates for each escalation step.
Payment Due Date Calculator
Calculate exact due dates for Net 15, Net 30, Net 45, Net 60, or custom payment terms.
Canadian Invoice Recovery Timeline
A step-by-step approach to escalating an unpaid invoice in Canada, from first reminder to small claims court.
Send a polite first reminder
Assume an innocent oversight. Reference the invoice number, amount (including applicable GST/HST), and due date. Keep it brief and professional.
Follow-up with firm reminder
Note that the invoice remains unpaid. Attach a copy. Reference your payment terms and any late payment interest clause in your contract.
Escalate — reference interest accruing
If you have a contractual interest clause, mention the accruing interest amount. Request payment by a specific date. Consider calling as well as emailing.
Send formal demand letter
Send a formal demand letter (LOD) stating the total amount due with interest. Give 7–14 days to pay. Mention that failure to pay will result in legal proceedings.
File in provincial small claims court
File in your province's small claims court. Ontario handles up to $35,000, BC up to $35,000, Alberta up to $50,000, Quebec up to $15,000 (Small Claims / Division des petites créances).
Consider a collections agency or lawyer
For larger amounts or defended claims, engage a collections agency (15–25% commission) or a commercial lawyer. Consider whether the cost-benefit of legal action makes sense.
Small Claims Court by Province
Each province has its own small claims court or equivalent tribunal for recovering unpaid commercial invoices. Most can be filed without a lawyer.
| Province | Court / Tribunal | Claim Limit |
|---|---|---|
| ON | Ontario Small Claims Court | Up to CAD $35,000 |
| BC | BC Civil Resolution Tribunal (online) / Small Claims Court | CRT: Up to $5,000 (or $35,000 for some disputes); Small Claims: Up to $35,000 |
| AB | Alberta Provincial Court — Civil Division | Up to CAD $50,000 |
| QC | Division des petites créances (Small Claims) | Up to CAD $15,000 |
| MB | Manitoba Small Claims Court | Up to CAD $10,000 |
| SK | Saskatchewan Small Claims Court | Up to CAD $30,000 |
Limits and fees are updated periodically. Check each court's website for current information. For amounts over the small claims limit, file in provincial Superior Court.
Frequently Asked Questions — Canadian Late Payment
What are the legal payment terms for invoices in Canada?+
Canada has no single federal law governing B2B invoice payment terms. Payment terms are set by contract. If no terms are specified, courts typically apply a 'reasonable time' standard — usually 30 days. The federal Prompt Payment for Construction Work Act (2020) requires 28-day payment for federal construction contracts. Several provinces (Ontario, Saskatchewan, Nova Scotia) have passed prompt payment legislation for construction contracts specifically. For general B2B invoices, Net 30 is the standard expectation.
Can I charge interest on overdue invoices in Canada?+
Yes, if specified in your contract or on the face of the invoice. Canada has no statutory B2B late payment interest rate — you must contractually specify it. A common rate is 1.5–2% per month (18–24% annually). Include it in your initial quote or contract: 'Invoices unpaid after 30 days accrue interest at 1.5% per month (18% per year).' The Interest Act (Canada) prohibits compound interest unless explicitly agreed to in writing.
How do I take someone to small claims court in Ontario for an unpaid invoice?+
Ontario Small Claims Court handles claims up to CAD $35,000 (as of 2024). File online at ontario.ca/smallclaims or at your local courthouse. You need the defendant's full legal name and address, copies of your invoices and contract, and evidence of non-payment. Filing fees are $102 for claims up to $1,000, $204 for $1,000–$10,000, and $408 for $10,000–$35,000. Service on the defendant can be done by registered mail. Most claims resolve within 3–6 months.
What should I do if a Canadian client claims they never received my invoice?+
Send the invoice again with a read receipt request and log the resend in InvoiceGrid's chase history. Follow up with a phone call. If they continue to claim non-receipt, escalate to a firm demand letter. Document every communication attempt. Courts take a dim view of debtors who claim non-receipt when the creditor can demonstrate multiple documented delivery attempts.
Does GST/HST apply to late payment fees on Canadian invoices?+
Generally, late payment interest and penalty fees are not subject to GST/HST in Canada because they are not consideration for a taxable supply. They are a compensation for breach of payment terms. However, if a late fee is structured as an 'administration fee' for processing the late payment, CRA may treat it differently. Consult your accountant for your specific situation.
Track Every Invoice. Chase Every Payment.
InvoiceGrid is a Kanban-style invoice tracker built for Canadian freelancers and small businesses. Log your invoices, track overdue days, generate reminder emails in the right tone, and keep a full chase history — so you have everything you need if you need to escalate to small claims court.
- ✓Know exactly which invoices are overdue today
- ✓Generate professional Canadian-context reminder emails
- ✓Full chase log per invoice — essential evidence for small claims court
Also useful: Late fee calculator · How to chase unpaid invoices · Demand letter for unpaid invoice · Invoice tracker for freelancers · Invoice tracker for contractors