Key takeaways
- California's small claims form asks whether you asked for payment before suing, so send a demand letter first.
- You generally have four years to sue on a written contract and two years on an oral one.
- Never threaten criminal charges, police reports or immigration reports to collect. That can be extortion.
A demand letter is a short, formal request for payment. It often gets you paid without going to court, and if it doesn't, it shows a small claims judge that you tried to settle first. The small claims form (SC-100, item 4) asks whether you asked the defendant to pay before you sued, and if you didn't, you have to explain why.
Before you write
Gather:
- the invoice(s), with dates and amounts;
- the contract, quote, purchase order or email where the customer agreed to the work or price;
- proof you delivered: signed delivery slip, photos of finished work, timesheets;
- any messages where the customer acknowledges the debt or complains about the work.
Check how old the debt is. In California you generally have 4 years to sue on a written contract (or an open account or book account) and 2 years on an oral one (Code Civ. Proc. §§337, 339). The clock usually starts when the contract was broken, typically the date payment was due and missed, not the date you signed. For an account with several invoices, it runs from the last item.
What to include
- Your business name and contact details, and the date.
- Who owes you, using their legal or business name and address.
- What you provided and when. One or two sentences.
- The exact amount owed, with invoice numbers and due dates. Add late fees or interest only if the contract allows them.
- A clear deadline, usually 10 to 14 days from the date of the letter.
- How to pay: check, bank transfer, payment link.
- What happens next if they don't pay, for example "I will file a claim in small claims court." Only state steps you actually intend to take.
- An offer to talk, if you're open to a payment plan.
Template
[Date]
[Customer name and address]
Re: Payment due for invoice #1042, $3,850
On March 3, 2026, we completed the kitchen tile installation at 12 Oak St, Rialto, as agreed in our signed quote of February 10. Invoice #1042 for $3,850 was due on March 17 and remains unpaid.
Please pay $3,850 by April 15, 2026, by check to the address above or through this payment link. If you'd like to discuss a payment plan, call me at the number below before that date.
If payment is not received by April 15, I intend to file a claim in small claims court for the full amount plus court costs.
[Name, title, business, phone, email]
What not to say
- Don't threaten to accuse the customer of a crime, report them to the police, expose a secret, or report their immigration status to get paid. Pairing a threat like that with a demand for money can be extortion in California, even if the threat is true (Penal Code §§518, 519, 523; Flatley v. Mauro (2006) 39 Cal.4th 299). Stick to lawful next steps, such as filing in small claims.
- Don't exaggerate the amount or add fees the contract doesn't allow.
- If your customer is a consumer (an individual buying for personal, family or household use) and you regularly collect debts like this in the ordinary course of your business, California's Rosenthal Fair Debt Collection Practices Act can apply to you, even though you're collecting your own invoice. That's unlike the federal law. Even if you're not sure it applies, follow its rules: avoid harassment, false statements, threats and excessive calls. Since July 2025 the Act also covers some business debts owed by individuals to lenders and debt buyers, but ordinary invoices from a supplier for its own goods or services ("trade credit") are excluded (Civil Code §1788.2).
Sending it
Send it in a way you can prove: email with the invoice attached and certified mail with return receipt, or a courier with tracking. Keep copies.
If they still don't pay
- For amounts within the small claims limit for businesses, file in small claims: see small claims for businesses.
- For larger amounts, talk to a lawyer about a limited or unlimited civil case.
- Contractors may also have mechanic's lien rights, but those deadlines are short and strict.
Worked example: from missed payment to small claims
Using the tile job in the template above:
| Date | What happens |
|---|---|
| February 10, 2026 | Customer signs the written quote |
| March 3, 2026 | Work is completed |
| March 17, 2026 | Invoice #1042 for $3,850 is due and goes unpaid. For a written contract, the 4-year clock generally starts here |
| About April 1, 2026 | Demand letter sent by email and certified mail, giving a payment deadline of April 15 |
| April 15, 2026 | Payment deadline passes |
| After April 15, 2026 | The business decides whether to file in small claims |
| Around March 2030 | The 4-year period for a written contract generally runs out |
At $3,850, the claim is within the $6,250 small claims limit for an LLC or corporation and the $12,500 limit for a sole proprietor. The filing fee for a claim of $1,500.01 to $5,000 is $50 for most filers. See small claims for businesses.
Frequently asked questions
Do I have to send a demand letter before small claims court in California?
The small claims form expects it. Form SC-100 (item 4) asks whether you asked the defendant to pay before you filed, and if you didn't, you must explain why. A written demand letter is the clearest way to show that you asked.
How long should I give a customer to pay?
Most demand letters give 10 to 14 days from the date of the letter. Pick a specific date, such as "by April 15, 2026", rather than "within two weeks", so there's no argument about when the deadline passed.
How long do I have to collect an unpaid invoice in California?
Generally 4 years to sue on a written contract, open account or book account, and 2 years on an oral contract (Code Civ. Proc. §§337, 339). The clock usually starts on the date payment was due and missed. For an account with several invoices, it runs from the last item.
Can I add late fees or interest to a demand letter?
Only if your contract allows them. Adding fees the contract doesn't provide for can undercut your letter, and if your customer is a consumer, false statements about the amount owed can raise problems under the Rosenthal Act.
Can I send a demand letter by email?
Yes, but it helps to send it in a way you can prove. Many businesses send it by email with the invoice attached and also by certified mail with a return receipt, then keep copies of both.
What should I not say in a demand letter?
Don't threaten to report the customer to the police, accuse them of a crime, expose a secret or report their immigration status to get paid. Pairing threats like these with a demand for money can be extortion in California. Stick to lawful next steps, such as filing in small claims.
What if the customer still doesn't pay?
For amounts within the small claims limit, the next step is usually small claims court. For larger amounts, a lawyer can explain the options for a limited or unlimited civil case.
Sources
We use primary sources: statutes, court rules, official forms and government pages. Read our editorial standards.
- Form SC-100 and self-help: statute of limitations
- Code of Civil Procedure §337 and §339
- Penal Code §519; Civil Code §1788.2