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Unpaid Invoice & Late Payment Recovery Services

Malaysian Bar registered Law Firm • Established 2016 • 2,000+ debt matters handled since 2016.

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How We Recover Unpaid Invoices

The Rule & Co team has spent the past ten years helping Malaysian creditors recover unpaid invoices, from single overdue payments to debts spread across dozens of invoices. We start with the quickest, least costly route and escalate only when the debtor leaves no other option.

Letter of demand: A formal demand from our firm setting out the amount owed, a deadline for payment and the legal action that follows if it's ignored. For many debtors, this step alone prompts payment.
Negotiation & settlement: If your debtor wants to pay but can't settle in full, we structure an instalment agreement protected by post-dated cheques, a default clause and late payment interest.
Civil litigation: If the invoice remains unpaid and the amount or circumstances justify it, we file a civil claim in the appropriate court.
Enforcement: If a judgement in your favour is obtained, we can further enforce it through seizing and selling the debtor's assets, garnishing their bank accounts, and several other methods.

Time and again, experience has shown that debtors respond differently once a law firm is involved. Reminders ignored for months often get an answer once a letter of demand arrives, because the debtor now knows the next step is court.

Who We Serve

suppliers and distributors
manufacturers
service businesses and agencies
consultants and professional firms
SMEs owed money by larger clients
freelancers

Documents to Establish
Proof of Debt

The stronger your paper trail, the faster an unpaid invoice can be recovered, and the following documents would be of great help for us to assess your case:

the invoice and any statement of account
purchase orders, quotations or a signed contract
delivery orders or proof the work was completed
emails or WhatsApp messages where the debtor acknowledges the debt
the debtor's correct registered name and number from SSM

Of course, don't worry if you're missing some of these. Get in touch all the same and we can advise on what's needed during your free case assessment.

Our Past Cases

Unpaid invoices are one of the most common issues we help Malaysian businesses with. As our clients have delivered what they were contracted to provide, only to be met with silence or repeated promises of payment, we take great pride in helping them recover what they are owed. Below, we share some of our more significant cases.

1. Threatening Debtor with Imprisonment

Debt value: RM180,000

Total recovery: RM180,000 (100%), paid in one lump sum

Background

Our client, a business owner, was owed RM180,000 for services rendered. Reminders by email and WhatsApp went unanswered, and the debtor ignored every attempt at settlement. The evidence was limited to a quotation and informal WhatsApp messages in which the debtor acknowledged the debt.

While not ideal, it was enough to build a recovery strategy.

Escalation

We issued a notice of demand, which was ignored, and then filed a writ of summons. The debtor failed to enter an appearance or file a defence, and we obtained judgment in default for the full RM180,000.

After several unsuccessful attempts to enforce the debt, we turned to a judgement debtor summons under the Debtors Act 1957. Compelled by the court to attend, the debtor was ordered to pay RM10,000 a month toward the judgment debt. After paying the first instalment, the debtor defaulted again.

Resolution

We filed a committal application asking the court to imprison the debtor for failing to comply with the payment order. Faced with the real prospect of jail, the debtor paid the full RM180,000 in one lump sum, a day before the committal hearing.

2. A Success Based Arrangement

Debt value: RM100,000 across 3 debtors
Total recovery: RM70,000 recovered in full from 2 debtors; remaining RM30,000 filed as a proof of debt

Background

A well-known real estate agency was owed RM100,000 in commissions by three property owners. The commissions were earned through completed sub-sales, but the owners bypassed our client and refused to pay the invoices, despite benefiting from the deals. We acted on a success fee basis, with no upfront legal fees unless we recovered.

Escalation

The first debtor owed RM30,000, outstanding since 2020 with only 1 year left before the 6-year limitation period expired. As a search revealed the owner had been declared bankrupt years earlier, we helped our client file a proof of debt and provided the documentation to claim a tax relief.

The second debtor, owing RM35,000, reacted as soon as we made contact on behalf of the agency. Five missed calls in a row were followed by a message asking which account to pay into, and the debt was settled in full in 48 hours.

The third debtor, also owing RM35,000, ignored our notice of demand and two weeks of follow-ups. We prepared a writ of summons, and one day before it was due to be filed, the debtor sent proof of full payment.

Resolution

Our client recovered RM70,000 without having to go to court and paid legal fees only on the amounts recovered. The one uncollectible debt was properly documented, allowing the agency to close its books on all 3 files.

3. Enforcing a Personal Guarantee

Debt value: RM300,000
Total recovery: RM300,000 (100%), paid the day after our response

Background

A mid-sized tax advisory firm kept losing large fee payments to shell companies with no assets. Once dormant, they were effectively judgment-proof, and their directors simply walked away from the unpaid invoices.

We reviewed and revised the firm's standard terms of engagement, adding a personal guarantee clause that makes the person signing the agreement personally liable if the company fails to pay.

Six months later, the clause was put to the test.

Escalation

A client owed the firm RM300,000, and the company, an RM2 Sdn Bhd, was clearly a shell. Knowing there were no assets to seize, its director told us to go ahead and wind up the company.

Resolution

Instead, we informed the director that we would not be winding up the company, and would be enforcing the personal guarantee against them personally as the signatory. The next day, a cheque for the full RM300,000 arrived.

Client Testimonials

FAQs

1. How do I recover an unpaid invoice in Malaysia? Start by gathering your invoice and supporting documents, then send a letter of demand. If the debtor still doesn't pay, the next steps are a court claim and, once you have judgment, enforcement against the debtor's assets.

2. How much does it cost to recover an unpaid invoice? Unfortunately, it varies too much from case to case to give a general answer. We would be happy to give you a tailored estimate during your free case assessment.

3. Is it worth pursuing a small invoice? Often, yes. A letter of demand costs a fraction of most invoice amounts and resolves many debts without going to court. We'll tell you honestly if the cost of further action outweighs what you're likely to recover.

4. What if my client disputes the invoice? A dispute doesn't end your claim. Let us review the evidence before we give you our take on your situation.

5. Can a 7-year old unpaid invoice still be collected? Probably not, as most invoice claims must be filed within 6 years of the payment due date. However, if the debtor acknowledged the debt in writing or made a part payment, the 6-year period may have restarted.

6. Can I charge interest on overdue invoices in Malaysia? Only if your terms, quotation or contract provided for it and your client accepted those terms. Without prior agreement, you can still ask the court to award interest if you file a claim.

7. How much interest can I charge on an unpaid invoice? There's no fixed legal maximum, but the rate must be reasonable. The courts can refuse a rate that is excessive compared to your actual loss.

8. Can I charge a late fee instead of interest? Yes, provided the fee was agreed in advance and is reasonable relative to the invoice amount. A large flat fee is more likely to be challenged as a penalty.

9. Why should contractors attempt negotiation before legal escalation? Many payment issues arise from misunderstandings or temporary cash flow constraints, and negotiation can lead to faster resolution while preserving business relationships.

10. How long does it take to recover an unpaid invoice? A letter of demand usually gives the debtor 7 or 14 days to pay, and many matters settle at that stage. Court proceedings take longer, depending on the court and whether the debtor defends the claim.