8 Tips to Write an Overdue Invoice Letter That Will Get You Paid
Chasing clients for money is uncomfortable for many small business owners and it can also eat up their precious time.
Still, itās something that needs to be done to improve cash flow and set your business up for success, according to Entrepreneur.
Fortunately, there are ways to write and send your overdue invoice letter that can make the process painless and encourage your clients to pay you faster.
Need an invoice template? FreshBooks has free downloadable invoice templates for small businesses.
In this article, weāll cover:
- Follow up at the Right Time
- Include All Invoice and Payment Details
- Tailor the Language
- Use Late Penalties
- Offer a Payment Plan
- Be Polite
- Automate Reminders
- Enlist Help
1. Follow up at the Right Time
Here are some tips to follow up at the right time:
- Follow up the day after an invoice is due, especially if the client regularly pays late
- Follow up after a week or two if the clientās usually on time with payment or theyāre a new client
- Follow up again at 30, 60 and 90 days after the due date
- Try sending an overdue invoice letter on the weekend when your invoice has less competition for the clientās attention
- Tuesdays are the best day to email during the week, says to Entrepreneur. Try sending right before or after lunch.
- If you have multiple customers with overdue accounts, send all your reminders at once to save time
2. Include All Invoice and Payment Details
Make it easy for the customer to remember what invoice they need to pay and how to make the payment.
Include the following details in your overdue invoice letter:
- Invoice number and date
- Amount owing
- Payment terms such as late fees
- Reminders of previous letters
- Instructions for payment (include links in emails)
- Your contact information
3. Tailor the Language
The overdue invoice letter you send the day after an invoice is due definitely wonāt be the same as the one you send 60 days past due. You need to tailor your language according to the situation.
Payment reminder letter templates can be found below.
1-15 Days Past Due
Be friendly and polite. Your aim is to maintain your relationship with your customer while also gently reminding them of their debt.
30-60 Days Past Due
Stay professional but be firm and demonstrate the urgency of paying the invoice. At this point, the invoice is very overdue and you shouldnāt be afraid to say so.
90+ Days Past Due
The longer a client doesnāt pay an invoice, the less likely theyāll pay at all. After 90 days, itās time to turn the invoice over to a collection agency.
An overdue invoice letter in this case will serve to notify the client that you will turn over their account to a collection agency in a certain number of days if you donāt receive payment. Or if you still donāt receive payment, let the client know that the collection agency will be in touch.
4. Use Late Penalties
Late fees must be discussed with a client at the outset of a project. A client canāt be ambushed with late fees after an invoice is overdue. This will only sour your relationship.
Late fees can be a set amount or a percentage of the invoice total. Each state has its own laws regarding how much you can charge.
- For example, if a state lets you charge 18 percent interest, divide that number by 12 to find the late fee you can charge monthly. At 18 percent, a business can charge 1.5 percent of the invoice total in late fees on a monthly basis.
If you are unsure about late fee charges, refer to our post How Much Can I Charge for Late Fees. It will guide you in calculating and determining appropriate late fee charges.
5. Offer a Payment Plan
Entrepreneur recommends offering your client a payment plan if mounting late fees donāt seem to faze them. Divide the invoice total up into manageable chunks. Itās not ideal, but at least youāre increasing the likelihood of getting paid.
6. Be Polite
Being polite in your overdue invoice letter isnāt just a courtesy. It can also actually help you get paid. FreshBooks found that invoices that included phrases like āplease pay your invoice withinā and āthank you for your businessā were actually 5 percent more likely to be paid.
Be sure to include āpleaseā and āthank youā in your letter even when the invoice is months overdue. At the very least, it improves the image of your company.
7. Automate Reminders
Invoicing software often includes the option to automate reminders to request payment. You can set when you want a reminder to be sentāafter one day, 30 days, 60 days, whatever you wantāand a personal message with each. This way you donāt have to set reminders in your calendar and email the client on each date.
Invoicing software can also automatically add late fees to the invoice total, as long as youāve discussed your late fee policy with your client in advance.
8. Enlist Help
Sometimes, despite your patient and professional follow up letters, a client simply has no intention of paying their invoice.
If the invoice is sizable, it could be time to bring a collection agency or lawyer on board to help collect the debt. Use the Better Business Bureauās website to find a reputable collection agency.
Send a second-to-last overdue invoice letter citing your intention to turn the invoice over to an attorney or agency.
In the final letter, notify them that your legal counsel or collection agency will be in touch. You must send the client a final warning letter to give them a last opportunity to pay before you hand over the unpaid bill.
If you want to learn more about unpaid invoices and the steps you can take to collect money, follow our guide on how to collect money from clients who wonāt pay.
People also ask:
How to Write a Past Due Invoice Letter
Here are some tips to write an effective and professional past due invoice letter:
- For invoices that are only slightly overdue, add the phrase āfor your convenience.ā A day after an invoice is due, you can write: For your convenience, Iām sending a quick reminder about invoice #001 that was due yesterday.
- Attach the invoice and add links to easy online payment options
- Try polite phrases such as āyour account now appears to be overdueā
- Remind the client of previous discussions. You can say: As you know, invoices are due 15 days after the invoice date. This reminds the client of your original discussion about payment terms.
- Donāt forget to use strong (but still professional) language for invoices that are over 60 days due. Phrases like āurgent matterā or āimmediate attentionā will convey the seriousness of the situation. Your subject line can include phrases like āAction Requiredā or āImportant.ā
- Be direct. Include in the first line of your letter: We would like to inform you that your invoice is now 60 days overdue.
- Remind the client you will call them via phone to follow up. This may jolt them into action.
Friendly Payment Reminder Letter Samples
Your overdue invoice reminders should be tailored to the situationāwhether the invoice is a day late or 90 days late. Here are some friendly but firm payment reminders you can send to improve your chances of collecting the debt owed.
1-15 Days Past Due
Hi [Client Name],
This is a friendly reminder that your account is now overdue. According to our records, the amount of $xx is now 7 days past due. In case the invoice wasnāt received, a copy is attached.
Hereās a summary of your account:
Invoice Number:
Invoice Date:
Amount Due:
Due Date:
Please send payment via check to the address listed below. Or you can pay by credit card through our website at www.yourbusiness.com.
As previously discussed, our payment terms are 30 days from the date of issue. Late payments are charged 3 percent per month overdue.
We appreciate your attention to this matter and look forward to working with you in the future.
Best,
[Your Name]
[Address]
30-60 Days Past Due
Dear [Client Name],
Weāre writing to inform you that your account is now 30 days past due. The amount of $xx was due on [insert date]. We sent you a past due notice on [insert date] and did not receive a reply.
This matter requires your urgent attention. Please send payment as soon as possible.
Invoice Number:
Invoice Date:
Invoice Total:
Current Amount Due:
Due Date:
Our payment terms are 30 days from the date of issue, as established in our contract. Your account now has an additional late fee of 3 percent.
Please contact me immediately about when we can expect the payment. Payment can be made via check to the address listed below or through our website at www.yourbusiness.com.
Sincerely,
[Your Name]
[Address]
90+ Days Past Due
Dear [Client Name],
We require your urgent attention to resolve this situation. We contacted you on [insert dates] about your overdue invoice, with no reply. Your account is now 90 days overdue.
Please remit payment within 10 business days. If we do not receive payment by [insert date], we will immediately refer your account to a collection agency.
Immediate payment of [insert amount] will ensure this action wonāt be taken.
Invoice Number:
Invoice Date:
Amount:
Current Amount Due:
Due Date:
Our payment terms are 30 days from the date of issue. Late fees are 3 percent per month. As your invoice is 90 days late, a 9 percent late fee has been added to the invoice total.
Please let us know immediately when you plan to send payment. Payment can be made by check to the address listed below or through our website at www.yourbusiness.com.
Sincerely,
[Your Name]
[Address]
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