Following up unpaid invoices takes time and effort that many business owners just don’t have.
Unfortunately, it happens to pretty much every business. For whatever reason, some customers just won’t pay invoices on time.
To make chasing late payments quicker and easier, you can use the invoice reminder letter templates in this article.
Scheduling automated reminder emails to late paying clients is a great way to reduce the time it takes to follow up unpaid invoices. You can also reduce the need for chasing up customers by setting up your invoicing system well in advance.
First, consider the impact of unpaid invoices on businesses. Without money coming in from paying customers, businesses need to have other cash options to pay bills and overheads.
Some businesses may have the resources to cover their outgoings for a while, but many others don’t. This is one of the main ways that late invoice payments impact business’ cash flow.
When this happens, an invoice reminder is a highly effective way of notifying customers that their account is overdue. Generally, just one well-worded, well-timed reminder is all it takes to get customers to pay their invoices.
To make it easy, you can use the following payment reminder email templates to alert customers to their unpaid invoices. You can use them verbatim, or use them as a starting point and edit them as you like.
You can automate these emails in your online accounting software. They’ll be sent out automatically to late paying customers, which means chasing late invoices is quicker than ever!
At this stage, you’re trying to encourage customers to schedule a payment before the invoice is due.
Subject: Invoice #2499
Hi [Customer Name],
I hope you’re well. This is just to remind you that payment on invoice #2499, which was sent on November 10th, is due next week. The invoice is attached here for your reference.
Let me know if there are any questions or issues.
Thanks very much!
The invoice is not yet overdue, but giving customers a gentle nudge to remind them to make payment today is well worthwhile. Many customers may have scheduled payments for today, but those that haven’t will know they need to make it a priority.
Subject: Invoice #2499 due today
Hi [Customer Name],
This is just a reminder that payment on invoice #2499, which was sent on November 10th, is due today. Feel free to ignore this email if payment has already been scheduled!
I’d appreciate your cooperation with making payment today – the details are on the invoice, which is attached.
[If relevant:] If you’re unable to make payment today, please also be aware that late fees of [Amount] will apply, as per our invoicing terms.
Let me know if anything needs further clarification, or if I can help with anything else.
Because the invoice is now overdue, you can start to become more assertive. In particular, if you charge late fees, your invoice late payment fee wording helps to remind customers that their failure to make payment is costing them extra.
Subject: Invoice #2499 is one week overdue
Hi [Customer Name],
Our records show that we haven’t yet received payment for Invoice #2499, which is now overdue by a week. If you can please take a look at what’s happened with this, I’d really appreciate it.
I’ve attached the invoice to this email, and you’ll see that late charges of [Amount] now apply.
If the payment has already been sent, please disregard this email.
Please let me know if you have any questions or issues at your end.
You can start getting more direct from this point. You’ve sent multiple reminders that haven’t worked, so it’ll be progress to just engage in a conversation with the customer.
Subject: Invoice #2499 now two weeks overdue
Hi [Customer Name],
I’m following up invoice #2499, which was sent on November 10th, due two weeks ago and is still outstanding. I’m keen to get this sorted so I don’t have to bother you with this anymore.
I’ve contacted you multiple times now and I’m wondering if you’re receiving these messages – can you please let me know if you’ve got this email?
After a month, you’ll be thinking about your next steps beyond just sending payment reminder emails. You don’t want to start making threats, but showing customers you won’t give up on unpaid invoices can encourage them to pay them.
Subject: Invoice #2499 one month overdue
Hi [Customer Name],
This is another reminder that invoice #2499 remains outstanding, despite repeated attempts to contact you and arrange payment.
If we don’t receive payment within the next seven days, we may need to look at next steps to resolve the overdue balance.
I’d be more than happy to have a conversation about how we can help to get the balance paid – let me know if you’d like to get together for this.
If payment reminder emails still haven’t worked, it’s time to talk to your customer in person. Give them a call to see what’s going on – it’s still possible they haven’t received your emails or that there’s been a genuine mistake.
Speaking to customers gives you more freedom to express frustration and understanding at the same time. Be honest about your concerns over the lack of payment but if you come across too aggressively it may work against you.
If you need to, you can outline the steps you’ll take if the invoice still isn’t paid. This can include engaging a collection agency or taking legal action. You may also be willing to offer a payment plan to get the balance paid.
Consider what your next steps are and don’t be afraid to tell your customer what it’ll mean for them if the invoice isn’t sorted out.
Even if it’s effective, chasing late payments is something you don’t really want to be doing. There are much more worthwhile things you can be doing to grow your business rather than following up with slack customers.
Fortunately, by setting up your invoicing and payments system well you can reduce the need to send payment reminder emails in the first place.
If you’re concerned about a customer’s ability to make payments on time, talk to them about it. This includes at the beginning of your working relationship or with customers who are consistently late with payments. It helps to be able to identify signs that customers cannot pay invoices on time in advance.
Tell them about how it puts cash flow pressure on your business and ask if you can do anything to enable them to pay on time more.
Many invoices go unpaid simply because customers didn’t know what the due date was. Make the due date prominent on your invoices so it’s abundantly clear.
Don’t use vague payment references like “Due on receipt”. Make invoices due on a specific date so there’s no ambiguity about when you expect to be paid.
Charging late fees is a great way of getting paid on time because it makes it in the customer’s best interests. To do this, you need to tell customers about late fees in advance. It’s best to have them in writing so you can refer to them if you need to.
Conversely, you could also look at offering an early payment discount. It has the same effect of incentivising prompt payment.
Learning how to effectively navigate late invoices will save you time, energy, money and frustration. It’s probably unrealistic to think you’ll never have to chase late payments, but if you can reduce how often you have to do it then it’ll mean more time doing the things that are really important.
One of the reasons chasing late payment is so important is to relieve negative cash flow pressure when clients don’t pay invoices on time. Another technique that helps businesses to pay bills and overheads in these instances is invoice financing.
Invoice financing is a form of lending that’s based on your invoices, and creates the same effect as customers having paid their balance on time.
Find out more about how invoice financing with FundTap works today.