How to Write Past Due Invoice Letters that Get Paid Fast
Overdue invoices are a serious problem for many companies. You must have a smooth cash flow alongside your daily operations. Your entire business depends on receiving payments on time.
Most businesses are uncomfortable with confronting clients about outstanding invoices. They might not want to damage their relationships with them. However, it is important to know how to deal with such situations. Here, your best bet is to send regular past due invoice letters.
For that, you should know how to write an overdue invoice letter. Your letters should be professional and friendly. But, they should also be firm enough to get your message across properly. There are certain things to keep in mind when writing such sensitive letters, that we will learn further.
In this blog, we will discuss various ways to get paid faster. We have also included a bunch of past due invoice letter templates for your reference.
Follow Up Proactively
Your relationship with a specific client dictates your follow-up schedule. If you have been dealing with the client for years, you may not feel the need to follow up. Similarly, you need not follow up with clients that regularly pay on time.
However, for new clients and clients that delay payments, follow-ups are a must. It is optional whether you want to follow up before the due date. But, once the due date is crossed, it is necessary.
Here are some tips for you to follow up on time:
- Follow up immediately after an invoice is generated. You can call up your client and confirm whether they have received the invoice. It cannot be called a proper ‘follow-up’ as you are just asking clients for an acknowledgment.
- It is possible that your clients forgot about the invoice and missed the due date. So, get in touch with them 1 day after the due date passes. You can remind them about their overdue invoice via email, call, or mail.
- Follow up at regular intervals. Most companies contact clients after 30, 45, 60, and 90 days. It is essential to reinforce your message frequently.
- Send a past due invoice demand letter during the weekend when people have a lot of time. There are fewer mail items in their mailbox and they can pay more attention to your letter.
- According to an article by the Entrepreneur, you should send emails on days like Tuesdays, Wednesdays, and Thursdays. This is because most people are busy on Mondays and ignore the email received post-Thursday.
Do not let your clients think that you don’t have the time to follow up. Let them know that your accounts team is tracking every invoice regularly. This will encourage them to complete payments promptly.
Don’t Miss Out on Any Details
Always add important details to your invoices. Missing out on them can increase the payment timeframe significantly. Moreover, mistakes and inaccuracies in invoices leave a bad impression on clients.
You may have to suffer huge losses due to such errors or inaccuracies. Imagine your accountant drafted an invoice for $1,000 instead of $10,000. In this case, your client may refuse to pay the actual amount making you lose a lump sum of greens.
In the same way, it is important to draft precise past due invoice letters. To help you with the same, here is a checklist that you need to take care of while drafting your invoice letters:
Checklist to Prepare Invoice Letters
- Invoice number
- Date of issue
- Full amount due
- A reminder of the letters sent earlier
- Payment instructions (You can also include a link or QR code)
- Your contact details
- Particulars of the invoice
- Payment terms
- Other terms and conditions
Some more things to remember are:
- The words “past due invoice” should be mentioned at the top of the letter.
- Mention the names of the buyer and seller both. Also, mention the full mailing address and contact number of the recipient.
If you are drafting an invoice, also include the breakdown of the amount due. Mention any additional taxes and duties included.
Adjust Your Language
You cannot use the same writing style and tone in every overdue invoice collection letter. Tailoring your language is important. It ensures that you are emphasizing your message properly.
So, how to write past due invoice letters?
Well, the answer is simple- A letter written after 15 days past the due date is surely different from the one written after 60 days. You should adjust your writing tone accordingly depending upon the number of days and the situation.
At times, clients reach out to you with a reason for non-payment. But, some clients stop responding to your texts and calls when their invoices become overdue.
Let us now find out how you can tailor your words and get paid faster.
1-15 Days Past Due
You should be extremely gentle and polite while sending a past due payment letter for the first time. Use a friendly tone and let customers know that this is just a reminder. This letter should not sound like a warning.
- Your motive should be to preserve your relationship with clients.
- Explain the payment terms and guide them on how to pay.
- You can also ask them to acknowledge your letter by responding to it.
- Once the customer receives the letter, you can also call them up.
- It is necessary to talk to them personally at least once.
30-60 Days Past Due
Ask your accounts team to send another overdue payment letter after 30 days. The letter should be professionally drafted, but do not forget to maintain a courteous tone. Try to emphasize the urgency of the matter.
- Attach a copy of the invoice. Mention that you had sent the invoice along with payment overdue letters earlier but didn’t receive any response till date.
- Use sentences like “Please complete the payment at the earliest” and “We need your urgent attention to this situation.”
- Include the revised amount inclusive of the late fees.
- At this payment collection stage, you should not shy away from asking for the payment firmly.
90+ Days Past Due
If a client delays payment for a long time, it is less likely that they will pay at all. Hence, you should keep up with your follow-up overdue invoice letters.
- The letter sent after 90+ days past the due date is a warning.
- It gives clients a final chance to complete the payment.
- Let clients know that you are expecting payment within a certain number of days.
- If the payment is still outstanding, you have the right to take legal action against them. Thus, your final letter should inform clients about the same.
Charge Late Penalties
It is common for banks and financial institutions to impose late payment charges. They do so by imposing interest on all missed credit card bills and EMI payments. You can also charge a late payment fee on your overdue accounts.
- Discuss the penalties and related charges with your customers beforehand or else do not mention them in the invoice and letters. If these things aren’t discussed earlier, you cannot charge any penalties.
- Any additional fees included without their knowledge can sour your company-client relationships.
- However, companies must refrain from charging any amount at their discretion. It should be a reasonable amount, mostly a certain percentage of the total due, say 7-10%.
Also, go through your state laws regarding how much interest you can charge annually. If your state allows you to charge 15% annually, you can divide that amount into 12 and charge monthly. A 15% interest charged annually equals 1.25% interest per month.
Additionally, you can enforce late payment fees as a way to get paid. Start adding up these fees to your invoice after the due date. It can set an excellent precedent. This way, your clients can learn that you expect to be paid on time.
The more the payments are delayed, the more are the late payment charges. This fact can encourage clients to pay you at the earliest possible so that they don’t pay anything extra.
However, you cannot charge late penalties to all clients. Some clients fail to complete payments due to some genuine reasons. They may have not received your letters and are hence, unaware of the matter.
Before taking any further steps, try to get in touch with them through several channels.
Offer Discounts and Payment Plans
They say- something is better than nothing. You might have to incentivize clients to pay you.
Some businesses offer early payment discounts to several customers. They ask their customers to pay before the due date in exchange for a good discount.
You can offer a small discount of 2-4% to attract early payments. This small percentage may not be very convincing, but it can surely work for some customers. Companies that are focused on cost savings are likely to avail of your discount offer.
These offers are regarding early payments.
What if your client has not paid you even after the due date?
You can try offering them a payment plan. An article published on Entrepreneur’s website suggests offering payment plans to clients with overdue accounts.
- You can divide the total amount receivable into smaller parts.
- Ask clients to pay a part every month.
- This way, they can pay off their debt over some time.
- It is also beneficial to you as you can regulate your cash flow.
This plan can also work for clients that reach out to you and ask for certain concessions. You can help them pay you by offering such payment plans.
Use a Polite Tone
Always be humble and polite while addressing a past due payment letter. Being courteous helps you to maintain a good brand image and goodwill. This further strengthens your relationships with the customers in a better way. Together, it all will eventually lead to high customer retention and increased sales.
Clients are likely to ignore letters that are written in a rude tone. Moreover, such letters can affect company-client relationships negatively. But, if you use a polite tone, it can help you get paid faster and retain customers.
FreshBooks stated that invoices containing polite phrases like “thank you” and “please” are 5% more likely to be honored.
Use sentences like:
- Thank you for your cooperation and time.
- Please complete the payment within X days.
Such phrases show your company in a good light and encourage clients to have a long-term relationship with you.
Automate Payment Reminders
Remembering due dates and sending payment reminders manually is a huge deal. So, you can rather take the help of your invoicing software.
Also, if you do not know how to write a letter for overdue payment, try using PostGrid’s pre-built templates.
You can set reminders on your invoicing software to send outstanding invoice letters. The ideal time plan is 1, 15, 30, 45, 60, and 90 days past due (just as we mentioned above). The software can send an automated email and mailpiece to clients on each of these days. You need not remember any dates or do anything manually
The software can also add late penalties to the invoice amount automatically.
If your invoices go unpaid even after 90 days, send a final unpaid invoice letter to your client. You need to mention that your next step is involving a collection agency.
In case the payment is not completed within the specified time, you can take the desired action.
Your first option is to hand over the invoice to a debt collection agency, as you mentioned in the letter. They may take a while to get the payment process completed.
If this option does not work, you can take your clients to court. However, consider whether the invoice amount is worth taking so much effort. Sometimes, the cost of hiring a lawyer and the court fees exceed the amount of the unpaid invoice.
In the US, it is quite easy to get your lawsuit to the small claims court. You only have to pay the court fees.
If your invoice amount is less than the state’s maximum limit, you need not hire a lawyer as well. Thus, you can take legal action against non-payers without spending a lot.
Tips for Writing a Past Due Invoice Letter
Below are some tips that can help you write professional and effective past due invoice collection letters:
- For invoices overdue by a few days, include the words “for your ease” or “for your convenience”. You can draft your sentences as “For your convenience, I am attaching invoice #770 that was due 2 days back.”
- Always add links to complete the payment. Don’t forget to attach the main invoice.
- Use polite phrases such as kindly, please, requesting you, thank you, we appreciate, etc.
- Remind your customers of all the previous interactions you had with them. Prefer adding words like “As we discussed earlier,” “As you know,” or “As discussed on call the other day.” These statements can remind clients of your conversations regarding the payment terms.
- Also, use phrases that demonstrate urgency. “Immediate attention”, “urgent matter,” and “action required” are some examples of such phrases. If you are sending an email, use such phrases in your subject line.
- Skip the irrelevant details and talk to the point. You need not beat around the bush for a long time before coming to the main subject. It can lead to distraction from the issue.
- Notify customers that you are going to get in touch with them via phone. They should know that you intend to talk to them personally on the subject. Some customers are uncomfortable talking about these things. So, they would rather prefer to complete the payment before that happens.
- Run credit checks on high-ticket clients. If you are dealing with someone for the first time, it is advisable to learn their business history. You should only deal with reputable clients that do not delay payments unnecessarily.
Friendly Past Due Invoice Letter Templates and Samples
It is not necessary to draft a unique past due invoice letter for every client. You can use a common template for the same. These templates are already drafted for you, so you don’t need to worry about its format.
Such overdue invoice letter templates help save a lot of time and effort. You can edit the necessary fields. Using these templates, you can sound professional while staying focused on your objectives.
But, you need to use a different tone for every letter. Hence, we have included a past due invoice letter template to give you a clear idea. You can use this template for all clients at all stages, irrespective of the days past due.
Past Due Invoice Letter Template
[Your Full Name]
[Your Company Name]
[Company Details] (such as address and contact details)
[Customer’s Full Name]
[Customer’s Company Name] (if applicable)
[Company Details] (if applicable)
Dear [Customer First Name]
[Opening Paragraph]. (Explain the main purpose behind your letter and pave the way for further details. Keep it soft and humble. This paragraph should be a mere reminder to reinforce all your previous conversations.)
[Invoice Details]. (Mention the invoice number, date, and particulars.)
[Late Fees]. (Include the amount of late fees charged and also write how you calculated the interest rate.)
[Payment Details] (Mention your bank account details for customers to pay you. You can also mention the other payment options available.)
[Closing Paragraph]. (Inform your customers that you have attached the invoice with the letter. Also, include your contact information and ask them to reach out in case of queries.)
Thank you for your time and cooperation!
[Your Name and Designation]
Enclosed: Invoice No. [#]
You can edit and use this template for invoices that are past due by 1-15 days, 30-60 days, and 90+ days. You can change the tone and the choice of words according to your requirements.
We have put together two samples that you can send before the invoice becomes overdue. These early invoice letters can help you avoid late payments in the first place.
Below are some samples of invoice reminders and past due payment letters that you can refer to:
Payment Reminder: 1 Week Before the Due Date
12th August 2021.
Hi Mr. Desmond,
Hope you are having a great day. This letter is in regards to your invoice no. 856 generated on the 20th of July, 2021. We wish to remind you that this invoice will be due next week on the 26th of July, 2021. A copy of the invoice is attached.
We understand that you are busy, but we would appreciate it if you take the time to acknowledge the invoice.
Please contact us if you have any doubts or questions.
Accounts Department – Galaxy Associates.
Enclosures: 1 (Invoice no. 856)
Why this reminder is effective: Your invoice due date is yet to come. Therefore, there is no need to bother the customer too much. This letter should be a reminder to aid faster payments. Keep it short, informative, and friendly. You should also not ask for the payment directly, as the invoice is not due yet.
The reminder gives out a message to customers that you track your invoices regularly. And, you expect the payment on time.
Payment Reminder: On the Due Date
Rosalia International Pvt. Ltd.
12th August 2021.
I hope you are doing well! This is to remind you that your invoice #1900 is due today. The invoice was both emailed and mailed to you earlier. For your ease, we have attached a copy.
You can pay via debit card/credit card/net banking on our website. You can also send a check to the below address:
Rosalia International Pvt. Ltd.
056 Crossbow Blvd.
Miami, FL 33128
We would be happy to assist you in case of any doubts.
Sr. Manager – Operations.
Why this reminder is effective: Reaching out to clients on the due date can get you paid easily. This way, you won’t have to write any late payment invoice letters.
When you follow up regularly, clients feel the need to complete payments as soon as possible. Hence, you are likely to receive the payment on the same day or at least a few days later.
The invoice isn’t overdue yet, so be polite. It should be highly professional and humble.
1-15 Days Past Due Invoice Letter
Star Media Inc.
San Diego, CA
12th August 2021
Onsite Construction Pvt. Ltd.
Dear Mr. Steve,
Hope you are doing well! This letter is in regards to your overdue invoice. As per our records, the due date was 5th August 2021.
Please find below the invoice details:
Date: 5th May 2021
Invoice no. 5284
Particulars: 3 magazine advertisements from 1st January to 30th April 2021.
As discussed earlier, the payment terms are 3 months from the issue date. Any payments completed beyond the due date are subject to a 5% interest charge. Requesting you to please look into the matter.
You can send a check to the address mentioned on the letterhead. Also, you can pay through net banking/debit card/credit card on our website.
In case of any questions or clarifications, please do not hesitate to reach out. You can drop me an email at [email protected]
We would like to thank you for your time and cooperation!
Keith Wesley, VP – Sales and Marketing.
30-60 Days Past Due Invoice Letter
12th August 2021.
523 Phoenix St.
Houston, TX 77005
Dear Mr. Richard,
This is in regards to your invoice no. 770J. It was due on 1st July 2021 and we are yet to receive the payment. We had earlier sent an overdue payment letter on 15th July 2021 but did not get any response. Since it has been 42 days past the due date, we need your urgent attention to this situation.
As mentioned in the invoice, past due amounts are subject to an interest of @15%. Hence, your total invoice amount is now $4,410. We have attached a copy of the invoice for your perusal.
You can complete the payment by logging into our website. There are several payment options available for your convenience. Otherwise, you can send us a check written to “Zing International Companies.”
Please complete the payment for the said invoice at the earliest. Feel free to contact us on (485) 8562-0100 for any clarifications.
We thank you for your business and look forward to working with you again!
Sr. Sales Manager – Zing International, TX.
Enclosed: Invoice No. 770J
90+ Days Past Due
85L Banksville Rd.
Pittsburgh, OH 15218
12th August 2021.
Pittsburgh, OH 15295
Dear Mr. Christian,
We are writing this letter to inform you that your invoice is now 105 days overdue. Our accounts team has sent you two outstanding invoice letters on 10th June 2021 and 12th July 2021. But, we didn’t hear back from you. We need your urgent attention to the matter.
This is our last unpaid invoice letter to you. Kindly remit the amount within 7 business days. Failure to do so will result in legal action. Please find the invoice details below:
Invoice Number: 10692
Date: 1st April 2021
Due Date: 29th April 2021
Current Amount Due: $47,940
As written in our contract, a late payment fee of 4% per month is chargeable. Please reply to this letter or drop me an email regarding when we can expect your payment.
You can transfer the full amount to the bank details written below:
Account Name: Ace Exhibitions
Account Number: xxxxx xxxxx xx853
ABA Number: xxxxxx298
Bank Name: Bank of America
Address: Pittsburgh, OH.
We have attached the invoice with this letter for your reference. Please get in touch with us as soon as possible.
Vice President, Marketing.
Enclosed: Invoice No. 10692
You can use these templates if you don’t know how to write a letter for overdue payment. Feel free to customize them according to your needs. You can also automate the process to save time and the effort needed to write such letters. Using PostGrid’s print and mail API, you can draft professional letters effortlessly.
Our API can help you pull details from your CRM and draft past due invoice letters in seconds.
How to Draft Overdue Invoice Emails
Now that you know how to write a past due invoice letter, it is worth knowing how to draft emails.
You can mix and match while using emails and physical letters for overdue payments.
- You can email an invoice copy immediately after generating it.
- Next, you can send another email one week before the payment is due.
- On the due date, you can send a physical letter to customers.
- Some companies prefer sending emails and mail at the same time for added effect.
Reaching out to clients through various channels is important. This way, you know that they are receiving your messages.
For sending emails, you should have your customers’ email addresses. Don’t forget to collect such information right at the beginning.
You can use the same letter samples mentioned above as email templates. The only difference is the subject line.
Find below some examples of subject lines used in overdue invoice collection letters:
- Follow-up on bill #5620
- Invoice no. 0721 is due today
- Invoice no. 250: Third reminder for payment completion
- Last warning for payment collection (Invoice #8609)
The subject line summarizes your emails and talks about the urgency of the situation.
What Are the Different Types of Invoices You Should Know About
A sales invoice is a document that informs customers about their transactions. It includes several other details like the:
- Seller Name
- Transaction Date
- Payment Terms
Invoices streamline payment collections for small businesses. And, they act as a reference for customers.
There are different types of invoices that you should be aware of. They are used in different situations and periods, they are:
This type of invoice is drafted before the order gets placed. At this point, the customer is still in the decision-making phase. Your proforma invoice can help them decide whether they want to purchase from you.
It is similar to a regular invoice and provides all the necessary information. Some businesses refer to it as a quotation. Since the purchase has not yet been completed, there is no official entry in your accounts books for the same.
Companies need to draft such invoices with utmost care. Consider your interactions with the customer regarding the deal. You can include all the agreed terms and conditions in this invoice.
Standard invoices are also called purchase invoices. These invoices are generated once the order is completed. In the case of businesses selling products, the invoice is sent along with the delivery of goods. Other companies can send an invoice after the customer has paid for your services.
It is useful in collecting payments. Usually, invoices confirm the completion of sales. They inform the buyer about the transaction particulars like the due date and amount. Such standard invoices create an obligation for the customers to pay you.
Whenever an invoice is generated, an entry is made in the books of accounts of both the buyer and seller.
It is crucial to draft accurate invoices. All your past due invoice collection letters are based on these invoices. Any mistake in the invoice can lead to customers refusing to pay.
Recurring invoices are drafted for recurring purchases. For example, you own a plastic manufacturing company. You will draft recurring invoices for clients who need to purchase from you regularly. It could be weekly, monthly, or even half-yearly.
Similarly, consider that you are a magazine publication. If a client wants to book a space in your 6 upcoming issues, you will draft separate invoices for each issue. Sometimes, you can also draft a single invoice for all 6 issues. It is a subjective matter and depends on your discussions with the clients.
Your account team should be proactive about recurring invoices. Arrange for sending invoices regularly. In the meanwhile, don’t forget to follow up with clients for completing payments.
Sending payment reminder letters along with recurring invoices is a good practice.
Over to You
Overdue invoices can make it difficult for you to keep your calm. But, remember, your clients are probably distracted by several things. They might have an overflowing inbox wherein it is easy for your emails to get lost.
You can get paid easily by following the tips and templates mentioned above.
For added attention, consider sending your overdue invoice letters through the mail. PostGrid can help you draft, print, and mail your letters effortlessly. Thus, you can save a lot of time, resources, and effort while maintaining a steady accounts receivable account.