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Letter of reminder for payment outstanding

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Letter of reminder for payment outstanding
September 01, 2018 Wedding Anniversary Wishes 1 comment

This is a kind of letter that is written when an individual or company has outstanding payment that needs to be made at the soonest. The overdue payment.

Editorial Note: Fundera exists to help you make better business decisions. That’s why we make sure our editorial integrity isn’t influenced by our own business. The opinions, analyses, reviews, or recommendations in this article are those of our editorial team alone.

As a small business owner, you’ve probably streamlined your business finances down to a science. You know exactly how to create your invoice, and you send it out immediately after completing a job. Despite your organization, however, it’s pretty much inevitable that a few of your customers will fail to pay their invoices on time. And, when that day comes, you’ll probably wonder how to send a payment reminder professionally.

If a client doesn’t pay you on time, you might be tempted to let that delinquency slide to avoid confrontation. Or, on the other end of the spectrum, you might feel like you need to be a little too harsh when you send that late payment reminder email.

How do you strike that balance, then? What’s the best way to send a polite payment reminder email that’s firm enough to get you the compensation you need for your hard work? (And, not to mention, for tax purposes, since it’s not always possible to write off unpaid invoices.)

We take the guesswork out of the occasionally uncomfortable, but crucial, task of requesting late payments from delinquent customers. These five professional payment reminder email templates will help you feel like you have a handle on your late payments—even if you need to get to red-alert status—and, hopefully, get you your balance due.

And, if sending late payment reminder emails still makes you cringe, we’ll show you a few other solutions for late payments as well. If overdue payments are threatening your business’s cash flow, and you need an immediate solution, consider invoice financing.

How to Ask for Late Payment in an Email: 5 Email Templates to Follow

The best practice, of course, is for your customers to send payment immediately after receiving your invoice. However, “best practices” is never guaranteed. So, if you’re waiting on a bill from a job you completed weeks ago, and you’re worried about a late payment, it’s smart not to wait for that late payment to occur. Rather, send your first follow-up email a week before the payment due date.

Then, if you’re facing a late payment, you’ll need to continue sending follow-up emails until you receive your bill. 

Asking for late payment can be tough, but the key is to modulate your tone across these reminder emails. You’ll need to be equal parts polite and firm—but, depending on how late that payment is, your tone may need to tip in one direction more than the other.

We’ll show you exactly what to write, and when to hit send:

1. Initial Reminder: One Week Before the Bill Due Date

Email subject: Follow-up on invoice #10237

Message:

Hi John Doe,

I hope you’re well. This is just to remind you that payment on invoice #10237, which we sent on March 25th, will be due next week.

I’m sure you’re busy, but I’d appreciate if you could take a moment and look over the invoice when you get a chance. Please let me know if you have any questions.

Thank you!
Jane Doe

Why this payment reminder works: Your first reminder should be short, friendly, and informative. There’s no need to bother your customer with too much information, and you don’t need to request payment straight away as the bill isn’t due yet. In this email, the customer should recognize that you regularly track your invoices, so you’ll get back in touch with them if they don’tsend their bill on time.

2. Second Reminder: On the Day the Payment Is Due 

Email subject: Invoice #10237 is due today

Message:

Hi John Doe,

This is just a reminder that payment on invoice #10237 (total $5,400), which we sent on March 25th, is due today. You can make payment to the bank account specified on the invoice.

If you have any questions whatsoever, please reply and I’d be happy to clarify them.

Thanks,
Jane Doe

Why this payment reminder works: This is one of the most important emails in the sequence, since you’re requesting your first call to action to your customer to make their payment. It should be short, straight to the point, but still friendly—that bill isn’t technically overdue yet!

3. Third Reminder: One Week After Late Payment Was Due

Email subject: Invoice #10237 is one week overdue

Message:

Hi John Doe,

Our records show that we haven’t yet received payment of $5,400 for Invoice #10237, which is overdue by one week. I would appreciate if you could check this out on your end.

If the payment has already been sent, please disregard this notice. And if you’ve lost this invoice, please let me know, and I’d be happy to send you another copy.

Thanks,
Jane Doe

Why this payment reminder works: This is the first email addressing that the invoice is overdue, so you’ll want to start firming up your tone. Include details about the invoice such as invoice number, amount due, and repayment timeframe for a clearer reminder of what the customer owes, and when they owed it. Also offer a copy of the invoice, as sometimes they do get lost or accidentally deleted.

4. Fourth Reminder: Two Weeks After Late Payment Was Due

Email subject: Invoice #10237 is two weeks overdue

Message:

Hi John Doe,

I wrote to you several times to remind you of the pending amount of $5,400 for invoice #10237. As another reminder, payment was due two weeks ago.

If you have any queries regarding this payment, please let me know. I’ve also attached a copy of the invoice to this email, in case the original was lost or deleted.

Could you reply to this message and let me know you’ve received it? Thank you.

Regards,
Jane Doe

Why this payment works: Okay, now it’s time to get more direct. In this email, you should clearly ask for payment, and ask the client to confirm whether they have received the message. That way, they have one less excuse to ignore your email.

5. Fifth and Final Reminder: One Month After Late Payment Was Due

Email subject: Invoice #10237 from 3/25 is overdue—please send payment ASAP

Message:

Hi John Doe,

This is another reminder that I have yet to receive the $5,400 owed on invoice #10237. Please be aware that, as per my terms, I may charge you additional interest on payment received more than 30 days past its due date. 

Again, please reach out if you have any questions on this payment. Otherwise, please organize for settlement of this invoice immediately.

Kind regards,
Jane Doe

Why this payment reminder works: At a full month overdue, and several ignored attempts to reach out to the customer, you’re entitled to take a tougher approach about reclaiming your compensation. But don’t let it get personal. Making accusatory statements toward your customer undermines your professionalism. 

What If Email Reminders for Overdue Payments Don’t Work?

If you still haven’t received payment after a full month, it’s time to step out from behind the email curtain and call your client directly. First of all, it’s possible that your client changed email addresses, or accidentally provided you with an incorrect email address. Or, if you’re working with a larger institution, you may be sending your invoice requests to the wrong person or department.

Either way, it’s always more effective to speak directly with your client, person to person, than it is to send an email. That way, you’ll give them the firm but kind reminder that they need to pay up, and hear their side of the story firsthand.

A Better Strategy? Prevent Late Payments in the First Place

Even with these email templates to arm you, you still might feel a little uncomfortable chasing down your customers for their money. So, the best way to avoid that discomfort is to prevent the possibility of late payments in the first place.

Implement these invoicing tips upfront, as they may help you avoid late payments down the line.

  • Be honest: If you’re at all concerned about the possibility of overdue payments, gently make your client aware of your repayment terms either before or right after signing on for a job. That way, you won’t leave it up to chance that your customer will (carefully) read your repayment terms when they receive their first invoice.
  • Be clear about your time frame: Often, business owners write “Due upon receipt” as their repayment terms on their invoices. But that’s a little vague, and it leaves too much room for your customers for incorrect interpretation. Instead, clearly indicate your repayment time frame in terms of days, e.g. “Due 30 days after receipt.”
  • Charge interest on late payments: Just as you’re privy to interest charges on late business credit card payments, your clients can also be held financially accountable for paying you late. Clearly indicate the terms of your interest charges directly on your invoice. If you’re not sure how much to charge for late payments, first read up on best practices when including finance charges on your invoice.

It also helps avoid overdue payments if you send your invoice to your customer immediately after you complete a job. When your goods or services are still fresh in the customer’s mind, they are more likely to pay you on time.

One other tip is to provide early payment discounts to your customers. When your customers pay early, offer a small discount like 1% off. This might not seem like much, but it could be just the nudge to get your customers to pay you on time.

With Late Payments, Be Professional—And Kind

If your invoice payment is seriously overdue, it can be hard to keep your cool. After all, “doing business” means more than doing your job well. It also means receiving timely compensation for your hard work. So if you don’t receive that compensation, you’re more than entitled to be diligent about tracking that money down.

Keep in mind, though, that late payments are rarely a personal affront. Most of the time, delinquent customers have simply been busy, distracted, or dealing with an overflowing email inbox and lost or forgot about your invoice in the process.

So, whether you’re sending an initial reminder about an impending payment deadline, or if you’re checking in on the status of a weeks-late invoice payment, remind yourself that you and your customer are both human beings. And human beings make mistakes! Maintain that attitude even when you need take a firmer approach toward reclaiming your compensation.

If you follow the email sequence and tips above, you’ll definitely notice your overdue invoice pile going down. But you’ll also ensure that you’re establishing and preserving trust between you and your client, which, in the long run, is just as important in running a successful small business.

Following up on outstanding invoices can feel awkward to navigate, Don't forget a letter closing that matches the tone of your reminder.

Assignment Point - Solution for Best Assignment Paper

letter of reminder for payment outstanding

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WATCH THE VIDEO ON THEME: How to Write an Email for Payment Follow Up - Accounts Receivable
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4 Payment Reminder Templates to Copy/Paste

letter of reminder for payment outstanding

Dear Sirs,

Outstanding Account Value – £ (Insert sum)

As at today’s date, we have yet to receive payment of the outstanding amount, which is now considerably beyond our agreed payment terms.

Our company has not yet levied any late payment or interest charges under the “Late Payment of Commercial Debt (Regulations) 2013” but we reserve our right to do so should your company fail to make immediate payment of the overdue amount.

We trust this will not be necessary and look forward to receiving payment of the overdue sum by return.

Regards
………………………………………………………………………………………………
End of letter

For your information only

Do not include the information below in correspondence to debtors.

Late payment letter drafted for Company Bug for its readers to use by Safe Collections, a debt recovery and credit control company. If you have a customer you are concerned about who may be unable or unwilling to pay your invoices you can speak to Safe Collections on 01772 454505, for a free, no obligation, credit health check.

Late payment charges as outlined above can only be charged on commercial business to business (B2B) transactions and not on business to consumer (B2C) debts.

Collecting payments from customers is challenging. This is where an overdue payment reminder letter can be the best tool in your payment collection toolbox.

Overdue payment reminder template

letter of reminder for payment outstanding

Late Payment Letter Templates and Advice


Overdue Payment - Time to Get Serious

Your customer has been giving you the run around. You've heard every excuse for not paying under the sun. You've reached the end of your tether. It's time to get serious about collecting that late payment.

We believe that the best thing you can do at this stage is involve a third party to collect the debt for you. It immediately escalates the seriousness of the situation in the debtor's mind and makes them more likely to pay up quickly. Why not try our CreditXS debt collection service? We keep things professional and unemotional, letting you get on with what you do best - running your business. We can add late payment interest and our fees to the debt, so the service could end up costing you nothing.

However, if you are determined to spend your own time on chasing overdue payments, then here's some example late payment template letters written by the experts at My Credit Controllers that you can modify for your own use.

Late Payment Letter Template 1: First Reminder

Before sending this letter, you should check whether the company that owes you money is still in business. We've developed an easy to use web tool for doing just that - check whether the company is still in business here.

YOUR HEADED PAPER

[Customer Name]

[Customer Address]

[Date]

Dear Sirs,

Our Ref: [Customer Name]

It has come to our attention that your account is overdue for payment.

We are not aware of any disputes or reason for non-payment, therefore we would respectfully remind you that you have exceeded the trading terms for these outstanding amounts and we would be grateful to receive your remittance as soon as possible.

The details of the outstanding invoices are as follows:

Invoice NoInvoice DateDue DateAmount
0000101/01/0101/01/01£999.990
0000201/01/0101/01/01£999.99


We look forward to hearing from you.

Yours sincerely

On behalf of [Your Company Name]

Late Payment Letter Template 2: Second Chasing Letter

You have a statutory right to add interest and compensation to the debt you area owed by a commercial company. Use our late payment compensation calculator to calculate the amount. The second late payment letter template for a non-paying customer has optional text which allows you to add in the interest and compensation at this point.

YOUR HEADED PAPER

[Customer Name]

[Customer Address]

[Date]

Dear Sirs,

Our Ref: [Customer Name]

Second Request For Payment

Further to our previous correspondence dated [date of first letter], your account is still overdue for payment. We would respectfully remind you that you have exceeded the trading terms for these outstanding amounts and we would be grateful to receive your remittance by return.

The details of the outstanding invoices are as follows:

Invoice NoInvoice DateDue DateAmount
0000101/01/0101/01/01£999.990
0000201/01/0101/01/01£999.99


[OPTIONAL SECTION - ADD INTEREST] [We have a statutory right under the Late Payment of Commercial Debts Regulations 2013 to add interest and late payment compensation to the sum outstanding. This currently equates to £[calculate here] therefore, the amount to pay as at today currently stands at £[total of invoice amount and compensation].

We look forward to hearing from you.


Yours sincerely

On behalf of [Your Company Name]

 

Late Payment Letter Template 3: Final Chasing Letter

At this point you can introduce the option of passing the overdue amount to an external debt recovery service such as CreditXS from My Credit Controllers into your late payment letter.

YOUR HEADED PAPER

[Customer Name]

[Customer Address]

[Date]

Dear Sirs,

Our Ref: [Customer Name]

Final Request For Payment

Further to our previous correspondence dated [date of last letter], your account is still overdue for payment. We would respectfully remind you that you have exceeded the trading terms for these outstanding amounts and we would be grateful to receive your remittance before [DATE - set to 5 working days from date of letter] to avoid [CHOOSE ONE OF:] [this overdue amount being passed to commercial debt recovery service CreditXS for collection] / [further action].

The details of the outstanding invoices are as follows:

Invoice NoInvoice DateDue DateAmount
0000101/01/0101/01/01£999.990
0000201/01/0101/01/01£999.99


[OPTIONAL SECTION - ADD INTEREST] [We have a statutory right under the Late Payment of Commercial Debts Regulations 2013 to add interest and late payment compensation to the sum outstanding. This currently equates to £[calculate here] therefore, the amount to pay as at today currently stands at £[total of invoice amount and compensation.]

We look forward to hearing from you.

Yours sincerely

On behalf of [Your Company Name]

Late Payment Letter Template 4: Letter Before Action

It is not good practice to threaten legal action without the intention to follow through on your threats. In fact it can be construed as harassment.

Another option is to pass the debt to an external debt recovery service, such as Credit XS from My Credit Controllers. This escalates the seriousness of the debt in your customer's mind, frequently resulting in quick payment. Resolving the situation rapidly and without recourse to law is in everyone's interest. The fees from CreditXS can be added to the debt as part of the statutory compensation payment, so if the customer pays in full then the cost of the service is paid by the debtor.

However, if you want to press on without outside help, here's a template letter before action that gives the debtor one last chance to pay before you go legal.

 

YOUR HEADED PAPER

[Customer Name]

[Customer Address]

Without Prejudice

Outstanding Invoices – Company Name

Final Letter before Action – via email & tracked post

We are disappointed to see that despite numerous requests, payment for the overdue invoices as listed below has still not been received.

Invoice NoInvoice Date Due Date Amount
0000101/01/01 01/01/01 £999.990
0000201/01/01 01/01/01 £999.99


Under the Late Payment of Commercial Debts Regulations 2013 we are entitled to claim late payment interest & compensation charges. This currently equates to £[calculate here] therefore, the amount to pay as at today currently stands at £[total of invoice amount and compensation]

Take notice that if full payment of the £[TOTAL] is not received in our bank account by close of business on [DATE - set to five working days from letter date], we shall, without further notice, begin legal action to recover the debt, all court costs and statutory interest of 8% above the Bank of England base rate (fixed for the six month period within which date the invoice became overdue) pursuant to the late payment legislation to be borne by yourselves.

To prevent this from happening please pay in full now.

Please accept our apologies if payment has been made within the last 24 hours.

This is our final communication on the issue.

On behalf of [Your Company Name]




How we can Help:

Debt Collection

Outsourced Credit Control Service

WATCH THE VIDEO ON THEME: How to Write a Payment Reminder

Set up the letter as a standard business letter. could read: “It is now crucial that you pay your outstanding bill.

letter of reminder for payment outstanding
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