Late payments are more than just a nuisance. Unpaid invoices can jeopardize your ability to meet your own financial obligations—or even pay your employees. Sending a friendly payment reminder to your clients can encourage timely payments, and it may even encourage some customers to pay early.
What's the best way to send a payment reminder? You'll find some great tips in the following guide.
BILL Accounts Receivable can help you simplify invoice tracking and follow-up. Filter invoices by status to get info quickly and set automated reminders.
What is a past-due invoice?
A past-due invoice hasn't been paid as of its due date. A common business practice is giving your invoice a basic deadline such as "net 30," meaning payment is due within 30 days of receipt. If a month goes by and you haven't received payment, you have a past-due invoice.
Late invoices are far too common among small businesses: 40% of small to midsize businesses (SMBs) experience "direct, negative impacts" from late payments.
When to send payment reminder messages
Send payment reminders early and often. Here's a general timeline of when you might consider sending invoice reminders to your customers.
Before the due date
The best payment reminders come before the deadline even passes. Roughly three to five days before the invoice is due, send a quick payment reminder email to nudge your customer to pay their invoice. Remind them that a timely payment will allow them to avoid interest or late.
On due date
Send a payment reminder on the official invoice due date. This should be a gentle reminder that the payment is officially due and that the customer may experience payment penalties if the invoice isn't paid by the close of the business day.
One week late
At this point, your invoice is now well past due. Send another payment reminder, this time updating the client regarding any late charges that they now owe. Stay friendly and acknowledge they may be experiencing a busy season, but you're still expecting payment as soon as possible.
Two weeks late
By now, the client has received multiple payment reminders. It's time to become a bit more assertive. Acknowledge the lack of response. Remind the client of the payment terms and any penalties, and make a specific request to arrange payment immediately.
One month late
After a month of payment reminders, your next move is to communicate that the client's account is long overdue. Stay professional, but it may be time to tell the client that further delay in payment may jeopardize your ongoing business relationship.
Final notice
Your final payment reminder should communicate the severity of the situation. Remind the client of the original due date and your repeated attempts to contact them. It's also appropriate to indicate your willingness to take further action (or even legal action) to collect this debt. Make sure you mark your letter or email as "final notice" to grab your client's attention.
How to follow up on past due invoices
How do you write the most effective payment reminder emails? Here are some tips for following up on overdue payments.
Be proactive
If all of your clients paid as expected, you'd never have to send payment reminders at all. Make sure that your clients understand your expectations even before you enter into a business relationship. Tell them your invoices are due on a specific date, and outline any late payment penalties that the client should know of.
Being proactive prevents your clients from claiming not to know or understand your payment process.
Set a payment reminder schedule
Create a payment reminder schedule, which will allow you and your accounts receivable (AR) team to follow a standard procedure for sending reminders. An invoice reminder schedule will also ensure you consistently send your clients a periodic nudge.
Include the original invoice details
Every past-due invoice reminder should include the details from the original invoice. These include the following:
- Invoice number
- Payment details and terms
- Payment due date
- Penalties for overdue payments
Include a copy of the original invoice and remind the client that their payment is now "X" days overdue.
Make it easy to pay
In addition to communicating your payment terms, your payment reminder emails should make it easy to complete payment. Offering multiple payment options streamlines the process for you and your client. If the email includes a payment link for prompt payment, clients will be more likely to pay their invoices quickly.
Clearly communicate the next steps
Each invoice payment reminder should communicate what you'll do if the invoice remains unpaid. Common next steps may include:
- Assessing additional late fees and penalties
- Contacting a debt collection agency
- Taking legal action
- Severing your client relationship
Clearly communicating these consequences may prompt your client to pay once they receive your reminder.
Maintain detailed records
Document everything. That includes the original invoice, as well as each of your payment reminder emails and letters. Should you decide to pursue legal action or contact a debt collection agency, a paper trail will be necessary. And while the IRS allows you to write off an unpaid invoice as bad debt, you can do so only if you provide evidence of your attempts to collect payment.
Tips for writing an effective payment reminder email
Late payments can be frustrating, especially when the client fails to respond to your initial payment reminder message. Use the following tips to generate more effective invoice reminder emails.
Use a clear subject line
Your clients receive a lot of emails—don't let yours get lost in the shuffle. So make sure your subject line indicates that you're contacting the client regarding a past-due invoice. You can also include the invoice number in the subject line, and even "PAST DUE" in your subsequent reminder emails to express the urgency of your communication.
Be direct and professional
Your goal isn't just to collect an unpaid bill; you also want to maintain a positive relationship with your customer.
To that end, be direct about the reason for your message, and include as many details about the invoice as possible. But remain professional and speak to your client with a friendly tone, especially in your first payment reminder email. Avoid the temptation to express anger or frustration, even in later reminder emails.
Stay consistent
In a perfect world, your clients would all pay their invoices on time, or at least after your first payment reminder message. But the business world is far from perfect, so it helps to send regular, consistent reminders to encourage your clients to submit payment. Following a consistent schedule can make your invoice a greater priority in the eyes of your clients.
Switch mediums
Are your overdue invoice emails going unheeded? It may be time to switch mediums, particularly once the due date is behind you. After all, some emails go straight to the spam folder or are simply lost in the avalanche of emails in the client's inbox. So if your emails aren't getting the message across, you can send letters by mail—to both the client's corporate office and your point of contact—or, better yet, call them directly to remind them of the overdue invoice.
Payment reminder email templates
If you look at some overdue payment reminder email samples, it's easier to craft one of your own. You can use the following payment reminder templates to create invoice reminders for varying due dates.
Payment reminder email template: Prior to due date
Subject line: [Your company's name and invoice reference number]
Hi [client name]. This is a friendly reminder that your invoice [invoice number] is due by [date].
Please contact me at your earliest convenience to arrange payment. I have attached a copy of the initial invoice for reference. Should you have additional questions, contact me at this email address or by phone at [your phone number].
Best regards,
[Your name and position within your company]
Payment reminder email template: On due date
Subject line: [Your company's name and invoice reference number]
Hi [client name]. This is a friendly reminder for payment on invoice [invoice number], due today, [due date].
Please submit payment by the close of business today to avoid any late fees. You'll find the original invoice attached to this email. Should you have additional questions, contact me at this email address or by phone at [your phone number].
Best regards,
[Your name and position within your company]
Payment reminder email template: One week late
Subject line: [Your company's name and invoice reference number]
Hi [client name]. I understand that this has been a busy season, but this email is to remind you that your invoice [invoice number] was due by [due date]. Unfortunately, your payment is overdue, which means that we've assessed a late fee of 10% of the [invoice amount].
Please contact us immediately to discuss payment options, or render payment today to avoid further penalties and charges. Should you have additional questions, contact me at this email address or by phone at [your phone number].
Best regards,
[Your name and position within your company]
Payment reminder email template: Two weeks late
Subject line: [Your company's name and invoice reference number]
Hi [client name]. I'm writing in regard to [invoice number], which was due on [due date]. Your payment is now two weeks late, which means that you've been assessed a 10% late fee. Should your invoice remain unpaid after 30 days, you'll be assessed an additional late fee of 10%.
Please get in touch immediately to discuss payment options. Should you have additional questions, contact me at this email address or by phone at [your phone number].
Best regards,
[Your name and position within your company]
Payment reminder email template: One month late
Subject line: [Your company's name and invoice reference number]
Hi [client name]. Payment for invoice [invoice number] was due by [due date] and is now more than a month overdue. As such, we've assessed your company a 20% late penalty.
Prior attempts to contact you have gone unheeded. Please contact us immediately to arrange payment; otherwise, our company may consider severing our professional relationship or taking further action to collect the unpaid balance. You may reach me at this email address or phone at [your phone number].
Best regards,
[Your name and position within your company]
Payment reminder email template: Final notice
Subject line: [Your company's name and invoice reference number]
Hi [client name]. This is your final notice regarding [invoice number], due on [date].
Should you fail to respond to this message, our company will be forced to take additional action to collect your balance and the 20% late penalty that has accrued. Please contact me immediately at this email address or by phone at [your phone number].
Best regards,
[Your name and position within your company]
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