7 Strategies to Use When Writing an Overdue Invoice Letter

As a small business, you can’t afford for customers not to pay their invoices. On-time payments are crucial to your company’s cash flow and success. Unfortunately, some invoices will inevitably become overdue — no matter how organized your invoicing software keeps you. Sometimes, customers are unable to pay, or they forgot the due date.

The first thing to do in this situation is to send the customer a considerate overdue invoice notice. You can write a friendly reminder email or send a letter in the mail to let them know the notice is past due. You should also use this opportunity to ask for prompt payment nicely. Use a polite, clear, and concise tone when sending a message. It’s important to write an effective overdue invoice letter so that you can collect what is owed.

This guide is designed to help you feel more comfortable writing and sending debt collection notices to your customers. Review our letter samples and try our top strategies when you need to write an overdue invoice letter.

How to Avoid Overdue Invoices

Whether you provide goods or services, we understand your time is best spent running and growing your business. Outstanding invoices can lead to multiple emails, letters, and phone calls before you’re able to collect what’s due. Small business owners like yourself don’t have time to waste on chasing down unpaid invoices. It could also lead to some uncomfortable feelings between you and your customers.

There’s no foolproof method to avoid overdue invoices completely; however, there are some things you can do to limit how often they occur. For example, you can:

• Use a template when billing your customers. Missing information on an invoice can lead to payment delays. Skynova’s invoice template is easy to use and helps you to remember to include every important detail, like the payment due date.
• Send invoices to customers as soon as possible. The faster you bill a customer, the more likely they’ll remember to pay for the goods or services you just provided.
• Include details about late fees on the original invoice. Late payment information gently warns the customer that penalties, such as interest, will occur if they don’t pay on time. It also sets a standard you can refer to should you need to follow up on an overdue invoice.
• Offer an early payment incentive. A discount off the total due may entice some customers to make a payment before the invoice due date.
• Send a payment reminder email. You can message a customer a few days to a week before the due date. You don’t have to wait until the invoice is past due to follow up. Life gets busy; sometimes, people need a little nudge to remember to pay.

If a customer already owes you for goods or services, you may want to consider not doing any further business with them until the debt is paid. It sounds drastic but may be necessary, especially if there are multiple outstanding invoices.

1. Follow Up: Send a Payment Reminder Letter After the Invoice Is Due

It’s optional to send reminders before an invoice is due, but it’s necessary to follow up after an invoice is past due. You can send a payment reminder letter through the mail or via email. The first overdue notice should create a sense of urgency for your customer without sounding overly harsh. It’s possible to be firm and stick to your terms without being rude.

One reason to tread lightly is that you don’t know why the payment hasn’t been made. Blaming the customer when it isn’t their fault leads to a negative relationship. Maybe you sent the invoice to the wrong person, or perhaps there was an unavoidable emergency. The last thing you want to do is appear insensitive or aggressive.

The first overdue payment reminder can be sent the day after the invoice due date. If you wish to give a short grace period, you could send it two to three days later. It depends on your relationship with the customer and how you want to handle overdue payments. This first message gives them a chance to make a payment quickly. It also provides a way for them to respond to you and explain why the payment is late.

2. Include All Invoice and Overdue Payment Details

When writing overdue invoice letters, there are key elements that should be included in each one. For example, you should always state your name and contact information so that they know who they’re dealing with and how to reach you.

Attach a copy of the invoice that was previously sent to them as proof that it’s overdue. This copy must include the original invoice date, the cost of the goods or services provided, and the total amount due. The invoice number should be visible so that it’s easy to refer to and track.

Remember also to include clear instructions for payment methods, such as by check or credit card, and provide links to a payment page if one is available. Since the customer may not respond to this first overdue invoice reminder, state again your company’s payment terms and how much late fees will cost them if they don’t remit payment before a certain date.

3. Adjust Collection Letter Language Based on Days Past Due

As a certain number of days pass with no payments in sight, you’ll need to adjust your collection letter language and send additional letters of warning. Of course, you want to stay courteous in tone; however, your wording must show that your terms are firm, and payment is expected as soon as possible, or there will be consequences.

Less Than 15 Days Past Due

It’s a good idea to send a more direct letter to your customer after a couple of weeks. Repeat that money is owed and how to pay. Ask them to reply once they’ve received your message. It may even be necessary to call them on the phone, especially if this is your first time sending them an invoice.

30 to 60 Days Past Due

If a month to two months has passed with no payment, it’s time to send another professional letter. Include a copy of the overdue invoice that shows the original amount due plus late fees. Clearly state the new total amount due and that it needs to be sent as soon as possible.

Over 90 Days Past Due

Three months is a long time to let an invoice go unpaid. A final notice letter offers the customer one last chance to make a payment within a set number of business days. O therwise, it’s within your rights to take legal action against them to collect what is owed. This would also be the time to warn if the debt is going to a collection agency if it remains unpaid.

4. Enforce Late Penalties

"Begin as you mean to go on" is great advice when it comes to invoicing customers and collecting payments. Enforce late penalties from the first overdue invoice onward to set a precedent. Your customers will learn that you expect to be paid, and you expect them to pay you on time. Remember, it’s your legal right to collect what is due, so don’t be shy about it.

5. Offer a Payment Plan

Sometimes, a customer may be upfront with you and explain that they can’t pay an invoice all at once. Consider offering a reasonable payment plan that works for you and them. It’ll help them pay down the debt over a period and keep cash flowing into your accounts receivable.

6. Use Invoicing Software for Automated Reminders

One of the best features of invoicing software is its capability to send payment reminders automatically to customers. Once you’ve invoiced a customer, Skynova’s business software can send automated reminders so that you don’t have to. Customers stay better informed, you’ll be more organized, and overdue invoices will likely decrease.

7. Be Polite

One way to ensure professionalism in invoicing and debt collection is always to be polite. In the beginning, try polite phrases such as "your account now appears to be overdue." As time passes, you may feel more anxious. Keep your cool, and don’t make it personal between you and the customer. If they continue to refuse to respond or pay, it’s probably time to seek help.

Get Help

There are a few options available to you when an invoice is more than 90 days overdue. If you’re dealing with a large department, you can ask to speak to an account manager. If the amount due is quite large, it may be worth hiring a neutral business mediator to solve the dispute. You may be able to reach a settlement this way that is less than what you’re owed but is still some of it.

Lastly, you can take the person to court. Every U.S. state has small claims courts in which you can bypass hiring a lawyer if you’re owed less than your state’s maximum limit. You’ll still spend some money on court fees. If the amount you’re owed exceeds the court’s limit, you’ll have to go to a regular court with a lawyer, which can get very expensive. However, it may be worth it, depending on what you may be awarded in court.

How to Write a Past Due Invoice Letter

How you write a past due invoice letter depends on how overdue the payment is. For instance, if it’s the day after the invoice is due, you could write something like: "For your convenience, I’m sending a quick reminder about invoice #001 that was due yesterday." Remember to attach the invoice to which you refer and include any links to easy online payment options.

If you’re writing a second letter, remind the customer about previous discussions. You could say: "As you know, invoices are due 15 days after the invoice date." This reminds the client of your original discussion about payment terms.

Once invoices are over 60 days due, use strong but still professional language. Include words in the email subject line such as "action required," "important," or "payment due ASAP." Be very direct at the opening of your letter. For example, you could write: "We would like to inform you that your invoice is now 60 days overdue."

Use phrases like "urgent matter" and "immediate attention" to convey how serious the situation is. In closing, remind them that you’ll be calling them to follow up. This simple statement may jolt them into action.

Overdue Invoice Letter Templates

Having a template to follow makes writing an overdue invoice letter so much easier. It’s already formatted for you, so you know what to include and where to place it. Using an overdue invoice letter template helps you stay on topic while looking and sounding like the professional business owner you are.

Less Than 15 Days Past Due

30 to 60 Days Past Due

Over 90 Days Past Due

Overdue Invoice Email Template

You don’t need to recreate a completely new template to send your letter via email. Simply copy and paste the letter into the body of the email, change the wording about "enclosed" to "attached," and attach the invoice to the email. Be sure to include the invoice number, the amount due, the due date, and a call to action in the subject line.

Track and Manage Invoices With Skynova’s Invoicing Software

Skynova’s invoice software helps professionals track and manage invoices. Our online small business products help you to stay organized, get paid faster, and so much more. Simplify your life; check out Skynova’s business software and free templates today.