Juno helps your business get paid on time

How to handle overdue payments (+ email templates)

by Raquel
| June 17, 2021
Reading time: 5 minutes
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As a business owner or freelancer, late payments are one of the toughest challenges you can face. Overdue payments can adversely affect your cash flow and strain business relationships with your clients.

So what can you do when an invoice you sent is overdue?

We have put together a guide and templates to help you create a robust accounts receivable workflow. Having a step-by-step process will not only help you treat all your late-paying clients equally, but will also help with removing awkwardness and guide you through what you need to do to get paid.

Remember you can adjust the suggested timelines and chasing frequency to your line of business.

First payment reminder email: Before the invoice is due

The best thing you can do to solve late payments is to do everything in your power to avoid them altogether. This means giving your clients a heads up and clear information they can use to pay promptly.

Send a friendly email reminder a week before the payment is due. The goal with this first is to be friendly and informative and to show them that you are on top of payment collections. By asking your client if they have any concerns, you may be able to gauge whether they are likely to have issues paying the invoice on time. 

Subject: [REMINDER] Invoice # is due soon

Hi [Client],

I hope you’re well. I wanted to reach out to remind you that your most recent invoice which we sent on [when you sent it] is due next week, on [due date]. You can find a copy attached to this email.

Let me know if you have any questions or concerns about making this payment on time.

Thank you!

[Your name]

Second payment reminder email: On the day the invoice is due

To maximise the chances of getting paid on the day the invoice is due, it’s good practice to send a gentle reminder. The goal of this email is to provide your client with the tools and information they need to make the payment before it becomes overdue.

Subject: [ACTION REQUIRED] Invoice # is due today

Hi [Client],

This is a reminder that invoice [invoice number] which we sent on [when you sent it] is due today. You can pay via [payment method] as specified on the attached invoice.

Please email back if you have any questions or issues I can help you with.

Thank you!

[Your name]

Third payment reminder email: 7 days overdue

So, it happened. Despite your best efforts to get paid on time, you’ve ended up with an overdue payment. This is the first time you are addressing that the invoice is overdue, so your tone needs to be a bit firmer than in the past emails.

Subject: [ACTION REQUIRED] Invoice # is [amount of days] days overdue

Hi [Client],

I noticed that we haven’t received payment of £[invoice amount] for invoice [invoice number], which was due on [due date]. I would appreciate it if you could check this out on your end. Remember that if we don’t receive payment within the next [X] working days, we will [INSERT PUNISHMENT – e.g. halt services, charge interest, etc].

I’m attaching the invoice again just in case. If you have sent payment, please let me know so that I can check our records again.

Thank you,

[Your name]

First payment reminder call: 2 weeks overdue

If you don’t get a response to the first email within a couple of days, you should consider calling your client. The goal of this call is to offer your help in speeding up the process. Remember: there is an off chance that your emails landed on your client’s spam folder and this is the first time they are getting an overdue payment reminder from you.

Start it with the following script:

Hi [Client],

This is [your name] from [company]. I’m calling regarding our outstanding payment of £[invoice amount] for our last invoice which was due on [due date].

We haven’t had any replies to our previous emails, so I wanted to check the status of the payment with you directly.

Fourth payment reminder email: 20 days overdue

Up until now, your chasing emails and calls have been passive, but now it’s time to switch your efforts up to ensure getting paid. The goal of this email is to add a sense of urgency, highlighting the repercussions of late payments. This is when you should add your late fees and terms if you have any.

Subject: [ACTION REQUIRED] Invoice # is two weeks overdue

Hi [Client],

This is our third attempt to collect a payment of £[invoice amount] for invoice [invoice number], which was due on [due date]. This payment is now [number of days overdue] days overdue.

I urge you to make the payment as soon as possible. I would hate to have to escalate the matter further. I would also like to remind you of our late payment fees and terms, which are as follow:

[Insert your late payment terms and fees. Remember to highlight any collection agencies and CCJ against the company and when these might occur]

Please find the invoice attached once more.

I look forward to your prompt reply,

[Your name]

Final payment reminder email: 30-60 overdue

After 30 days have passed, you may want to consider sending a new invoice, including any late fees and statutory interest charged at 8% over the Bank of England rate. At this point, it’s also a good idea to consider offering payment options to your client, in case they are going through a tough time.

Subject: [URGENT] Invoice # is 30+ days overdue

Hi [Client],

It has now been over 30 days since invoice [invoice number] was due on [due date].

Unfortunately, this leaves us no choice but to issue you with a new invoice including late fees and statutory interest for late payment (attached).

Please reply to this email or call us if you have any questions or would like to discuss how we can make it easier for you to pay.

Looking forward to your reply,

[Your name]

Once you get paid

Whether you got paid on time or not, it’s always good practice to send a thank you email when your client pays you. This encourages positive behaviour and nurtures your business relationships.

Subject: Thank you: Invoice # 

Hi [Client],

I just wanted to drop you a quick email to let you know that we have received your recent payment for invoice [invoice number]. We really appreciate it.

Thank you!

[Your name]

What if your client doesn’t pay?

You can keep chasing, but the more time goes by, the less likely you are to get paid. 

In the UK, invoices 90 days past due are only paid in full 50% of the time. At this point, you may want to enlist a collections agency.

Once 180 days have passed, it’s best to write off the debt.

Make it easier for your customers to pay your invoices with smart payment requests.

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