Email Invoice

What to Do When My Invoice Payment is Late

2 out of every 3 small businesses in United States struggle because of customers that can't or don't want to pay.

The magic of follow-up emails

It’s often estimated that 20% of all invoices around the globe will be paid late.

It’s a huge problem, but you keep running your business as usual. After all, who wants to deal with it? Chasing and reminding your customers to pay is time consuming and you don't want to put your relationships with your customers at stake.

So what's the key to overcome this awkward and frustrating situation?

In the past couple of years we’ve worked with over 2400 companies facing the exact same problem. What we’ve learned in helping them is that the most effective way to reduce the risk of late payments is to constantly follow-up. Yes, follow-up, follow-up, follow-up!

We’ve noticed that people who follow-up on their unpaid invoices at regular intervals were able to reduce the rate of late payments by up to 47%.

That means this is something you can take control of and we’re going to show you how.

Remind them before it’s late

Sending a payment reminder email before the invoice is due is the most significant factor when it comes to increasing the likelihood of on time payment.

When it comes to collections communication, time is of the essence. The more time passes that past invoices are past due, the likelihood of a successful collection decreases.

On-time Payment Graph

An invoice that is 90 days past has a 73% chance of successful collection, while an invoice that is 6 months past due has a 44% chance of successful collection, and an invoice that goes unpaid for over a year only has a 25.3% chance of successful collection.

Reminder schedule which tend to yield the highest success rates

Reminder Timeline
  1. A payment reminder email 7 days before due date.
  2. Another follow up the very day the invoice is due.
  3. An additional payment reminder for each past due chunk (7 days, 30 days, 60 days, 90 days).
  4. A final email/letter on demand (120 days after due date).
  5. Hand over to collection agency.

In most cases, the first 3 reminders should do the job.

Two key things that make a reminder email effective are the language and the timing. And when I say language, I don’t mean just the words verbatim, but the actual psychology of the message. Here’re few guidelines to have in mind when crafting these delicate letters:

  • Set a personal, warm tone. Be polite, empathetic, and understanding.
  • Include key details about the invoice (number, amount due, days due).
  • Attach the invoice or include a direct link to it.
  • Mention your payment options (if possible provide them an option to pay online).
  • Keep it short, to the point.
  • Handle each past due invoice separately.
  • Use the version of your business’ name that is most familiar to the company.
  • Include details about any previous correspondence.
  • Gradually increase the tone in each subsequent reminder.
  • CC the message to the company’s key people (after the 5th email)
  • Don’t use UPPER CASE or CamelCase in the subject line (you don’t want your email to look like an ad or a newsletter).
  • HIT them at the RIGHT TIME.
TIPS
The first couple reminders should be human, non-intrusive and friendly. They are intended to remind customers of what they might have missed and keep them informed without leaving any bad taste. They work well when sent closely to the invoice due date (few days before/after).

Later reminders should build-up to more formal and serious tone. If you get in a situation where the customer is ignoring you after the 5th email, you should consider trying to reach them by phone (if you haven’t done this already). At this point, you may need to involve the company’s leadership.

In addition, we will show you a real sequence of follow-up templates that has proven to be incredibly effective.

Every template includes the actual email (the subject line too), the psychology of each template and the best possible timing for sending. Feel free to customize and use it for your own follow-ups.

REMINDER 1 – Friendly/Personal
7 days before due date
Subject: Follow-up on Invoice {doc_number}
Hi {client_name},

Hope everything is going well.

Just wanted to get in touch with you to see if you have any questions on the Invoice {doc_number} we sent on {issue_date}.

I am sure you’re busy with work, but would much appreciate if you could take a moment to look at the invoice when you get a chance and let us know if you have any questions (here’s the invoice - https://invoicebus.com/demoinvoice/).

Thanks a lot!
{your_name}
STORY
This is the first reminder and should be subtle, friendly and informative. This way your customer will know that you are tracking your receivables and are on top of your accounts. This will also give your customer the impression that you are organized, disciplined and are closely monitoring your receivables.

  • Keep the email as short as possible (3 sentences max).
  • Keep it low commitment (include the invoice or direct link to it).
  • Pay attention to the formatting (new lines, blank spaces).
REMINDER 2 – Friendly/Personal
Very day the invoice is due
Subject: Invoice {doc_number} is due today
Hi {client_name},

Just wanted to touch base about the Invoice {doc_number}, emailed on {issue_date} to let you know that is due today ({amount_due}).

You can preview and pay it directly by Credit Card or PayPal here - https://invoicebus.com/demoinvoice/

If you have any questions, please let me know and I would be happy to respond.

Thanks,
{your_name}
STORY
This is one of the most significant emails in the sequence and should be sent the very day the invoice is due (or one day before). It is intended to evoke the sense of urgency and call to immediate action.

  • Pay attention to the subject line (trigger word - “today”).
  • Keep it short, friendly, and to the point.
  • If possible, include an online link where the customer can instantly pay (Invoicebus generates this link automatically and helps you easily include it in your email).
  • Note the copy where it says – “pay it directly by Credit Card or PayPal” (clear, blunt call-to-action).
  • We’ve also noticed good results when the reminder was sent one day before due date (trigger words - tomorrow, 24 hours).
REMINDER 3 – Friendly/Personal
7 days after due date
Subject: Invoice {doc_number} overdue by 7 days
Hello {client_name},

According to my records, I have not received payment of {amount_due} for Invoice {doc_number} which is overdue by 7 days now. I believe you might overlook this due to some burden of work.

Would be grateful if you could check this out on your end.

If the payment has already been sent, please accept my apologies and disregard this notice.

Thanks,
{your_name}

Ps. In case you need to glance over the invoice here it is – https://invoicebus.com/demoinvoice/
STORY
This is the first reminder (after the 2 early follow-ups) which indicates past due payment. It still maintains calm, empathetic and polite tone. You take into account that accidents happen. Maybe delay occurred in transaction processing or the original email got lost (ahem)?

  • Make sure to include the document number + the number of overdue days in the subject line.
  • Include key details in the message: client name, amount due, document number, days due, your name, and the actual invoice (in the Ps).
REMINDER 4 – Medium/Personal
30 days after due date
Subject: 4-th reminder on Invoice {doc_number} - overdue by 30 days
Hi {client_name},

I wrote to you couple of times recently reminding you of the outstanding amount of {amount_due} for Invoice {doc_number}, but it appears to remain unpaid even after 30 days.

If you have any queries regarding its payment or if I can help you in any way feel free to let me know. If not, please organize for settlement of this account immediately.

Regards,
{your_name}

Ps. Could you please reply to me via email or call me directly at 800-928-1234 by the end of the day and let me know you received this?
STORY
This email uses clear, more direct tone. The model is colder but still calls to action. The subject line contains 2 psychological triggers: “4-th reminder” and “overdue by 30 days”.

  • Recall on previous reminders.
  • Clearly ask for payment.
  • Ask them to reply or call (make sure to put this in the Ps section - it’s the most read part of an email). This will show if the customer actually reads your emails or not. If you don’t get a reply, you’ll know that you should call them by phone.
REMINDER 5 – Harsh/Very Personal
60 days after due date
Subject: Invoice not yet paid - really disappointed
Hi {client_name},

A quick note to say that I am really disappointed that you have still not paid me the {amount_due} that I'm owed for the work I did for you. In the grand scheme of things, it's not a lot of money, but actually I think that this is more a matter of respect.

I have always been there at the drop of a hat to sort out any problems you might have. I love working with you and have always taken our relationship as more than just client/supplier. But if I can't rely on you paying promptly or it takes several attempts and reminders to get my money, that's not good business.

I'm not saying that I don't want to work with you, I do. But if I don't receive what I am owed within the next couple of days, I will have to think twice about helping you in the future.

Kind regards,
{your_name}
STORY
This letter has been originally written by Andrew Clarke and here’s the story in his own words:

This proved to be the most effective debt collecting email I have ever written. Every client settled their account within two days, while two telephoned to apologize within minutes of receiving my email. I chose to abandon a stiff business approach and instead write one email, carefully worded to express how I personally felt. After all, business may be business, but people work with people. This exercise taught me that even the trickiest situations can be handled better and resolved faster by plain, honest speaking.
REMINDER 6 – Harsh/Formal
90 days after due date
Subject: Important letter on seriously past due account
Dear {client_name},

This is an important letter and requires your immediate attention.

Despite sending you several reminders, we have received no response from you about your seriously past due account.

We feel we have given you ample time and have been more than patient with you. Therefore, we feel there is no recourse but to write this debt off of our books by reporting it as a “bad-debt loss” to the I.R.S. through a 1099-A filing.

You can avoid this by sending us a payment today for the full amount due. If we do not receive your payment within the next five days, we are going to have to take action.

You have a total outstanding balance of {amount_due} with the following invoice overdue:

Invoice {doc_number}
Issue date: {issue_date}
Due date: {due_date}
Total: {total_price}

We regret having to take this action, but we feel we have been more than patient with you. We sincerely hope you will give this your serious consideration.

Sincerely,
{your_name}
STORY
This letter is written by the receivables management company Funding Gates and should be used in the later stages of the collection communication process (when nothing else works). It utilizes formal, serious tone, and sends explicit warning about the measures that will be taken if the invoice is not paid soon.

  • Include company’s key people in the email (founders, CEO)
  • Include details about the invoice
  • Enclose all previous communication emails
  • Make simultaneous phone call, alerting them on the email
REMINDER 7 – Ultimate/Formal
120 days after due date
Subject: Final notice on demand
Dear {client_name},

This is an important letter and requires your immediate attention. Despite sending you several reminders, we have received no response from you about your seriously past due account. We feel we have given you ample time and have been more than patient with you. Therefore:

  1. We feel there is no recourse but to put your account in the hands of our collection agency.
  2. This action will affect your company’s credit rating.
  3. We may also report this to the I.R.S. as “bad debt loss” with form 1099-A if payment is not received.

You can avoid this by sending us a payment today for the full amount due. If we do not receive your payment within the next five days, we will consider the matter out of our hands.

You have a total outstanding balance of {amount_due} with the following invoice overdue:
Invoice {doc_number}
Issue date: {issue_date}
Due date: {due_date}
Total: {total_price}

We regret having to take this action, but we feel we have been more than patient with you. We sincerely hope you will give this your serious consideration.

Sincerely,
{your_name}
STORY
This is the final letter on demand and is similar to the previous email. Here you point 2 more consequences and address the letter to the CEO of the company. If you don’t receive payment after this, probably it’s beyond your reach and you should hand over the case to a collection agency.

Put your reminders on autopilot

The whole point of the reminders is to secure stable cash flow, the lifeblood of your business. But if you have to deal with this on a regular basis you can easily get overwhelmed by all those emails. Just imagine if you have to check daily on your customers, how much they owe you, who is approaching due date and who is past due.

That's the moment when an online invoicing tool like Invoicebus can come really handy. Invoicebus helps you schedule a smart sequence of reminders, which then are automatically sent at the right time. This can save you a ridiculous amount of time, and more important, significantly reduce the risk of late payments.

TIP
Whenever you set a reminder sequence, make sure to include yourself in the recipient list. This way you’ll get a copy of the email at the exact same time your customer gets the email. And this is a perfect moment to make a simultaneous phone call and stay on top of the things.

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