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Writing a letter for past due invoices is a necessary evil but often also an unwelcome and time-consuming task. Your business has provided products or services with the understanding that clients would pay for them. 

And yet, we still end up asking those ever-dreaded questions: ‘Where’s the money, Lebowski?’  

Statistics vary for how many people pay late and how late their payments are. The truth is, paying late is common – way more common than paying in advance, at any rate.

How you handle communication makes the difference in getting paid or being ghosted by your clients. Use a friendly and courteous tone to make communication and collection easier for both parties. At the same time, this helps build strong business/client relationships.

What is a Past Due Invoice Letter?

A past due invoice letter is sent to clients when they are late paying an invoice. The letter should be courteous, formal, and state:

• The invoice number
• Description of the goods sold
• Amount of the outstanding invoice
• Payment deadline
• Any potential late fees or penalties

It should also show your desire to engage with the client to agree on how to proceed with payments.

Why Send a Letter for Past Due Invoices?

Unpaid invoices impact your business. You may find yourself in a situation where you cannot pay your bills or meet your financial obligations.

People don’t pay invoices on time for many reasons, including forgetting about or losing the invoice. An overdue invoice letter is a simple way to remind your clients of their commitments to you for the products or services you provided. Sending a past due invoice letter is a polite way to collect payments while maintaining good client relations. 

If handled well, these polite reminders can also build positive engagement with your clients by keeping the lines of communication open and avoiding unnecessary conflict.

The Difference That Tone Makes

People who buy your products or services have a legal and ethical obligation to pay you for those products/services. That is how business works. Trying to collect past due payments is frustrating for the business owner and the client. 

There are many reasons why clients don’t pay on time, and most of them are legitimate and explainable. You have no control over why your clients are late, but you do have control over how you treat them during the collection process.

According to Zippia.com, 78% of customers are unwilling to complete payments because of a negative customer service experience. 91% of customers say they are unhappy in these instances and wouldn’t willingly re-engage with a company that left them dissatisfied.

That negative experience could be from how the business owner handled past due invoices.

Setting a polite tone from the beginning is key to collecting payments and maintaining good customer relations.

Avoid things like:

• “Demand” or “insist” on payment
• Using threatening language
• Making personal attacks
• Using legal jargon
• Threaten to take legal action or give an ultimatum

Instead, use phrases such as:

• “We appreciate your business and look forward to resolving this matter.”
• “We are always happy to work with our customers to make payment arrangements.”
• “We understand that unexpected expenses can arise, and we are willing to work with you to find a solution that works for both of us.”
• “We value our relationship with you and want to do everything we can to keep it that way.”

Throughout the process, show as much empathy as possible. 

How to Write a Friendly Overdue Invoice Letter

Follow Up at the Right Time

The first follow-up should occur shortly after the invoice’s due date. A good rule of thumb is to send the letter out the day after the invoice is due. This sets the tone that you intend to collect payment and serves as a friendly reminder.

When crafting your first reminder, clearly state upfront all policies about payments, due dates, and consequences for late payments. Customers don’t like surprises (or extra zeros) on their bills.

You should space out subsequent follow-ups to allow time for the client to process the payment on their end. Typically, this is on a 30-day cycle. Anything more frequent can feel like you are applying undue pressure. Anything less frequent suggests that payment is merely a ‘friendly suggestion’ and not your priority.

Include a Polite Opening

Nothing gets people’s backs up faster than receiving a letter requesting payment for past due invoices, so it’s important to break the ice as soon as possible. Sending an impersonal form letter with a “business as usual” tone may not be deleterious, but personalizing it conveys the importance of your request while still being pleasant.

Start with the opening salutation. “Dear [person’s name]” is good and still considered acceptable. Using titles shows enough formality to remind the recipient you take the situation seriously and you respect their position.

If the business/client relationship allows, using “Hello” or even “Hi” may be more appropriate.

For the first reminder, take the time to express your satisfaction in serving them and inquiring how they are enjoying the product or service you provided.

Include All Invoice and Payment Details

Your past due invoice letter should contain:

• All details from the invoice itself
• The original due date and the expected next due date
• Any fees that have or will be assessed
• Dates for all prior communication attempts
• A call to action that the client needs to take

The above information serves as a friendly reminder early on in the collection process in case the client has forgotten the payment or lost the invoice. 

Being clear about what is expected removes ambiguity from the communication. 

Explain Payment Options

Make it easy for the client to take action and make their payment. This is where utilizing different response methods (email, telephone, in-person, etc.) for the person to contact you is extremely important.

If you offer online payment through your site or a payment provider, leave a few figurative breadcrumbs by including the web address and not just a name, ensuring your client goes to the right place.

Let them know if they can make payments over the phone. Not everyone trusts online payment systems and may prefer to talk to someone at your business. 

Finally, include your mailing address so they can send checks or money orders.

Specify Next Steps

Specifying the next steps may not be necessary for the first communication. 

When it is necessary, describe your late fee policy and the consequences for non-payment. Be clear and upfront about what will happen. If that includes involving a collection agency or litigation, make that clear.

It is important to remember the business/client relationship here. Escalating too soon may result in bill payment but also the loss of the customer (and a scathing online review to boot) in the process. This isn’t to say that you shouldn’t define all of the possible steps that could be taken. However, emphasis should be on the next step that will be taken.

Another good rule of thumb is to assume the customer wants to pay their bill (innocent until proven guilty) until they show they don’t intend to do so.

Tips for Writing a Past Due Invoice Letter

Use Late Penalties

Unpaid invoices impact your business in time and effort to follow up with clients on past due invoices. Late penalties allow companies to recover some of the costs associated with unpaid invoices. 

Late penalties can incentivize clients to pay their bills while maintaining and building good customer relations. Create a ‘Plan B’ by stating your late fee policy in the letter, even if the client won’t incur fees until later. 

Typical late penalties are between 1.0-1.5% monthly on the outstanding balance. This is considered sufficient to encourage on-time payments without placing an additional burden on the client. 

Offer a Payment Plan

As the author Dan Miller once said, ‘A little bit of something is better than a whole lot of nothing.’ Getting the bill paid in installments is better than not getting it paid at all.

A payment plan gives the client a reasonable means to fulfill their agreement with you because: 

• The client spaces out their payments over a fixed period. 
• Your business receives payments towards a debt it is owed.

You can opt to include a processing fee that is lower than accruing interest. Communicate clearly what those costs are to the client.

Be Brief

Most people skim through content, looking for what is relevant. Effective collection letters are brief, scannable, and to the point. 

Include the invoice number at the top of the page. This makes it clear what the message is about.

Include pertinent details from the invoice, such as the balance due, service date, due date, and a brief description of products or services invoiced.

Use templates that include only the relevant information.

Include the complete invoice as an attachment. The client can reference it from the letter without needing to find it.

Automate Printing and Mailing

Manually printing and mailing invoices is a time-consuming and error-prone process. That’s where using automated software or systems like Click2Mail can be beneficial for expediting printing and mailing overdue invoices for faster payment collections. 

Automated systems can help companies by:

• Creating templates that contain all relevant information.
• Importing your customer address data.
• Personalizing mailings with customer-specific information.
• Ensuring communications go out on schedule.
• Tracking results, including previous communications.

Click2Mail collaborates closely with the US Postal Service and UPS. You can easily convert your invoice letters to print using our innovative s software-as-a-service tools like MailJack+, Email-to-Mail, or Mailing Online Pro. You can also explore low code / no code automations using Click2Mail’s Zapier integration or fully integrate via our powerful REST or Batch APIs. 

Past Due Invoice Templates

Regardless of the tone of the rest of the communication, always include:

This demonstrates a high degree of professionalism and adds credibility to the request.

Below are examples of past due invoice templates, in order of each logical step your company may take in the payment collection process. 

Recent Due Date

Dear [Client name],

Good afternoon! I hope you’re well and satisfied with [products or services]. This is a friendly reminder that your payment of [amount] was due on [due date]. I’ve attached your invoice [reference number] for your convenience.

As previously discussed, our payment terms are [number of days] days from the issue date. We understand that mishaps occur and trust that you will rectify the situation as soon as possible.

Please note that late payments are charged [percentage rate]% per month overdue.

You can submit payment by [explain payment method]. 

Whenever you have a free moment, I’d appreciate a response to confirm that you received the invoice. If you have any questions, I’m happy to help.

Thanks!

[Your name]

[Contact Information]

Late Overdue Payment

Dear [Client Name],

I am writing to let you know that your account is now [number of days] days past due. The amount of $[balance owed] was due on [insert date]. 

We sent you a past due notice on [insert date] and have yet to receive a reply. 

This matter requires your urgent attention. Please send payment as soon as possible.

As outlined in our contract, payment terms are [number of days] days from the date of issue. Your account now soon start incurring additional late fees of [percentage rate x amount]%. If we don’t hear from you by [specific date], this will be applied. 

We have included a copy of your revised invoice for your records.

Please contact me about when we can expect the payment. You can make payment via check to the address listed below or through our website at [business website or payment collection site].

Do let us know if you have any questions or concerns. We value our relationship with you and want to do everything possible to keep it that way.

Sincerely,

[Your Name]

[Contact Information]

Final Notice

Dear [Client name],

This is an urgent message regarding your account with [your company name]. Invoice [reference number], which was due on [due date], is now [number of days] overdue and requires immediate payment. The current amount due is [amount].

We’ve attempted to contact you [specify contact dates] about arranging payment. But we haven’t received confirmation that you received our letters or tried to make payment. 

Please be aware that late fees of [percentage rate]% may occur for every additional [time period] of late payment. If we do not receive full payment by [date], we reserve the right to refer this account for resolution by a collections agent. 

Please contact me immediately to keep your account in good standing.

Sincerely,

[Your name]

[Contact Information]

Conclusion

Two facts about business life are: a significant number of people pay their invoices late, and you will need to communicate with them through email, letters, and follow-up calls to get those invoices paid. 

In many situations, the reasons why invoices are late are beyond the control of your clients and do not reflect a lack of desire to pay the invoice. Always start by assuming the best, and not the worst. 

Sending a well-crafted, friendly, and courteous overdue invoice payment reminder after the due date and following up regularly until the issue is resolved will benefit you and your client. Your goal should always be to remain courteous, respectful, and maintain a good relationship with the customer.  

Click2Mail gets your messages across politely and swiftly, with our Easy Letter Sender and Priority Mail Plus services. Now, you can avoid that awkward Friar John moment in Romeo and Juliet and ensure your letter for past due invoices ends up in the right hands.