Learn how these free late invoice letter templates can help you manage accounts receivable, maintain cash flow and client relationships with ease.
Managing your business's finances is a juggling act, and one of the most challenging balls to keep in the air is accounts receivable. At some point, every SME owner faces the dilemma of unpaid invoices. Crafting an effective unpaid invoice letter can be a game-changer in these situations, ensuring that you maintain both your cash flow and your client relationships.
In this comprehensive guide, we'll walk you through the ins and outs of writing an unpaid invoice letter that gets results. We'll also provide you with templates to make the process even easier.
Before getting ahead of ourselves, let’s cover the basics.
How do you write an unpaid invoice letter? - 10 valuable tips
What makes an invoice letter “good” or “effective? Writing an unpaid invoice letter is a delicate task that requires a balance between firmness and courtesy. We've created a list of tips that will help you get your invoices paid and maintain a positive relationship with your clients.
- Start with a Gentle Reminder: For invoices that are only a day or two overdue, begin with a gentle reminder. Use phrases like "for your convenience" to make it less confrontational. This sets a friendly tone while reminding the client of their obligation.
- Timing is Everything: The timing of your follow-up can make a significant difference. If the client is usually late, follow up the day after the invoice is due. For new or punctual clients, give them a week before sending the first reminder. Also, consider sending reminders on weekends or during lunch hours when they're more likely to be seen.
- Be Comprehensive but Concise: Include all essential details like the invoice number, amount due, and payment terms. Make it as easy as possible for the client to make the payment by providing multiple payment options and links.
- Escalate the Language: Your language should reflect the urgency as the invoice becomes increasingly overdue. Use strong but professional terms like "urgent matter" or "immediate attention required" for invoices over 60 days due.
- Legal and Ethical Compliance: Always adhere to legal guidelines like the Fair Debt Collection Practices Act (FDCPA) and local laws regarding late fees. Make sure to discuss late fees upfront to avoid surprising your client later.
- Follow-Up Calls: Mention in your letter that you will follow up with a phone call. This adds another layer of urgency and shows that you are serious about the matter.
- Personalize Your Approach: Tailor your language and approach based on how overdue the invoice is. A friendly reminder works well for a slightly overdue invoice, while a more stern tone may be necessary as the invoice becomes significantly overdue.
- Leverage Psychology: Studies have shown that polite language like "please" and "thank you" can increase the likelihood of getting paid. Maintain this courtesy throughout your communication, regardless of how overdue the invoice is.
- Offer Payment Plans: If the client faces financial difficulties, offer a payment plan. This shows empathy and increases your chances of at least receiving partial payment.
- Provide an Incentive for Early Payment: Offer a small discount or a future service voucher for clients who clear their overdue payments within a specified period. This not only encourages prompt payment but also fosters goodwill.
Bonus Tip - The "Nudge Technique": Here's a tip that offers insane value. Use behavioral science techniques like the "Nudge Theory" to encourage payment. For example, mention that "9 out of 10 clients pay within 15 days" to create a social norm that encourages timely payment.
3 unpaid invoice letter templates that will get you paid
Let’s put all the tips to the test. These unpaid invoice letter templates have been crafted to help you collect more on your overdue accounts. They are pretty general, so we suggest you take the time to personalize them to align with your business imprint and customer’s specific situation.
Also, don’t stop yourself at unpaid invoice letter templates, check out our 10 optimized Debt Collection text messages samples you can use.
Template 1: Gentle Reminder (1-20 Days Past Due)
Subject: Paying on time gets you benefits! - Invoice #123 Due on [Date]
Dear [Client's Name],
I hope all is well. As a valued client, we appreciate your business. For your convenience, I'm sending a gentle reminder about Invoice #123, which was due on [Date]. The total amount due is [Amount].
Did you know that 95% of our clients who pay their invoices on time are eligible for exclusive promotions and early access to our new [Service/Product]? We'd love for you to take advantage of these perks as well.
Please find the invoice attached for your reference. You can make the payment via [Payment Options and Links].
If you have any questions or concerns, feel free to reach out. Thank you for your prompt attention to this matter.
Best regards,
[Your Name]
[Your Contact Information]
Template 2: Moderate Urgency (20-60 Days Past Due)
Subject: Immediate Attention Required: Invoice #123 Now 45 Days Overdue
Hello [Client's Name],
I hope all is well. As you know, Invoice #123 is now [Past due days] days overdue. The total amount due is [Amount], and we kindly request immediate payment.
Please be aware that we will follow up with a phone call to discuss this urgent matter further. You can make the payment via [Payment Options and Links].
Failure to settle this invoice may result in late fees, as per our initial agreement and local laws.
Thank you for your immediate attention to this matter.
Sincerely,
[Your Name]
[Your Contact Information]
Template 3: Final Notice (60+ Days Past Due)
Subject: Urgent: Invoice #123 is now [Past due days] Days Overdue
Dear [Client's Name],
I hope this message finds you well. Despite our previous communications, we have yet to receive payment for Invoice #123, which is now [Past due days] days overdue. The total amount due is [Amount].
If we do not receive payment within the next [Number of Days], we will have to consider other formal avenues for securing payment, which we would like to avoid for the sake of our ongoing relationship.
We understand that circumstances can arise, so, as a final option, we are open to discussing a payment plan or offering a small discount for immediate payment. Please contact us as soon as possible to resolve this matter.
Thank you for your immediate attention to this urgent issue.
Best regards,
[Your Name]
[Your Contact Information]
Each template can be modified to suit your specific needs and circumstances. Remember, the key to a successful unpaid invoice letter is to be clear, courteous, and firm while adhering to legal guidelines. Use these templates as a starting point to ensure you get paid what you're owed.
Wrapping Up
Navigating the complexities of accounts receivable is no small feat, especially when unpaid invoices start piling up. However, as we've explored in this guide, a well-crafted unpaid invoice letter can be your secret weapon in resolving these financial hiccups. Not only can it help you secure the payments owed, but it can also preserve the valuable relationships you've built with your clients.
Unpaid Invoices Letter FAQs
How do you politely remind an unpaid invoice?
To politely remind a client of an unpaid invoice, send a friendly email or letter that includes the invoice number, due date, and total amount owed. Use courteous language like "for your convenience" and "thank you for your business." Attach the invoice and provide easy payment options. A follow-up phone call can also be mentioned for added urgency.
How do you ask someone to pay their invoice professionally?
To ask someone to pay their invoice professionally, use a clear and direct subject line and send the reminder at an appropriate time, such as a few days before the due date. Maintain a formal tone, provide all essential invoice details, and include step-by-step payment instructions.
Ensure your request is legally compliant and mention a follow-up action if the payment still needs to be received by a specific date. Include your contact information for any queries and end with a professional signature. Always proofread before sending to maintain a polished, professional image.
How do I get a client to pay an overdue invoice?
To get a client to pay an overdue invoice, you need four main things:
- A solid Credit and collections policy.
- Set up payment reminders and start before it’s overdue.
- Craft compelling copy.
- Make payments as easy as possible.
Dive deeper into these four pillars of collections in our guide.
How do I follow up an overdue payment?
The best you can do is to set up automated reminders. As your business grows, overdue accounts will follow, so setting up a killer automated Email + SMS campaign will let you collect payments on autopilot while you focus on the more complex accounts and keep growing your revenue.