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Keeping track of customer invoices is an integral part of a collector’s job.
But, despite their best efforts, a lot of times collectors are unable to collect payments before the due date.
Most business owners claim that their cash flow issues are caused by late payments from their customers. So, to maintain a good business relationship, sending a dunning email or getting in touch via a call is a good strategy for meeting the business’ financial needs.
This guide contains sample payment reminder letters and best practices that will help you in customer dunning. There are also steps that you can follow to design your past-due invoice email.
Past-due invoice emails are sent to clients when they don’t pay their invoices on time. The invoice contains information about how much they owe, what the due date was, and how they can proceed with the payment.
It’s important to remain positive when dealing with past-due payments, even if it takes some extra effort. You cannot pay your bills unless your client does, and late payments can ruin your cash flow and in turn hamper business operations and growth.
To avoid ruining customer relationships, businesses must tread carefully when managing unpaid and past-due invoices. Companies not only have to ensure they are paid on time but also see to it that customers do not feel badgered when they are sent dunning emails.
Here, we’ll talk briefly about some of the effective approaches to collecting past-due invoices.
You can send gentle payment reminders when invoices become overdue. It works well when customers forget to pay their invoices, which is quite often the case.
Consider calling the client if they do not respond to your payment reminders and provide a solution to their payment issues.
Offer a longer deadline or allow customers to pay in installments if necessary.
A penalty can be imposed if a customer delays payment beyond the due date. It can incentivize customers to pay on time.
Regardless of whether it is an individual, a business, or both, legal action for non-payment of invoices can be issued with a formal demand letter to the non-paying client.
To effectively compose a past-due invoice email and decrease bad debts, consider the following steps:
Create a subject line that references the invoice. This grabs the attention of the client and instantly reminds them that a payment is due. Mention the company name and add the invoice number of the order to give the email some context.
Here are a few examples of subject lines for emails with past-due invoices:
Provide the client with the invoice due date and the amount owed. Be sure that you have the correct amount in the client’s account and all past communications. Make these details stand out by using formatting such as bolding and spacing.
Provide a call to action and explain how the client can make the payment. Include an online payment link so that they can enter their bank or card details. You can also include the address of the place where a check or money order can be sent.
The main aim is to provide an easy way for the client to pay immediately so that another reminder won’t need to be sent.
If the client ignores communications or the payment is several months late, then some necessary steps are required to be taken.
Explain the late fee policy and the consequences for non-payment. Providing information about the consequences of non-payment may encourage them to clear their dues.
A few examples of these consequences are:
There are some important aspects you need to be aware of when writing follow-up emails to clients, like
If the payment has not been received by the due date, first check to see if the bill was received by the customer. Send a kind email reminder, indicating that perhaps the invoice was overlooked.
Here is a list of past-due invoice email templates that you can simply copy, paste, edit, and send to your customers.
If you don’t receive payment by the due date, check with them to see if they have even received the bill. Invoices that are just a few days late can be reinforced with a kind and friendly reminder.
That may be sufficient to remind them to make the payment.
Subject line: [Your Company Name]: Invoice #XXXXX for [Product/Service] is 15 days past due
Hi [Customer’s Name],
I hope this email finds you well.
This email is to notify you that payment on invoice #XXXXX for the amount of [invoice amount], which was sent on [sent date], is now 15 days past due.
I’ve attached the invoice [reference number] for your convenience. You can submit payment by [explanation of payment method].
I would appreciate it if you confirmed payment to make sure you received the invoice. Please let me know if you have any queries.
[Your Company Name]
You might begin to feel concerned when your payment is a month overdue. After your initial reminder, if you haven’t heard back from the customer, it’s a good idea to call them politely again to confirm receipt of the invoice and ask if they have any questions.
In most cases, it could be that your invoice has been overlooked or it must have been lost. So, do not hesitate to ask about it.
If you’ve already spoken with the client, reissue the invoice with any new charges. You can also begin assessing late payment fees—but this is important—only if they’ve signed an agreement regarding it because the unexpected charging of a late fee could annoy customers.
Subject line: [Your Company Name]: Invoice #XXXXX for [Product/Service] is 30 days past due – Payment is required
I have contacted you before requesting a past-due invoice payment for Invoice [Number], but I haven’t heard anything from you.
I was curious whether you had any issues processing the payment since the due date for the invoice payment has passed.
According to our records, the following invoice [Invoice Number] is overdue with [Due Date Amount]. Your account is now past due, and a late fee of [amount] has been applied. For your convenience, you may make a payment here: [payment options]
If you have any questions or need to discuss your account, please reach out to me at [Contact Number].
[Your Company Name]
Not receiving the payment even after the invoice due date is past 60 days can lead to strained relations with the customer. The chance that an account will be paid decreases noticeably when it is 60 days or more past due. You should now send a stronger email and make follow-up phone calls.
The email to be sent now should be:
Subject line: [Your Company Name]: Invoice #XXXXX for [Product/Service] is 60 days past-due: Need Urgent Payment!!
Hi [Customer’s Name],
This email serves as a reminder that your invoice is now 60 days past due, and I need your prompt attention.
According to our records, the [invoice amount] amount due on [due date] for invoice #XXXXX has not yet been received.
A late fee of [amount] has been imposed as your invoice is now past due.
The unpaid invoice has a [number of days] past due balance of [invoice amount plus late fees, if applicable]. A copy of the invoice is attached. You may make a payment here: [link to online payment or other payment methods].
Please let me know the status of your payment.
Please ignore this notice if your payment has already been sent. Contact me at [contact number] if you have any queries, or doubts, or would like to talk about your alternatives for a payment schedule.
I’d appreciate it if you could get back to me as soon as you can so we can resolve this.
[Your Company Name]
In this situation, you are now on the verge of contacting a collection agency, and there are real concerns that you will not be paid.
Try delivering a final notice that clearly states your approach to dealing with past-due payments. There are currently actual consequences and possible legal repercussions.
The email should be:
Subject line: [Your Business Name]: Invoice #XXXXX for [Product/Service] is 60 days PAST DUE – Please send payment right away.
Hi [Customer’s Name],
Please pay close attention to this important message. There have been several occasions when I have contacted you regarding a payment that has been overdue for 90 days.
Under my payment terms, you may be subject to additional [late fees or interest] if your payment is received more than [number of days] after the due date.
If your payment is still not received by [final date], we reserve the right to refer this account to a collection agency. This can be avoided by submitting your payment as soon as possible.
Again, if you have any questions or concerns about this payment, please contact me at [contact number]. I hope we can settle this matter as soon as possible.
[Your Company Name]
Late payments can be extremely annoying and hamper the growth of your business. However, there are instances when people are simply too busy to recall money matters.
Always be transparent and clear about what your business delivers and the payback time frames you’re willing to tolerate when composing a late payment email.
Especially when providing particular financial information, double-check that you are emailing the right client and email address.
Including the key information about a past due invoice can help your client complete the transaction quickly. It includes the:
It’s a best practice to attach a copy of the original invoice to each email sent when a payment is overdue. As a result, the client will find it simple to check any details and validate the information in your message.
When your client’s invoice is just a few days past due, start contacting them.
Being proactive will help you ensure that no one forgets to pay their invoice.
When customers don’t pay, it’s simple to become upset and perhaps send a harsh email as a result.
Your emails should be straightforward, include specific information about the problem, and call for quick action. For example, you can ask a client to pay an invoice as soon as possible and provide you with a payment confirmation.
It won’t be effective to send an email reminder for an invoice anytime you remember to. The best approach is to use an email flow with numerous contact points and follow-ups. One activity per week is an excellent way to start.
It is possible that the person you are in contact with at your client’s company is unavailable, no longer employed there, or is just too busy.
You can try calling the front desk to ensure that your emails are delivered and ask to speak with the appropriate person.
It might sometimes be enough to quickly resolve a dispute by only mentioning “legal action.” Before taking things further, you might consult with your legal counsel or issue a formal letter as a final warning (like a collection agency).
HighRadius’ Collections Software Solution automates and optimizes credit and collections management to improve collector efficiency, minimize bad debt write-offs, improve customer relationships, and reduce DSO.
It provides a complete set of solutions to streamline and automate the management of credit collections, enabling improved prioritization of credit collection tasks.
Maintain a casual tone in your dunning email and include a copy of the original invoice. If in the next 24 hours you don’t receive a response, give the client a call to find out why payment is late. After two weeks of no response, issue a second reminder email, with more urgent and straightforward language.
If an invoice’s balance is unpaid but its due date hasn’t yet passed, it is considered an outstanding invoice. However, the invoice would be considered past due if it is not paid by the last day for payment specified in the payment terms.
Most of the time, you may resolve the issue without going to legal action by using alternative methods like a reminder email, payment schedule, mediation, etc.
But if that doesn’t work, it is okay to take legal action to solve the matter.
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HighRadius Integrated Receivables Software Platform is the world’s only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Integrated Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway – covering the entire gamut of credit-to-cash.