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Key Takeaways
- A past due invoice is an unpaid bill for goods or services that remains outstanding beyond its due date.
- When dealing with past due invoices, following best practices for writing these emails and using effective email templates can help.
- A well-crafted past due invoice email should contain the invoice number, due date, payment amount, and clear payment instructions.
- Embrace automation, such as AI-based collections software, to streamline the management of past due invoices and boost efficiency.
Introduction
Dealing with unpaid invoices from clients is a common challenge in business.
When payments are overdue, it can strain the client relationship and impact your company’s finances.
In this article, we’ll teach you how to craft courteous emails to remind customers of these past due invoices. Also, we will be offering steps and templates to help you manage this situation professionally and maintain good client relationships.
What Is a Past Due Invoice?
A past due invoice is an unpaid bill for goods or services that remains outstanding beyond its due date. It represents an unfulfilled financial obligation between a business and its customer. When an invoice becomes past due, it means the payment timeframe has expired, and the sum remains unpaid.
It’s important to remain positive when dealing with past-due payments, even if it takes some extra effort.
How to Handle Past Due Invoices?
Addressing past-due invoices requires a strategic and systematic approach as late payments can disrupt your cash flow, hinder business operations, and strain client relationships.
To navigate these challenges effectively, we’ve outlined a step-by-step strategy. By following these steps, you can regain control over your accounts receivable and minimize the impact of past-due invoices on your bottom line.
- Assess the situation: Start by reviewing the overdue invoice and any associated agreements. Verify the payment due date, terms, and any late fees that may apply.
- Send gentle reminders: Initiate contact with the customer through a polite reminder. A friendly email or a courteous phone call can often resolve the issue without escalation.
- Offer flexible payment plans: Consider offering payment plans or extended deadlines if the customer is experiencing financial difficulties. This demonstrates your willingness to work with them.
- Escalate communication: If reminders don’t yield results, escalate the communication to a more formal collection notice, clearly stating the consequences of continued non-payment.
- Leverage late fees: Enforce late fees as specified in your terms and conditions. Clearly communicate these fees to the customer to motivate timely payment.
- Maintain accurate records: Keep detailed records of all communication, including emails, letters, and phone call logs, as well as payment receipts and agreements.
- Review and improve processes: Regularly evaluate your invoicing and payment collection processes. Identify weaknesses and make improvements to prevent future past-due invoices.
- Seek legal recourse (if necessary): As a last resort, consider taking legal action to recover the debt. Consult with legal experts to understand the steps involved.
Now that you’re equipped with strategies to handle past-due invoices effectively, it’s time to explore another critical aspect—how to craft compelling past-due invoice emails.
How to Write a Past-Due Invoice Email?
It can be a very frustrating process when customers don’t settle their accounts despite reminders and notices. As a collections analyst or a business owner, you understand that the key to success in these situations lies not only in persistence but also in effective communication. This is where crafting compelling past-due invoice emails comes into play.
These emails serve as vital communication tools, capable of significantly impacting your ability to recover overdue payments while simultaneously preserving positive client relationships.
To effectively compose a past-due invoice email and decrease bad debts, consider the following steps:
1. Include the invoice number in the subject line
Grab your client’s attention right from the start by making the subject line of your email directly reference the invoice. Incorporate your company name along with the invoice number, which not only provides context but also reminds the client of the pending payment.
A well-crafted subject line can significantly increase the chances of your email being opened and acted upon.
Some effective subject line examples include:
[Company name – Invoice Number] Regarding an overdue payment
[Company name – Invoice Number] Is a month overdue
[Company name – Invoice Number] Payment required
2. Specify the due date and the amount
Transparency is key when communicating about overdue invoices. Clearly state the invoice due date and the precise amount owed in your email. Use formatting techniques like bolding and spacing to make these details stand out.
Ensure that the information matches the client’s records and previous communications. This clarity helps eliminate any ambiguity and sets clear expectations.
3. Explain payment options
Make it easy for your client to take action by providing clear instructions on how to make the payment. Include a prominent call to action and, if possible, an online payment link that allows them to enter their banking or card details swiftly.
Alternatively, provide the address where they can send a check or money order if that’s their preferred method of payment. The objective is to offer a hassle-free way for clients to settle their dues promptly, reducing the need for further reminders.
4. Specify next steps
In cases where clients keep ignoring your communications, it’s essential to outline the next steps clearly.
Explain your late fee policy, if applicable, and detail the consequences of continued non-payment. This information may serve as a motivation for clients to prioritize clearing their outstanding balances.
Some examples of consequences for non-payment include:
- Placing the account in bad status
- Applying additional fees
- Taking legal action in extreme circumstances
- While maintaining professionalism, make it evident that non-payment has implications, and prompt action is in their best interest.
By following these steps, you can craft an effective past-due invoice email that not only reminds clients of their financial obligations but also provides them with a straightforward path to resolution.
Now, let’s take this a step further and explore pre-designed past due invoice email templates that can simplify the process and save you time in your collections efforts.
Past Due Invoice Email Templates
The below templates are designed to help you communicate effectively while maintaining the integrity of your client relationships.
1. Past Due Invoice Email Template (Day 15): Two Weeks Late
If payment hasn’t been received by the due date, it’s a good practice to reach out and confirm whether the invoice has been received on their end. In cases where invoices are only a few days overdue, consider sending a friendly and gentle reminder. Often, this simple nudge is all it takes to prompt payment.
Sample Email
Subject line: [Your Company Name]: Invoice #XXXXX for [Product/Service] is 15 days past due
Dear [Customer’s Name],
I trust this message finds you in good health.
I am writing to bring to your attention the status of Invoice #XXXXX, dated [sent date], with a total amount due of [invoice amount], which is now 15 days past due.
For your convenience, I have attached the invoice [reference number] to this email. To facilitate a smooth payment process, please consider submitting your payment using the [explanation of payment method].
Ensuring that you have received the invoice and addressing any potential questions or concerns is essential to us. If you require clarification on any aspect of the invoice or face any challenges, please do not hesitate to reach out. Your satisfaction is our priority.
We kindly request that you confirm the payment status promptly. Your timely action will greatly assist in resolving this matter.
Thank you for your attention to this, [Customer’s Name]. Your prompt payment is greatly appreciated.
Warm regards,
[Your Name]
[Your Company Name]
2. Past Due Invoice Email Template (Day 30): One Month Late
When a payment is one month overdue, it’s prudent to follow up, especially if your initial reminder hasn’t yielded a response. Politely calling the customer to confirm receipt of the invoice and addressing any potential questions can be a proactive step.
In many cases, it’s possible that the invoice was overlooked or misplaced. Don’t hesitate to inquire about its status.
If you’ve already engaged with the client and the payment remains outstanding, consider reissuing the invoice, incorporating any additional charges if applicable. However, exercise caution with late payment fees; apply them only if both parties have previously agreed to such terms. Unexpected late fees can potentially create friction with customers.
Sample Email
Subject line: [Your Company Name]: Invoice #XXXXX for [Product/Service] is 30 days past due – Payment is required
Dear [Customer Name],
I have contacted you before requesting a past-due invoice payment for Invoice #XXXXX, but I haven’t heard anything from you.
We are genuinely concerned and want to ensure there are no issues on your end that may be hindering the payment process. If there are any challenges you’re facing or if you require additional information to facilitate the payment, please don’t hesitate to reach out. We are here to assist you.
As of today, Invoice #XXXXX is now 30 days overdue, and, in accordance with our terms, a late fee of [amount] has been applied to your account. To bring your account up to date, we kindly request that you submit your payment at your earliest convenience. You can conveniently make a payment by following this [payment options] link.
If you have any questions or need to discuss your account, please reach out to me at [Contact Number].
Regards,
[Your Name]
[Your Company Name]
3. Past Due Invoice Email Template (Day 60): Two Months Late
When a payment remains overdue for 60 days or more, it can strain customer relations significantly. It’s crucial to escalate your approach at this point by sending a more assertive email and initiating follow-up phone calls.
This email should be:
– Assertive (Conveying the urgency of the issue)
– Urgent (Emphasizing the need for immediate action)
– Flexible (Open to discussing payment plans if necessary)
Sample Email
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 an urgent reminder that your invoice, #XXXXX, is now 60 days past due, and I need your prompt attention.
Our records indicate that the payment of [invoice amount], originally due on [due date], remains outstanding. Regrettably, a late fee of [amount] has been applied to your account as the invoice has entered its second month of delinquency.
As of today, the total outstanding balance, including late fees, stands at [invoice amount plus late fees, if applicable]. For your convenience, we have attached a copy of the invoice to this email. You may promptly settle this amount by following this [link to online payment or other payment methods].
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.
Time is of the essence in resolving this matter, [Customer’s Name]. I’d appreciate it if you could get back to me as soon as you can so we can resolve this.
Thank you for your cooperation.
[Your Name]
[Your Company Name]
4. Past Due Invoice Email Template (Day 90): Three Months Late
In this critical situation, genuine concerns exist regarding the outstanding payment. Deliver a final notice that unequivocally outlines your course of action for addressing past-due payments. The gravity of the situation should be reflected in:
– A formal tone that underscores the seriousness of the issue.
– Clarity in articulating the next steps, including the possibility of involving a collection agency or taking legal action.
– Conciseness, with a focus on brevity and clarity to convey the message succinctly.
Sample Email
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.
The final deadline for your payment is approaching. If we do not receive your payment by [final date], we will have no choice but to escalate this matter to a collection agency. We genuinely hope to avoid such a course of action and believe that a timely resolution is in the best interest of all parties involved.
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 immediate attention to this matter is crucial, [Customer’s Name]. We appreciate your prompt response and cooperation in resolving this long-standing issue.
Kind regards,
[Your Name]
[Your Company Name]
Best Practices to Keep In Mind While Writing a Past Due Invoice Email
Late payments can indeed be frustrating and detrimental to the growth of your business. However, it’s important to recognize that people are often preoccupied, and financial matters can sometimes slip their minds. When composing a past-due email, it’s crucial to adhere to best practices that ensure clear communication and encourage prompt resolution.
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Start early: Initiate contact with your client as soon as the invoice becomes even slightly overdue. Proactivity helps ensure that payments are not forgotten and encourages timely settlement.
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Be transparent and clear:When drafting a late payment email, make sure to clearly communicate the originally agreed-upon payment deadlines. Establishing clear expectations from the outset can help prevent misunderstandings down the road.
Verify contact details: Prior to sharing any financial information, double-check that you have accurate client information, including their email address. Ensuring you’re reaching the correct recipient is vital for effective communication.
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Include key information: In your email, include all key details related to the past-due invoice. This should encompass invoice date, invoice number, past due amount, payment terms and any applicable late fees, and contact information.
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Attach a copy of the invoice: A best practice is to attach a copy of the original invoice with each overdue payment reminder email. This simplifies the process for the client to review details and verify the information in your message.
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Be consistent: Sending a single email reminder sporadically is unlikely to yield results. Create an email flow with multiple contact points and follow-ups. Weekly reminders can be a helpful starting point.
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Try other contacts: In some instances, the person you are initially in contact with may not be responsive or available. Don’t hesitate to explore other contacts within the client’s organization to ensure your messages are received and acknowledged.
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Mention legal action when necessary: While not ideal, mentioning the possibility of legal action can sometimes expedite resolution. Consult with legal counsel or consider sending a formal warning letter, especially in cases that warrant escalation.
How Automation Can Revolutionize Past Due Invoice Management
Effective management of past due invoices presents a significant challenge for businesses in various industries. Even with dedicated collections teams, the intricacies of handling overdue payments can be daunting. Late payments can disrupt cash flow, hinder growth prospects, and strain client relationships. Moreover, amidst their own busy schedules, clients may unintentionally let invoices slip through the cracks.
So, how can businesses deal with these challenges and improve their management of overdue payments? The answer is automation. Automation is a solution that can make things easier by streamlining processes, making your business more efficient, and helping you collect payments more consistently and successfully.
Here are several ways in which automation can revolutionize past due invoice management, making it more efficient and less labor-intensive.
1. AI-based worklist prioritization
Automation leverages cutting-edge AI algorithms to efficiently prioritize customers based on a multitude of factors. These include invoice amounts, aging, credit risk, and historical payment behavior.
This intelligent system assigns recommended actions to each customer, streamlining the decision-making process for collections teams. By freeing up collectors’ bandwidth automation helps them focus on reaching the right customers at the right time.
2. Automated email correspondence
One of the primary advantages of automation is its ability to eliminate manual tasks. It automatically sends past-due notices by analyzing customer responses and generates follow-up tasks.
Automation empowers collections teams to utilize pre-designed templates for past-due notices and proactive reminders. Additionally, it automatically tracks the status of correspondence, offering valuable insights into customer interactions.
3. In-app dialer
Automation significantly enhances the efficiency of collections teams through streamlined calling processes. It assists with both pre and post-call activities by analyzing past due invoices and summarizing the purpose of the call.
One-touch calls can be initiated directly from the collections tool, saving valuable time that would otherwise be spent navigating multiple applications. Automation also simplifies call logging, capturing important details from conversations.
4. Web portal collections
Robotic process automation (RPA) plays a pivotal role in the automation of web portal collections. It automatically logs in to A/P portals using customer credentials, allowing organizations to track invoice statuses and record follow-up actions efficiently.
Additionally, automation identifies and flags missing open invoices, proactively addressing discrepancies. It also automates the handling of promise-to-pay arrangements and disputed invoices, maintaining comprehensive records of disputes.
5. In-app payments
Automation seamlessly integrates digital payment options into correspondence, enabling customers to initiate payments with ease. By incorporating payment links within the communication process, it simplifies and accelerates the payment collection process.
Conclusion
No matter what you do, if you sell goods on credit, past-due invoices will always occur, or at least, they will always remain a possibility. When not handled properly, these unpaid bills can disrupt cash flow, hinder growth prospects, and strain relationships with valued clients. To avoid this effective communication and systematic approaches are crucial and can serve as the foundation for successful resolution.
As businesses strive for efficiency and consistency in managing past due invoices, automation emerges as a game-changer. Automation streamlines manual processes and empowers collections teams to focus their efforts on strategic recovery, while routine and low-risk tasks are automated. The result is a more efficient and effective collections process that benefits both businesses and their valued clients.
At HighRadius, we bring you the future of collections through our AI-based collections software. Unlock cutting-edge features with our advanced worklist prioritization, streamlined processes, and automated dunning capabilities, all designed to achieve faster recovery and reduce DSO (Days Sales Outstanding). HighRadius redefines efficiency, giving you more time to focus on what matters most.
Schedule a demo with us today to experience the power of AI-driven collections. Embrace innovation and take control of your financial future with HighRadius.
FAQs on Past Due Invoices
1. What is past due vs. overdue invoice?
A past due invoice and an overdue invoice essentially refer to the same thing: an invoice that has not been paid by its due date. They both indicate that a payment is late and needs to be addressed promptly to avoid any potential issues.
2. What is considered a past due bill?
A past due bill is one that has not been paid by the specified due date, making it overdue. It signifies that the payment is late and should be settled as soon as possible to avoid any further consequences or late fees.
3. How long can an invoice be overdue?
The duration for which an invoice can be overdue depends on the terms and agreements between the parties involved. In general, invoices are considered overdue if payment is not received by the due date specified in the invoice terms. This due date can vary from business to business and may range from 15 to 90 days or even longer in some cases.
4. How do you politely say the invoice is overdue?
You can politely inform someone that their invoice is overdue by sending a friendly reminder. You can say something like, “I wanted to kindly remind you that the invoice for [product/service] dated [invoice date] is now past its due date. We would greatly appreciate your prompt attention to this matter.
5. How do you work late fees on an invoice?
To work late fees on an invoice, you can include a clear statement in your payment terms or at the bottom of the invoice. For example, “A late fee of [amount or percentage] will be applied for payments received after the due date.” This notifies clients of the late fee policy and encourages timely payments.
