Now more than ever, it is vital that all businesses have a process in place to send out an unpaid invoice letter. In 2021 it was estimated that UK SMEs were owed over £61 billion due to late payments and in early 2022 The Federation of Small Businesses estimated that over 400,000 small businesses could go out of business due to the late payments crisis. We covered some tactics for chasing invoices in another blog and today we will outline an outstanding payment letter template to help you through this process.
Invoice chasing can be a tough process for a small business and can quickly rack up costs and resources, so having an outstanding payment letter template can help to speed things up and recover payments efficiently.
There are different stages of sending a reminder or overdue invoice letter and this starts with a polite notice which should be sent out within the first 14 days after expected payment. It is also important that you keep a copy of this, and any future overdue payment reminder letter for your records, or send electronically, leaving a paper trail.
Polite Reminder
Subject line: [Your company name] – Overdue Payment – [Invoice number]
Dear [Name],
This is a polite reminder from [company name] that we have not yet received payment for:
[Invoice number, balance, due date]
As we are not aware of any outstanding issues or reasons for non-payment, we would ask that you confirm receipt of this reminder and advise us as to when to expect the payment.
Please see attached the invoice for reference. If you have any queries or need any assistance, please do let us know.
Kind regards,
[Name]
Following this late payment letter, you should hopefully receive payment. It could be as simple as an oversight and the customer will recover the payment promptly. However if this isn’t the case, further attempts should be made to recover the payment and we suggest sending these electronically and via post to ensure your overdue invoice letter is received.
Upon 14 days of no payment, you should send a firm reminder for the overdue invoice. Within this unpaid invoices letter, you should put emphasis on the timeframe and reference your previous overdue payment reminder letter.
Firm reminder
Subject line: [Your company name] – Overdue Payment – [Invoice number]
Dear [Name],
Further to my previous correspondence, I am contacting you regarding late payment for:
[Invoice number, balance, due date]
As this payment is now overdue by [number of days overdue], we would appreciate confirmation of receipt of this reminder and a status update on the overdue payment. Please find the outstanding invoice attached.
Please also be advised that late payment interest may be applied if we do not receive payment within 30 days.
Kind regards,
[Name]
After sending two overdue payment reminder letters, and still no acknowledgement or communication from the customer, the last stage is a final reminder. Sent at 30 days past due date, this final stage should show evidence of prior communications, a definite cut-off date for payment and outline any legal action you may take.
Final notice
Subject line: URGENT: [Your company name] – Overdue Payment Final Notice – [Invoice number]
Dear [Name],
Following the lack of response to my previous communications, we now require your immediate attention to resolve this issue. The attached invoice is now overdue by [number of days overdue].
[Invoice number, balance, due date]
If we do not receive payment or acknowledgment of this issue before [cut-off date], we will pursue legal action to recover the costs of the invoice plus the late payment penalties as outlined in our payment terms.
Please confirm receipt of this email and advise as to when the invoice will be paid in full.
Kind regards,
[Name]
The threat of legal action in this final overdue invoice letter will hopefully generate action on your clients’ side. If not, we covered legal action in our "What are the best tactics for chasing overdue invoices payments?" blog, so please do read it through before considering your options. You may want to try mediation, a statutory demand or a court claim against your debtor.
Overall, sending an unpaid invoices letter can be uncomfortable and can cause friction. Whilst we hope that our templates have prepared you in advance of non-payment, we also hope that you wont need to use them frequently!
No set-up fee and transaction fees as low as 4p. Customised packages available for businesses with large payments volume.