How to Write an Overdue Invoice Letter
How to Write an Overdue Invoice Letter
Every business in the UK is affected by non-paying customers.
Companies of all sizes in every industry must face this challenge daily, from freelancers to global corporate enterprises.
If a customer has not paid for goods or services that you have provided, it is important to act as soon as possible.
If a debt recovery task is left for too long after an overdue invoice, your business’s cash flow could be affected.
Large corporate entities have dedicated accounts teams to handle matters when an invoice is overdue.
Smaller businesses and those that are self-employed may not have the time or resources to do this themselves.
For businesses of this size, the managing director performs several job roles at once.
If there are any overdue payments, it may not be an option for them to spend the necessary time chasing customers.
If this happens, the debt may be abandoned and the customer’s money will be lost.
A good step that may help to ensure that you receive payment is to write an overdue invoice letter.
Our debt collection experts have listed the most effective piece of information you should include in your overdue invoice letter.
Top 5 Tips for Writing an Overdue Invoice Letter
If you have overdue payments from a customer, the best thing to do is to contact them.
The best way you can do this is by sending a polite payment reminder letter.
Here are some tips from our debt collection experts to help you write an effective overdue invoice letter.
Creating an invoice email template or letter template is a good idea, as this will help speed up your process.
Step 1 – Remain Calm and Composed
If you have not been paid for goods or services, you may be feeling annoyed and frustrated.
This is completely understandable, but despite this, you must remain calm and composed.
Acting rashly at this point may make the debt collection process more difficult or give your customer grounds to withhold payment entirely.
Instead, you should remain calm and work towards resolving the issue in the most professional manner possible.
A good overdue invoice letter should be a friendly reminder to the debtor that the invoice is overdue.
A payment reminder email is also appropriate, but you should make sure to use a read receipt to ensure that the message has been seen.
Step 2 – Send the Letter at the Appropriate Time
The timing of the letter is important and can help the entire process if done properly.
Sending it too early (as in, moments after the invoice is due) may antagonise the debtor as they may pay as soon as you have posted it.
Sending it too late may make the collections process harder.
Instead, a good time to send the first letter is the next business day after the invoice is due.
In some cases (especially when dealing with larger companies), sending a follow-up letter a week after this is necessary.
You should also follow this reminder letter at 30 days, 60 days and 90 days overdue.
Step 3 – Make Sure That All Invoice Details Are Easy to Understand
Many non-paying customers will go to great lengths to avoid paying an invoice.
One tactic that is sometimes used is the claim that details on the overdue invoice letter were unclear, and so they cannot make a payment.
To prevent this from happening, make sure that the following details are clear and easy to understand:
- Invoice Number
- The amount that is owed
- The due date of the invoice (to help them pay on time)
- Your contact details
- Invoice payment terms
- Your payment details
Step 4 – Make it Easy for the Debtor to Pay
This may sound like a simple step, but include information on all possible ways that a debtor will be able to pay you on time.
Include this information in your overdue invoice letter.
There are certain circumstances in which a debtor may not be able to pay.
For instance, they may simply have fallen into financial difficulty and have no money to pay.
If this happens, setting up an alternative option such as a payment plan will help to resolve the matter amicably.
Step 5 – Seek Professional Help
If your overdue invoice letters are having little effect, it is time to escalate the matter to a professional.
Taking legal action is one course of action, but a far more cost-effective and productive option is to instruct a professional debt collection agency.
If you choose to do this, you should provide the debtor notice of intent in the last letter that you send to them.
How to Recover Money from an Overdue Invoice – Instruct a Debt Collection Agency
If you have sent a letter requesting payment of an overdue invoice multiple times to no effect, the best course of action is to instruct a debt collection agency.
A professional agency will be able to recover your unpaid invoice promptly and at a low cost.
Frontline Collections is one such agency, and since 2005 we have helped businesses recover money that is owed to them.
This allows small business owners and those who are self-employed to focus on activities that grow their businesses.
If you are having issues with overdue payments, speak to one of our friendly debt collection experts for a free pre-action debt assessment.