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How to Write an Unpaid Invoice Letter

Last editedMar 20222 min read

You’ve sent an invoice to a client, and the payment deadline has come and gone. What steps can your business take to ensure it receives payment? Sometimes, all it takes is a polite reminder. Here’s how to write an unpaid invoice letter and increase your chances of swift payment.

When to send a late payment reminder letter

Timing is everything when it comes to sending a friendly late payment reminder letter – you want to be professional yet persistent. When creating an invoice, you should list clear payment terms including a due date. This must be clearly marked and visible to make things as easy as possible for your client.

Once the due date has arrived, a quick email often resolves the situation without the need for a more formal letter. If this doesn’t work, it’s time to follow up with a late payment reminder letter. You can send this typically after one week has passed since the official payment due date. Be sure to keep copies of all written correspondence.

Details to include in a late invoice payment letter

The details to include in your letter will depend on how much time has passed without payment. Think of the first letter as a gentle nudge designed to inspire payment. In this first late payment reminder letter, include pertinent details:

  • Your name and address

  • The recipient’s name and address

  • Today’s date

  • Account or payment reference numbers

  • Original payment due date

  • Outstanding amount due

  • A statement that no payment has been received

  • Payment options

  • Reminder of your payment terms

If the first friendly late payment reminder letter doesn’t yield results, you should send out a second letter. This should include all the same information as your first letter, along with a reference to your first letter and an explanation that payment is still outstanding. You could also reference any late fees or interest payments as outlined in your payment terms.

If this still doesn’t lead to a payment, it’s time to send a more formal payment reminder. The third unpaid invoice demand letter serves as a final notice before action. In addition to all contact details, dates, and payment reference numbers, this must state that the client is now in breach of your payment terms. Explain these terms once more, giving a final cut-off date for payment and consequences of what will happen should the invoice still go unpaid.

Unpaid invoice demand letter template

Now that we’ve covered what should be included at each step of the letter writing process, from friendly reminder to demand letter, here’s how it looks. You can use this general template as an outline and fill them in with your own company details and payment terms accordingly.

(Customer Name and Address)

(Date)

Dear Sirs,

Our Ref: (Account and order number)

Your account is now overdue for payment. This letter serves as a friendly reminder that you have exceeded the payment terms for these outstanding invoice amounts.

The following invoices are overdue:

Invoice Number

Invoice Date

Due Date

Amount

XXXXX

XX.XX.XX

XX.XX.XX

£XXX.XX

XXXXX

XX.XX.XX

XX.XX.XX

£XXX.XX

You can make a payment by clicking this link and following the instructions. If you have any queries regarding payment terms and conditions, please contact us at XXX-XXX-XXXX. We look forward to hearing from you.

Yours sincerely,

(Your Name)

On behalf of (Company Name)

For the second and third requests for payments, you can then reiterate the message with slightly stronger language each time. This could include referencing interest charges or late fees and the steps that will be ultimately taken should payment not be received.

One final thing to keep in mind is that if you threaten legal action, you must be prepared to follow through on it. There are legal companies you can outsource the issue to, as well as invoice factors to help collect funds. Perhaps the best way to avoid the need to write a late payment letter is by setting up automatic payments. GoCardless offers a pull-based Direct Debit payment solution that eliminates the need to chase up payments. You control the timing and amount of each payment, for a smoother, more user-friendly process.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.

Over 70,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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