How to write an overdue invoice letter?

It happens to every company, late paying customers. The best thing to do before looking at sending an overdue invoice letter is to look at the invoice. Was the invoice clear and detailed? Were there no questions raised by your clients about the invoice?

Sending the best possible invoice is your first goal. See also how to write an invoice letter.

Illustration of someone holding an overdue invoice letter

When to send a late payment reminder letter?

The easy answer is immediately after your invoice is overdue. You might want to wait two days to check upon your bank account. Just to be sure the bank transfer was not the reason for a late payment.

Research has shown that after the invoice expiry date the willingness to pay an invoice decreases by 1% per day. This is why it is important to send a reminder as quickly as possible. Also, if you chase your outstanding invoices professionally, your product or service will be considered more valuable. The proverb “the better your customers pay, the more your products worth” works perfectly for your business too.

Which means of communication works best?

There is a lot of knowledge about the effect and cost of each means of communication. A personal call is expensive but gives great insight into reasons for not paying. We also know that telephone calls can play a negative role concerning payments. We would therefore not recommend using a telephone call in your debtor management.

Email is the most widely used method for a late payment reminder. There are many advantages using email. It is cheap, it can be automated and it is easy to know if it is received or bounced.

A printed letter can be helpful if you do not have an email address. But it is expensive compared to email. Only in certain cases a printed letter pays off.

An upcoming means of communication is a text message. The reason for its success is the same reason as to why people are hesitant to use it. It is considered very personal. For example:

“Dear Peter, you still haven’t paid invoice 0357X from Company X. It is past its due date. Please pay me this week or contact me if you have any questions. Kind regards, Cindy from Company X”.

People even open a text message while in a meeting. The facts are that we see an increase in payments when an email is accompanied by a text message. The same increase as a personal phone call. But it is much cheaper than a printed letter or a phone call.

How to write the best overdue invoice letter?

The first rule is that the receiver must immediately know that this letter is addressed to him/her. Write the name of the addressee at the top. Even in bold letters if necessary. There must be no chance of denial that this letter is addressed to you. Also, use your invoice number or any recognisable number for your client to match your invoice to his bookkeeping.

The second rule is to make the letter as personal as possible. Dear Peter pays better than Dear Sir Roberts.

The third rule is to be precise in what you want. Please pay within two week, before [date]. And if there are going to be consequences if your debtor does not pay in time, always mention the consequences.

Some of our clients add administrative costs to their payment reminder letter. It works. But it does not fit in every type of business.

Rule number four is to make it easy to pay. If an email contains a [PAY NOW] button, the success ratio is much higher. There are payment methods that are affordable and work well in most businesses.

Rule five is to make it easy to react to a reminder. Any means of communication works. But a button in an email reminder works best. Written text is more precise than a phone call.

It is also less emotional. And it is asynchronous.

Your debtor can write at the time it suits him/her. And you can answer whenever it suits you. Importantly, all written communication is neatly stored in your file.

Hope this article was helpful to you. We can help you set up specific flows with our knowledge about debtor management.

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