Late payments affect a business’s cash flow. It takes up time and effort to collect your money.
The process of collecting on overdue invoices can be challenging. Using a firm but polite tone to request late payments through emails, letters and telephone calls can help you get your money while maintaining good relationships with customers.
How Do Late Payments Affect a Business?
Late payments can directly affect your short-term finances and budgeting for the long term.
Customers who fail to pay on time can be devastating to a business trying to make ends meet. One problem could lead to another: A company that isn’t paid on time might not be able to pay its bills, leading to late charges and soured relationships.
If you’re unsure when you’ll be paid, you can’t accurately project your cash flow when creating budgets.
This affects your ability to plan projects and predict what you can afford, limiting your expansion options.
Coming up with a way to track down late payments — or prevent them entirely — can help your company be more efficient and successful.
How to Ask for a Late Payment Professionally
It may be tempting to hound customers who are overdue on their payments. That shouldn’t be your approach.
Instead, be polite. A rude or pushy tone may offend a customer or cause them to feel threatened and less open to paying a late bill.
Why lose a customer for life, along with any referrals they could have sent your way?
Keep a polite tone in all of your correspondence regarding payments. Use a mix of emails, phone calls and letters (optional) to reach out and encourage your customers to pay up.
Should You Charge Late-Payment Fees?
If done right, the presence of late fees in a contract can encourage a customer to pay you on time..
Reasons for charging late fees include:
- Deterring customers from paying you late multiple times
- Being first in line if a client owes more than one business
- Increased ability to project incoming cash flow
Charging late fees shouldn’t be treated as a source of income. The main goal is to encourage payment while maintaining a mutually beneficial relationship.
Charge a small percentage (1%-3%) or a flat fee after an interval of 15-30 days, depending on your best judgment of what’s fair in your industry.
Make sure customers know ahead of time what fees they could incur before they sign the contract and before you do the work.
When writing a request letter for late payment, include a reminder of the late fees your customer could be charged under the contact.
As the late fee date gets closer, include stronger language in each overdue payment reminder email to clients, motivating them to pay you before they’re charged any fees.
How to Ask for a Late Payment by Email
Be proactive. Send emails to alert customers before they miss the due date and check in with them until you receive a response or payment.
Use these simple, polite payment reminder email templates to collect from your clients.
Email 1: A Week Before the Due Date
Email the customer a week before the payment due date. Sometimes invoices fall through the cracks. Simply remind them to pay the bill.
The email lets your customers know that you keep up with your invoices. They’ll be less likely to forget to pay on time if they know you’re aware of the upcoming due date.
Subject: Invoice #12345 coming due
Hello, [customer name]
Thank you again for your business.
I wanted to reach out to remind you that payment for invoice #12345 is due next week on [date].
Please take a moment to review the invoice. If you have any questions, please feel free to reach out. I look forward to hearing from you.
Email 2: The Day Before Payment Is Due
If you don’t receive a response or payment after the first email, you’ll want to reach out again a day before payment is due.
This gives the customer some time to gather funds and pay your bill. If you reach out to them on the due date, they may not have enough time to make the payment.
In this (still friendly) payment reminder letter, request the payment and remind customers about their options (check, bank transfer, etc.).
Subject: Invoice #12345 due tomorrow
Hello again, [customer],
I wanted to remind you that payment for invoice #12345 totaling $1,500 is coming due tomorrow, [date].
Please refer to the invoice for instructions on how to remit payment.
If you have any questions or issues with payment, please let me know how I can help.
Note: If you decide to charge late payment fees, you’ll want to remind the customer in this email of any penalties they’ll face if payment is overdue.
Make a Phone Call
A day after the invoice is overdue, call the customer.
You can speak with the person in charge of paying you directly, or at least someone who can report to them. If you get a voicemail, simply state your reason for calling.
Again, don’t be pushy. There can be many reasons why they failed to pay you on time. You may simply have the wrong email address on file and they didn’t receive any of your reminders.
If you get in touch with them, just ask when they’ll be able to pay. If they’re having any issue getting the money to you, this is your time to work out a plan that works for the both of you.
Email 3: A Week After the Due Date
If you still haven’t gotten an adequate response from your client, you’ll have to reach out again to let them know the invoice is overdue.
You’ll still want to write a polite payment reminder email, but it’s time to let them know that they need to get you the money as soon as possible.
Include details about the invoice and attach a digital copy of the contract.
If you’re going to charge late fees, remind customers again about the penalties they’ll face if they don’t pay their bills before the charges kick in.
Subject: Invoice #12345 now one week overdue
I wanted to remind you that the $1,500 total for invoice #12345 was due last week on [date].
If you have already submitted payment, no further action is needed.
Please review the attached copy of the original invoice sent [date] and remit payment as soon as possible.
As a reminder, a late fee of 1.5% will be added to the bill on [date].
If you have any questions or issues, please contact me immediately.
Email 4: Two Weeks After Due Date
After two weeks, it’s a good idea to give your customer another call.
If you don’t reach them and they still haven’t responded to your emails, it’s time to take a firmer tone.
Directly ask for payment. Also, ask the customers to acknowledge that they’ve received your emails.
If late-payment charges will begin to accrue soon, use that date to set a hard deadline. Knowing they’ll have to pay late fees soon may stir a customer to action.
Subject: Two weeks overdue: payment for invoice #12345
I wanted to reach out again to remind you that the $1,500 payment for invoice #12345 is now two weeks overdue.
Please review the instructions on the invoice and submit payment before a late fee of 1.5% begins to accrue on [date].
If you’re having issues submitting payment, feel free to reach out and I’ll be glad to assist you.
Please let me know when you have received this message.
Email 5: One Month After the Due Date
Your final request for late payment notice should go out about a month after the due date.
Feel free to be stern, but professional, in your tone. It’s still possible to salvage a lucrative working relationship.
In this email request, late payment charges should be used to show the customer that you’re serious. This will take any doubt out of their mind that you’ll add money to their bill if they don’t act now.
Subject: FINAL NOTICE: invoice #12345 one month overdue
This is your final notice that the $1,500 payment for invoice #12345 is now one month overdue.
As stated in the contract signed prior to the work being performed, you’ll be charged a late fee of 1.5%, 30 days after the original due date.
If payment has already been submitted, disregard this notice.
If not, please resolve this issue and submit payment immediately.
If you have any questions or issues resolving this issue, reach out to me after receiving this email.
If Your Late Payment Request Letters Don’t Work
Hopefully, the request for late payment email templates compel your customers to submit their payments.
If not, it’s time to be more aggressive. Start by calling the business more frequently, or even sending a letter by mail if you get no response.
If you’re dealing with clients who refuse to pay, consider the last-resort move of taking the matter to small claims court. A decision in your favor can legally bind your customer to pay, but can damage your relationship.
Stop Late Payments Before They Happen
Some factors to consider:
- Try to be proactive in limiting the amount of customers that let their payments go overdue.
- Set clear, visible due dates and spell out any late fees before and after fulfilling the contract.
- If the customer still doesn’t pay on time, requesting late payment by email and friendly, professional phone calls should get you paid quickly.
If you’re consistently having trouble receiving payments on time and need cash now, you do have alternative options.
Invoice financing allows you to get funding now in exchange for your unpaid invoices. You simply pay a small fee while the lender waits to get paid by your clients.