Tips to Write an Overdue Invoice Letter

By Annapoorna


Updated on: Jan 21st, 2022


3 min read

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Often, the most challenging part of being in business is chasing after unpaid invoice dues. Small businesses cannot afford to lose out on unpaid invoices as it affects their ability to survive in the long run. Sending the customers a friendly reminder for the overdue invoices will help mitigate the damage to a certain extent.

Regular follow-ups

The timing of the follow-ups is crucial to receive the dues from the customer.

If it is a new client, it will make more sense to give them a couple of weeks to settle their dues. If the client is a regular late payer, ensure that the follow-ups are done within a day or two. In general, follow-ups need to be done every fortnight (15 days) so that they are promptly reminded of the outstanding dues.
The overdue invoice letter should be sent to the client on weekends since weekends are usually the time when the clients catch up on essential letters and mail.

Inclusion of all details

The overdue invoice letter should contain all the relevant information that helps the client make the payment quickly and efficiently. They include-

  • Date of the invoice and due date
  • Invoice serial number
  • Total amount due
  • Payment details
  • Contact details
  • Reminders of letters sent previously
  • Late fees applicable (if any)

Use clear language and a professional tone

The overdue letter sent to the client over different periods will require different tones. However, the overall spirit of the letter has been one with clear language and a tone that remains professional throughout.

  • 1-15 days due

This is a gentle reminder, just giving them a heads up on the amount due.

  • 30-60 days due

Here, the tone shall be more firm than friendly since conveying that the unpaid invoice is causing you inconveniences.

  • 90+ days due

It is now time for a collection agency to take over since three months is a relatively long period to pay their dues comfortably. If it is not paid for 90 days, it is likely to turn into a bad debt unless appropriate steps are taken to ensure it doesn’t happen.

Introduce late fees and penalties

At the start of the project, the scenarios for introducing late fees have to be discussed with the client so that they aren’t blindsided by it later. The percentage of the late fee must also be decided in advance. Every state has its limits about maximum late fee leviable.

However, since the introduction of late fees is a sensitive matter, this option must be used sparingly and only when it is warranted.

Offer payment plans

The overdue invoice letter can also contain a payment schedule that is suited to the client’s interests and yours. The outstanding dues may be broken down into instalments that can be paid at regular intervals, thus ensuring better dues.

Automate reminders

Invoicing software offers a host of features, including the automation of certain tasks. Tasks such as scheduling invoices and reminders may be automated, thus saving time and also ensuring consistency. This helps eliminate the need to set reminders in the calendar and then send out the overdue invoice letters each time to the client.

Take concrete steps

There are instances where clients take advantage of the courtesy extended to them and just do not intend on paying the dues. This often warrants a call for further action. At this point, the overdue invoice letter must contain information notifying them about the fact that your legal counsel or a collection agency will get in touch with them if they fail to pay the invoice within the stipulated time. It is necessary to create a sense of urgency to get the client to move faster in settling the dues without involving any third parties.

About the Author

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more


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