Ultimate Ways to get Past Due Invoices Paid

Ultimate Ways to get Past Due Invoices Paid

Suffering from past due invoices? Well, you are not the only business undergoing this trauma. Chasing late payments can be cumbersome but it is an inevitable task. Let’s figure out how you can rack up your revenue.

Probably, no business in this world has ever escaped from late payments. In fact, most of the businesses believe that possibly 20% of the invoices will get paid after the due date while the reality is, it does happen. Invoice 30 days past due is a common scenario. Even after 30 days, most businesses deem they will get paid but sometimes the situation goes downhill and becomes 90 days past due, 4 months, 6 months, and finally forgotten invoice. It is really dreadful and annoying when you don’t get paid for your hard work. More time passes, it more difficult to get paid. Hence, it is wise to strategize before it’s too late. Start executing your plan of action, following 30 days past due.

What is a past due invoice?

A past due invoice is one such invoice that has not been paid as of its due date. Payment terms dictate payment due date and other policies, which shows how much time the buyer has to clear the due amount. When the payment is late as per the payment terms of the supplier, then the invoice is considered as past due.

One of the essential factors you need to remember before invoicing your client is to clearly mention the PAYMENT DUE DETAILS without fail. Clearly specify payment is due and payable on Net 15, Net 30 or within 15 days (from invoice date), whatever is your business payment terms.

Tip: It’s better to use the word ‘days’ over ‘net’ as it is easy for the clients to understand who are less experienced in the business.

If you caught any client with late payment, follow the simple strategies and ensure to get paid (if not on time, at least late).

Invoice with 30 days past due:

Initially, it is advisable to ask the client with good faith to make the payment. Be polite and let them know that you will be of their assistance in the future and also thankful if they respond and make payment within the next 10 days.

Email your client, professionally:

If it is your initial reminder, make a point to be polite and to the point. Make sure the email is precise and understandable. Creating a template or automated process will do no good as each client business is different and payment due may be also different. So it’s better to compose mail, yourself.

  • Use your work email id to mail your past due payment clients
  • Mention your business name
  • If you have contacted the client before, regarding payment, include previous communication details in the mail
  • Include your invoice
  • Use polite language (even if your frustration level has reached the peak)
  • Keep a track of your email conversation for further use
  • Call your client to notify them about the mail

Communicate via call:

Calling can be a challenging task for you, as there are chances of bursting out your anger and worsening the situation. Hence we advise you to have a scripted and rehearsed call.

How to make your phone call gainful?
  • Don’t directly start with the late payment issue. Be polite, start with general greetings and then talk about something that denotes your business relationship, how important your client is for your business and finally break the ice
  • Explain how essential it is to maintain cash flow for managing and expanding your business
  • Start discussing the invoice in detail – invoice date, invoice number, invoice description, due date, how many days passed from the payment due
  • Explain your payment policies
  • Convince your clients and take a specific date on which they will make payment. Also ask them to give it in writing (probably an email message), so that you will have a proof

Prepare a script before a conversation, so that you can talk confidently and convincingly.

Late payment fees / Interest rate:

Warning or threatening your clients usually works. Charging late payment fees is a good trick to get paid. The interest rate on invoices compels the client to pay on time as nobody is interested in paying interest. Remember to include the late payment charges/interest rate in the initial bill itself so that the client understands the consequence of late payment.

How to write a past due invoice email?

Check out the below format to learn how to write past due invoice emails!

For the first week

For the invoices that are past for a week.

Subject: Past Due Reminder for Invoice Number ##000

Hello [Client Name],

Hope you are doing great.
I’m following up on the invoice issued on (date), for (total amount), which is now past due for (number of days). You can find a copy of the original invoice attached.

Kindly let us know when we can expect payment?

Please get back to us at the earliest.

Kind regards,
[Your Name].

For the second week

Email format for invoices past due for two weeks.

Subject: Past Due Reminder for Invoice Number ##000

Hi [Client Name],

Based on my previous mail (date of first mail), I would like to follow up regarding the outstanding invoice(invoice number), that was due on [invoice due date].

As per the payment terms outlined in our contract, a late fee of (amount) is added to the previous invoice changing the invoice amount to (new amount). This is the total payable as of today.

Please pay the due amount immediately to avoid any further penalties.

Kind regards,
[Your name].

FAQs

Is overdue the same as a past due invoice?

Yes, they both are the same with a slight difference. Past due invoices refer to those invoices which have not been paid in the immediate past. Whereas, the overdue invoices are due for a longer duration like over a month.

Payment Terms and Invoice due date – are both of these same?

No, they aren’t. They both are separate entities. The invoice due date denotes when an invoice is due. Whereas, the payment terms represent other details, like late fee policies, early payment discounts, and also the payment due for net-15 or net-30, etc.

Is legal action necessary for a past due invoice?

Not necessarily until the buyer completely denies to pay back the amount due.

It is infeasible to manually keep records of pending invoices, hence helpful invoicing software like Billbooks will assist you to keep a track of paid, unpaid, and partially paid invoices, according to which you can analyze, streamline the process and follow the line of attack.

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