Letter of explanation for late payments template

Rob's mission is to educate businesses on the current payments landscape and the range of options that can be implemented to optimise their payment processes. As a former small business owner, Rob understands the issues that continually complicate payment collection and creates content to help businesses navigate the available solutions to these problems.ConnectSee full bio

Last editedDec 20226 min read

Table of contents

  1. How can businesses use simple emails to tackle late payments?
  2. Polite reminder template (less than 14 days overdue)
  3. Firm reminder (over 14 days overdue)
  4. Final notice (30 days overdue)
  5. What to do if late payment emails don't get through
  6. How to prevent late payments
  7. We can help

Are you dealing with late invoice payments? You’re not the only one. In the UK, overdue payments are an enormous issue for SMEs. GoCardless found that, on average, UK SMEs are paid around

18 days late, and 1 in 6 invoices remain unpaid after 90 days (three months after work has been completed). Put simply, late payments represent a severe existential threat for many small businesses.

A more recent study from Barclays indicates that this is very much still an issue. According to their research, 58% of SMEs are owed money on overdue invoices. Barclays’ study highlighted some of the many negative effects of overdue payments. Put simply, overdue payments represent a severe existential threat for many small businesses.

Our research into 'money mutedness' also indicates the very British trait of leaving things unsaid is one the factors contributing to businesses being under- or unpaid. 25% of British small businesses feel uncomfortable talking to their customers and suppliers about money.

How can businesses use simple emails to tackle late payments?

So what exactly can business owners do about overdue payments? Learning how to write an effective late payment invoice email is a good place to stat. We’ve put together three late payment email templates you can use if you’re chasing payment: a polite reminder template, a firm reminder template, and a final notice template. Check them out right here.

Polite reminder template (less than 14 days overdue)

In the best-case scenario, your customer only needs a polite nudge to make payment. This is actually fairly common, as invoices can sometimes fall through the cracks in a busy accounting department. This means that just sending a polite follow-up email can sometimes be enough.

When you send your first overdue invoice email, be sure to keep the tone of the letter polite and respectful. This avoids creating friction with the client and encourages them to resolve the situation. Use this late payment reminder template for invoices that are less than 14 days overdue:

Subject line: [Company Name] – Overdue Payment – [Invoice Number]

Dear [Name],

This is a friendly reminder that we haven’t received payment for invoice [Invoice Number]. The payment was due on [Due Date]. We’re not aware of any outstanding issues or reasons for non-payment, so we would like to respectfully ask you to make payment as soon as possible.

Please let us know when we can expect to receive payment for this invoice. If you have any queries, don’t hesitate to let us know. You can find the original invoice attached.

Kind regards,

[Name]

Firm reminder (over 14 days overdue)

If the invoice is over 14 days overdue, adopt a firmer and more direct tone. Reiterate the key details of the invoice, including the invoice number, the amount due, and the payment terms.

You should also enclose a copy of the original invoice, as it’s always possible that it was accidentally deleted or just got lost. This late payment email template is best used once the invoice is around two weeks overdue:

Subject line: [Company Name] – Overdue Payment – [Invoice Number] – Second Request

Dear [Name],

Further to my previous correspondence, I am contacting you regarding late payment for invoice [invoice number]. The invoice was due on [due date], and payment is now overdue by [number of days overdue].

Be advised that late payment interest may be applied if we do not receive payment within 30 days. Let us know when we can expect to receive payment for the outstanding invoice. Please find the outstanding invoice attached.

Kind regards,

[Name]

Final notice (30 days overdue)

At this point, make it clear to the customer that your overdue invoice email is a final warning. This means that you should include a final cut-off date, as well as an outline of the potential consequences of non-payment. Provide information about your debt-recovery arrangements.

It’s also worth remembering that you may be legally entitled to add late payment interest to invoices if they’re over 30 days late. Reminding the client of this fact may be enough to finally motivate them to make payment. Use the following late payment email template if the invoice is still unpaid after 30 days:

Subject line: URGENT: [Company Name] – Overdue Payment – [Invoice Number] – Final Notice

Dear [Name],

We require your immediate attention to resolve this issue.

Invoice [invoice number] is now overdue by [number of days overdue]. If we do not receive payment within 10 working days, we will refer the matter to a collection agency. As a last resort, we will seek to resolve the matter in court.

Our invoice terms are [X] days from the date of issue, and late fees of [X] percent may be applied. Given that the invoice is now 30 days overdue, an [X] percent fee has been added. You can find the updated invoice attached.

Please confirm your receipt of this invoice and advise as to when the invoice will be paid in full.

Kind regards,

[Name]

What to do if late payment emails don't get through

If your emails for overdue payment fail to get the response you want, decide whether or not the matter is worth pursuing. If you are going to go down the debt collection process, keep in mind that it can be lengthy. It’s therefore generally advisable to get the ball rolling as soon as possible. 

Keep in mind that ultimately your dispute may end up in court. You may have to wait a long time to get a hearing. When you do, ensure that the hearing goes in your favour. This generally means showing both that the money is owed and that the customer has had reasonable opportunity to pay. This is part of the reason why it’s important to give your customers regular reminders about their overdue payment before taking action.

Even if the hearing does go in your favour, you still have the challenge of enforcing the judgement. You also probably have to accept the fact that your relationship with the client is permanently ended. On the one hand, this may be a moot point if they are not paying you anyway. On the other hand, it may still be worth making one last effort to salvage the situation.

Charging late fees on overdue invoices

In some cases, charging late fees on invoices can be a very effective way to get businesses to prioritise them. In other cases, charging a late payment fee can end up being counterproductive overall.

For example, if a business is having cash-flow problems, it may simply not be in a position to pay at this point. Charging a late payment fee may encourage your customer to prioritise your payment over another. It may, however, cause you to lose a customer that still had value.

How do I write a letter of explanation for a late payment?

What should a late payment letter include?.
your company name and address..
recipient's name and address..
today's date..
a clear reference and/or any account reference numbers..
the amount outstanding..
original payment due date..
a brief explanation that no payment has been received..

How do you respond to a late payment professionally?

Excuse #1. I have also not received payment from my customers. ... .
Excuse #2. Invoice dispute – with a contract agreed on. ... .
Excuse #3. I am unable to get to the office to process payments. ... .
Excuse #4. Cannot pay the invoice due to cashflow issues. ... .
Excuse #5. We are bankrupt and about to be liquidated. ... .
Excuse #6. ... .
Excuse #7. ... .
Excuse #8..

How do you politely apologize for late payments?

I am sorry to be so late with my payment, and hope that this has not caused you any great inconvenience. My hours at work were cut unexpectedly, leaving me short of money this week. I am just starting another job and will be able to pay on time in the future.

What are good reasons for late payments?

We haven't received the invoice. / We've lost the invoice. ... .
The company name/address/balance/etc. on the invoice is not correct. ... .
The computer is down. Ask your customer how often this happens and how they've dealt with it..

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