How to Write an Overdue Payment Reminder Letter7 min read
Asking for money is never easy.
We seem to be hardwired with a certain civility that leads us to believe it’s somehow rude to ask for what’s rightfully ours. We think we’re being pushy or that we’re nagging. It’s uncomfortable and, we fear, annoying.
Unfortunately, as freelance business owners we face this predicament more often than we’d like. Everyone who has freelanced long enough has at least one story about a client who disputed charges, was late on a payment, or just outright refused to pay. In fact, The Freelancer’s Union found that 71% of freelancers have had trouble getting paid.
And even though we’ve done the work and satisfied our end of the transaction, we’re still leery about asking for payment. Maybe we imagine that asking indicates that we don’t trust our client’s motives. Maybe they’ll think we’re impeaching their character. After all, we wouldn’t need to ask them to pay if we already knew they were going to pay, right?
There’s nothing to fear
The first step to collecting overdue accounts is to recognize that the narrative you’re telling yourself about nagging and badgering simply isn’t true. Most people want to settle their debts.
A quick way to dispel this myth is to ask yourself a question: do you feel badgered when your clients check in on the progress of the work you’re doing for them? I’d be willing to bet the answer is no. You recognize that they’re just interested in a progress report. They want to know the status of your end of the transaction.
The same applies to you. When you ask after payment, your clients recognize that you’re looking for a status report on their end of the transaction.
A client that plans to pay but hasn’t gotten around to it for one reason or another will not take exception to being reminded. At worst, they’ll be embarrassed that your payment has slipped through the cracks – and as a result, grateful for the reminder.
A client that plans to pay but hasn’t gotten around to it will not take exception to being reminded. Dispel your fear of sending an invoice reminder and learn how to write an effective one. #FreelanceIsntFree Click To Tweet
Your work has value
The second step to painless debt collection is to recognize deeply that your work has value. You spend your limited time delivering your clients what they want and need. You take this very seriously and your customers benefit. You’ve met your client’s objectives and timelines. Why shouldn’t you expect reciprocal respect from them?
You know your clients would be upset with you if you delivered late and you would do whatever it took to make things right. It’s more than fair for you to expect your clients to uphold their end of the transaction in the same way.
For more about invoicing, take a look at AND CO’s guide to invoicing as a freelancer.
Overdue payment reminder letters
So how do we collect our debts now that we recognize we have every right to and that our customers won’t hold our efforts against us? And how do we minimize the amount of time spent pursuing overdue accounts? A properly-worded overdue payment reminder letter is the perfect strategy. These short, pointed emails serve both as friendly reminders and requests for payment. They’re polite enough to avoid any whiff of condescension but still firm enough to make clear your expectations. They demonstrate that you take both your client and yourself seriously.
Before the invoice is due
There are two phases to your collection efforts. In phase one you’re simply reminding your customer of the coming due date. This is not always necessary (for example, if you know your client is a prompt payer), but if you are at all concerned about your invoice being paid on time, a reminder in advance can help keep things on track.
Send an email a week before the payment deadline. The tone should be friendly and informational. You’re not asking for payment, because payment isn’t due yet. This email is intended only to remind your customer of the impending invoice and, most importantly, plant the seed in their mind that you’re a business that’s serious about getting paid. Customers are less likely to procrastinate on you if they know that you’re watching your invoices carefully. Try this sample letter.
Subject: Following up on invoice [your invoice number here]
Hi [client name],
Hope things are going well for you. [Consider adding a pleasantry specific to your client.]
This is just a quick reminder that invoice [invoice number here] will be coming due on [invoice due date].
If you get a moment please take the opportunity to look over the invoice. I’m happy to answer any question you might have.
Thanks again for your business!
If your client is a procrastinator, this email alone may be enough to spur them into action. If they’re forgetful, it may be the reminder they need. The tone is pleasant and the reminder is couched in an offer to answer questions, which flips the arrow of responsibility and allows your client to feel like they’re being taken care of, even as you’re looking out for yourself.
While not necessary, you may consider sending out a second reminder on the invoice due date. The tone should be identical to the first. You could say something like, “This is just a quick reminder that invoice [invoice number here] is due today. If you’ve already made payment please disregard this message and we thank you. As always it’s a pleasure doing business with you.” Again, keep it friendly and light. You’re only trying to stay on your customer’s radar.
After the payment is late
In phase two, your tone begins to shift. These overdue payment reminder letters should remain professional and friendly, but you’ll begin inflecting a firm expectation of payment.
Subject: Invoice [your invoice number here] is overdue
Hi [client name],
Our records indicate that invoice [invoice number here] is currently outstanding. Payment in the amount of [invoice amount] was due one week ago. If you would look into this we would very much appreciate it.
We know that life can be busy, and details can be missed. If there’s anything we can do to facilitate payment, please let us know. If you have any questions we’re happy to answer them. If you need another copy of the invoice just let us know.
This email isn’t overbearing or harassing. It still couches your request for payment in a way that sounds like you’re being helpful to the client. However now you are making a specific request for payment.
Continue sending emails like the one above every week until the bill is paid. With each iteration, your tone can become less congenial and more direct. Your client needs to sense how serious you are about collecting your payment. Ask them directly if they still have it. Ask them to reach out to you and confirm receipt. Begin to put the onus of contact on them.
At 30 days overdue, your tonal transition is complete. You’re no longer giving your customer the benefit of the doubt. At this point they should sense from you that you recognize they are badly in default and need to square their account immediately. However, remember that they are still your client and you’re not looking to damage the relationship. Keep things professional but firm, and always offer to help however you can.
This will usually work… Except when it doesn’t
With well-executed overdue payment reminder letters, you’ll be surprised how less frequently accounts become seriously overdue, but occasionally it will still happen. When your emails aren’t successful, moving to paper demand letters can help spur a client to action.
Having these letters mailed by a third party adds a layer of urgency, as if they’re hearing from a law office or a collections agency who is demanding payment based on what can be viewed as a breach of contract. Williams & Harricks sends a real demand letter by mail for only $12, written on your behalf (not by you). You can pick from multiple letter templates, ranging from a friendly reminder to a stern one. And if you’re already an AND CO user, you can populate your letter automatically based on your invoice information, right from the software.
Getting paid is the lifeblood of any business. Following the steps detailed here you’ll find the whole process will be less stressful and more successful. And you’ll be able to get back to doing what you love sooner.