Past Due Invoices? 6 Steps to Get Paid (Templates & Examples)

Past due invoices piling up in your books? You’re not alone.

In an ideal world, you wouldn't have to deal with late payments and you’d get paid on time every time without having to ask for it. But at Upflow we’ve noticed that 30% of outstanding invoices require 3+ payment reminders before they get finally paid.

In other words, the key is to have a robust accounts receivable collections process in place, be proactive, and use targeted actions to recover your late invoices. Keep reading to know:

• What is a Past Due or Overdue Invoice?

• 6 steps to Avoid Past Due Invoices:

  1. Analyze & focus on your most overdue accounts

  2. Send an overdue invoice email

  3. Set a tempo for your overdue payment reminders

  4. Call your past-due accounts

  5. Involve your account managers

  6. Follow up with a past due invoice letter (snail mail)

Need help writing effective payment reminders? Click on the banner below and download our free templates.

Past Due or Overdue Invoice Meaning

A "past due" or "overdue" invoice refers to a bill that remains unpaid beyond its agreed-upon due date. It signals an overdue payment requiring immediate action to avoid potential late fees, interest charges, or disruptions in the business relationship. Businesses typically set standard terms, such as 30 days post-invoice, but these can vary based on client agreements or negotiated payment plans. Managing past due invoices efficiently is essential to maintaining cash flow and ensuring financial stability.

We suggest you to take the following 6 steps to avoid the situation of past due invoices:

1. Analyze & focus on your most overdue accounts

Since there’s a 60% less chance you’ll get paid after the 90 days overdue threshold is crossed, it is a good idea to start with going after past due invoices that are in the “danger zone”.

Your immediate attention should be focused on getting a clear picture and ranking your past due accounts by total amount owed and time overdue by drilling down into your aged receivables report (you can use your invoicing software, here’s how to do it in Quickbooks and Xero).

Once you have identified your most at-risk accounts, it is time to build an action plan to collect your past-due invoices!

2. Send an overdue invoice email

In about a third of cases, late payments occur because your customers simply had a quirk in processing your payment. Typically this occurs because they forgot to process your invoice in due time.

So your best bet at this stage is to send a first “technical” payment reminder email to your customer’s billing contact - just to make sure that everything is okay. Remind them of the agreed-upon payment term.

Keep this first email professional, polite, and plain text: when formatting, avoid HTML emails generated by billing & accounting tools as they usually look like spam to your customer. They can also be unreadable due to your customer’s internal email policy (blocking images, links, etc.).

Worse: if this past due invoice email is also sent from an address like "[email protected]", it will almost certainly end up in the trash.

Of course, the tone can and should be adapted relative to how many invoices are overdue and the number of days passed the payment due date. If the customer is a known “bad payer”, or if you’ve already sent reminders.

Remember: the more a past due notice is personalized, the higher the chance you’ll get an answer - that's what you’re looking for.

In most cases, you will get a reply stating that your payment is underway or an explanation from your customer. But this first notice is also a chance to uncover a potential underlying dispute that might be brewing.

Last thing: make sure your reminder email is correctly delivered, i.e. not bounced, and opened. For example, you can use Mailtrack for Gmail to achieve this.

You may be wondering how to write a past-due invoice email. Don’t fret, here is an email template that you can start using right now to send a first friendly payment reminder (just replace the “{...}” with relevant information):

3. Set a tempo for your overdue payment reminders

This is the key step in recovering your past due invoices - demonstrate to your customer that you have a robust process in place. Unfortunately, too many finance teams let receivables fall through the cracks and end up with +90 days of unpaid invoices that haven’t been chased at all or only erratically.

Once you’ve sent a first reminder via email after the invoice due date it is paramount to set a tempo and follow up until you have received payment. There can be a zillion reasons why one simple overdue invoice reminder doesn’t work: email inbox clutter, your billing contact is out of the office (or you may not have the correct contact information), the invoice payment terms were not clear, etc. Ultimately, collecting your cash is what keeps your company's lights on.

Typically a simple collection workflow should look like this:

Yes, we’re biased since Upflow allows you to easily set up workflows to automate reminders, but if you use Gmail you can use Boomerang to have your past-due notices come back up in your inbox if there’s no reply.

Are overdue payments piling-up? Have a look at our free guide with tips to get paid on time!

4. Call your past-due accounts

Few companies do this, but it’s often the best way to get a quick answer and unblock situations if a reminder letter does not work - just picking up and dialing the good old phone number.

Typically you would do that after having sent at least 2 or 3 late invoice payment email reminders that didn’t receive a reply within a few days, for the simple reason that it gives you a conversation starter and arguments on the call.

Be prepared and specific when you make the phone call if your customer has questions. Have readily available a copy of the invoice, the outstanding balance amount and invoice number, or the list of unpaid invoices with: days past due, due payments amount, payment methods available, etc.

Here’s a call script you can use to kickstart the conversation with your customer, that you can adapt depending on the situation:

After your call, make sure you quickly follow up with an email - keeping track of your conversation in writing is key.

5. Involve your account managers

We’ve all heard the infamous “salespeople should sell, not work on collection”. We disagree.

Apart from technical “glitches” that should be resolved by now, if your customer hasn’t paid yet this is a strong indicator that there could be a looming dispute. Don’t let this happen!

Selling without collecting payment is a double punishment for your company: costs were incurred but no inbound cash flow will match them.

The cost of write-offs is indeed high: at 20% gross margin, you’d have to sell 5x to zero them out.

So it’s a great idea to involve your sales or account management team to help unblock the situation, especially as they ultimately own the customer relationship.

When the finance team has done their job and payments are still awaited, account managers should take over. At Upflow, we’ve helped many companies educate their sales teams and turn cash collection into a business topic - discover how!

6. Follow up with a past due invoice letter (snail mail)

In hopefully rare cases, you’ll have done all of the above but still won’t have collected outstanding payment from your customer.

Now’s the time to send an overdue invoice letter via snail mail: finance and administrative teams are used to receiving quite a few of these every day so you’re almost guaranteed that it will be opened and read.

Sending the original invoice via snail mail is quite a pain to send at scale (printing, posting costs) but thankfully services like Lob allow you to schedule & send snail mail online.  

Don't shy away from raising your tone of voice at this step: it is abnormal that you still haven't received payment way past your payment terms, considering your multiple previous friendly reminders.

The goal is to collect non-payments and avoid having to involve a collections agency or escalate to the small claims court. Alternatively, you could create a payment plan with your customer should they be having cash flow difficulties.

Remember to include a clear summary of past due invoices with their amounts, and attach them in print to your letter. Here's a template you can use to get immediate payment from your customers:

Key Takeaways

Collecting your past due invoices is easier than you'd think, but 90% of it is process and discipline.

Yes, asking for payment sometimes feels awkward or you might fear appearing "needy" but remember that cash flow is the lifeblood of your company. It matters a LOT.

To quickly collect past due invoices, there’s a simple formula: 

• Consistently track and rank your late-paying customers

• Follow up quickly on late payments, and set a tempo (at least 1 action per week)

• Turn collections into a business focus, involving account managers

Depending on your financial relationship with your customer, you also have the option to send advance warnings of interruptions of service unless payments are received, charge late fees, or block new orders until the balance is paid.

The key is to go about it professionally and politely: you need to get paid to simply deliver an outstanding experience for your customers.

At Upflow we make it easy for you to turn collections into a hassle-free process through a modern interface integrated in real-time with your billing tool. Want to know how?