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How to collect past due invoices in 6 steps (with templates)

Côme Chevallier
Côme Chevallier
Nov 13, 2020

Wondering how to collect the past due invoices piling up in your books?

You’re not alone.

In an ideal world you’d get paid on time every time without having to ask for it.

But at Upflow we’ve noticed that 30% of past due 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.

Let’s get right into what works.

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”.

The first step is to get a clear picture and rank 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).

Aged receivables report in Upflow showing how much invoices are past due with time buckets

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 notice via email

In about a third of cases, late payments occur because your customer’s 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.

Keep this first email professional, polite and plain text: avoid HTML-formatted 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 trash.

Of course, the tone can and should be adapted relative to how many invoices are overdue and for the number of days they have been so, 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 under way 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.

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):

Subject line

{your company name}: ${balance due} overdue for {client name }


Dear {billing contact},

I hope you are well!

I am reaching out regarding your overdue account balance which stands at ${amount due}.

Please find the list of our invoices references which are now past due: {invoices references list}

You will also find the corresponding PDFs attached to this email if needed.

We would appreciate a {payment options} payment upon receipt of this email.

If your payment is already underway, please disregard this notice.


{your name}

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 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 office, or ignoring you if you’re not persistent. Ultimately, collecting your cash is what keeps your company's lights on.

Typically a simple collection workflow should look like this:

Collection workflow with email reminders for past due invoices

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.

A banner to learn about the best way to deal with past due invoices.

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 - just picking up the good ol’ phone.

Typically you would do that after having sent at least 2 or 3 email reminders which 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 invoice 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:

Hi John,

This is Jane from SuperCompany, Inc. - I’m calling regarding our 3 outstanding invoices for a total of $40,000 and for which we are still awaiting payment.

These were due in August & September respectively, and we didn’t receive a reply via email to our inquiries about their processing status from you.

Do you have more information on your end by any chance?

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 payment from your customer.

Now’s the time to try the snail mail card: 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.

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. 

Bonus: in Upflow you can also send letters directly from your interface, from the same place as email :)

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, and considering your multiple previous reminders.

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:


Letter of formal notice for your overdue balance of ${overdue amount}

Dear Sir or Madam,

Despite several reminders to your company, we still haven't been able to collect payment for our invoices which are now late overdue and that you will find attached to this letter.

Here is the full list for your reference:

{invoices references list}

We therefore demand that you proceed to the payment of ${overdue amount} within the next 15 days.

If we do not receive your payment or hear from you by {payment deadline}, we will unfortunately have to escalate the situation and resort to legal actions.

We look forward to hearing from you,


{your name}

Wrapping up...

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

Yes, asking for payment sometimes feel awkward or you might fear to appear "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 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?

Talk to an expert