Jul 30, 2025
If you are running a business then I'm sure you know how stressful it can be when customers don’t pay their invoices. In this blog post we are going to take a closer look at some of the things you can do to ensure that you get paid.
Running any type of business certainly comes with its fair share of challenges, and few are as frustrating as having to chase clients for overdue payments. Not only can it be an uncomfortable and often awkward experience, but when clients are late paying invoices it is also likely to have a negative impact on your cash flow limiting your ability to reinvest in your company.
Sadly, the problem of delayed payments is a widespread one in the world of accounting and bookkeeping. Research suggests that around 90 percent of accounting and bookkeeping professionals in the UK have had to deal with the unenviable task of chasing overdue invoices.
This problem is not peculiar to the UK as 94 percent of accountants and bookkeepers in the United States report they are required to go after clients for late payments, while in Australia, 95 percent deal with the added difficulty of missed payments and unbilled out-of-scope work.
That being said, just because something is 'common' it doesn't mean you're powerless to change it. Here's what you can do to take action right away."
Before we go through the steps you should take when dealing with unpaid invoices, we’ll highlight the processes you need to put in place, what you should say to your clients and the things you can do if a client continues to refuse to settle the invoice.
If a client hasn't settled their invoice, follow up with a gentle reminder a day or two after the due date. At this point, it is possible the missed payment is simply an oversight or something that has been accidentally mislaid.
Keep the tone friendly by sending a message such as…
Sample Overdue Invoice Reminder Letter
Subject: Friendly Reminder – Invoice #[Invoice Number] Due
Dear [Client’s Name],
I hope you are well.
I'm writing to kindly remind you that Invoice #[Invoice Number], dated [Invoice Date], for the amount of £[Invoice Amount], was due on [Due Date] and currently remains outstanding.
We understand that oversights happen, and we'd greatly appreciate your prompt attention to this matter. If you've already arranged payment, please disregard this message.
For your convenience, I've attached a copy of the invoice. Should you have any questions or require assistance, please don’t hesitate to reach out.
Thank you very much for your attention to this matter. We value your business and look forward to resolving this promptly.
Warm regards,
[Your Name]
[Your Job Title]
[Your Company Name]
[Your Contact Information]
As well as sending a polite reminder by e-mail it may also be beneficial if you contact the client in other ways. Making a quick phone call or if they are local calling into their premises can sometimes help resolve the matter in a timely fashion.
A telephone call or a face-to-face meeting tends to be more difficult to overlook. They also give you the opportunity to get an instant response, rather than having to wait hours, days or weeks to hear back.
The possibility of being charged interest or having penalties imposed for late payment can often be a strong incentive for clients to pay. However, before applying these, it’s important to review the legal guidelines in your area to ensure it’s allowed and to determine the maximum interest rate you’re permitted to charge. These rules will often vary depending on location for instance, in the USA, each state has its own limits on allowable interest rates.
In the UK, late payment rules are outlined on gov.uk, while in Australia, it’s advised to consult your terms and conditions first before deciding on an appropriate interest rate.
The handling of overdue invoices can be a sensitive issue that requires care. It’s wise to discuss payment expectations, including any potential interest or penalties, with your client upfront, ideally in your engagement letter, so there are no surprises later.
If you insert high penalty clauses it may appear punitive, which can sometimes damage the client relationship. A good alternative may be offering clients the chance to request a payment extension if they need more time. This creates flexibility that will benefit both your business and your clients.
If the client fails to make payment after your initial follow-ups, escalate the matter by sending a formal overdue invoice notice.
Subject: Overdue Notice – Invoice #[Invoice Number]
Dear [Client’s Name],
I hope this message finds you well.
Our records indicate that Invoice #[Invoice Number], dated [Invoice Date], for the amount of £[Invoice Amount], was due on [Due Date] and is now overdue.
We kindly request immediate attention to this overdue payment. If you have already sent payment, please disregard this notice and accept our sincere thanks.
Please find attached another copy of the invoice for your reference. If there is an issue or if you need further assistance, feel free to contact us immediately to discuss potential arrangements.
We greatly appreciate your prompt response and cooperation in resolving this matter.
Best regards,
[Your Name]
[Your Job Title]
[Your Company Name]
[Your Contact Information]
If your client has several outstanding invoices, consider attaching an account statement that details all transactions between you and the client within a specific timeframe. This summary highlights both payments made and balances due, giving the client a clear overview of what they owe.
If the client replies to your overdue invoice reminder but is unable to pay the full amount right away, you can offer flexible repayment arrangements to help them clear the balance. This might involve breaking the total into smaller payments over a set period such as six, 12, or 18 months depending on the particular circumstances.
You can also ask whether or not they are able to make a payment right away, which will allow you to collect that amount immediately and set up a realistic payment plan for the remaining balance.
If your client fails to make the agreed payment by the due date, the next course of action is to issue a final reminder or a formal letter of demand (as shown below) in which you can outline the concerns you have while emphasising the urgency of the situation.
The type of communication you send will depend on your location. For instance, if your business is based in Australia, you can find a letter of demand template on business.gov.au. In the United States and the United Kingdom, Law Depot offers templates suitable for these situations. Regardless of your location, it's important to conduct proper research and ensure you are adhering to all applicable local laws and regulations.
Below is a sample email you can use:
Formal Demand for Payment Letter
Subject: Final Demand – Immediate Payment Required – Invoice #[Invoice Number]
Dear [Client’s Name],
We regret to inform you that despite our previous reminders, Invoice #[Invoice Number], dated [Invoice Date], for the amount of £[Invoice Amount], which was due on [Due Date], remains unpaid.
This is our final request for immediate settlement. If payment is not received within [specific number of days, e.g., 7 days] from the date of this letter, we may proceed with further action, including but not limited to legal proceedings or referral to a debt collection agency.
Attached again is a copy of the invoice for your immediate reference. If you believe there has been an error or if you wish to discuss the overdue account, please contact us immediately.
Prompt action to resolve this matter is strongly advised to avoid any additional inconvenience or costs.
Sincerely,
[Your Name]
[Your Job Title]
[Your Company Name]
[Your Contact Information]
To demonstrate how urgent the situation is you may consider sending your letter by recorded delivery if you are in the UK or certified mail in the USA or registered post in Australia. By doing this you can verify that both the invoice and formal letter of demand has been received by your client.
Are you dealing with a client who’s unresponsive or refusing to pay? There are official channels you can turn to for support. In North America, you can contact the Better Business Bureau (BBB); in Australia, the Australian Securities & Investments Commission (ASIC); and in the UK, you might consider mediation, issuing a statutory demand, or pursuing a court order. Involving a formal or legal authority could be the push your client needs to take the matter seriously and resolve the payment.
The exact process will depend on the organisation or authority you’re working with. For example, if you file a complaint through the BBB in the U.S., here’s what typically happens:
If your case meets the BBB’s guidelines, it will be forwarded to the business (i.e., your client) within two business days.
The client will then have 14 days to respond.
You’ll be notified as soon as the client replies, or if they fail to respond within the given time.
If your attempts to recover outstanding payments have been unsuccessful so far, it might be time to employ the services of a professional debt collection agency to collect the outstanding amount on your behalf. Debt collection agencies are specialists when it comes to chasing overdue accounts.Something you need to be aware of though is that most agencies will take a percentage of the amount they recover as their fee. To get more information on this, as well as other available debt recovery options and procedures, consult the collection agency regulations in the U.S., official government resources in Australia, or seek advice from a legal firm in the U.K.
Taking legal action can be both time consuming and costly, which is why it’s often considered a last resort. That said, if the amount you’re owed is significant, pursuing legal remedies will probably be worthwhile.
The best legal approach will vary depending on your location and the nature of your business, so it’s important to seek advice from a lawyer or solicitor who understands your specific industry and can help navigate the process.
Alternatively, you may consider filing a claim through small claims court or initiating a money claim, which allows you to resolve the dispute either with or without legal representation.
If you’ve read this far, you already know how stressful and time‑consuming chasing overdue invoices can be. The best way to reduce the chances of this happening is to take a proactive approach which can help prevent these problems arising in the first place.
Here are a few ways to make that happen:
If at all possible request an upfront payment which could be either a deposit that covers your expenses or the total project fee before beginning any work. This will help guarantee that you're compensated, at least in part, for your efforts.
Another option, depending on your business structure, is to adopt a subscription-based or recurring billing model. This setup enables automated payments at consistent intervals, providing a steady and predictable cash flow.
Make the payment process as smooth as possible by offering clients the flexibility to use their preferred payment methods. In today’s digital landscape, this typically includes credit and debit cards, as well as internet banking transfers.
These options not only make it easier for clients to pay but can be advantageous for professionals such as accountants and bookkeepers. Payments are processed quicker which can eliminate delays you sometimes get with manual invoicing or cheques in the post. The funds will be deposited directly into your bank account, cutting down on administrative tasks.
Using Invevo’s software can simplify the payment process by automating routine tasks such as issuing invoices and sending payment reminders. This helps ensure clients are nudged to pay on time, with minimal effort required from you.
Invevo’s flexible billing features are designed to accommodate different workflows. Whether you charge by the hour, invoice monthly, or bill upon project completion, the platform can be tailored in line with the needs of your business.
Chasing overdue invoices can disrupt your cash flow and divert valuable time from running your business. The good news is that there are effective ways to address and even avoid these issues. By using Invevo Software, you can streamline your billing process and minimise the chances of payments falling through the cracks.
To get more details on how Invevo can help ensure invoices get paid on time and your business continues to run smoothly contact our expert team today.
