First letter chasing an overdue payment

What’s a first letter chasing an overdue payment and when should you use it?

You should use this letter at the start of any correspondence with another business – or a consumer – that owes you money.

As careful as you may be with your trading terms and when giving out credit, sometimes a customer just doesn’t pay on time.

As a small business, cash flow is of essential importance-one unpaid invoice from a customer can mean your suppliers don’t get paid either.

Most businesses want to preserve good sales relationships, even if something goes wrong with a customer on one occasion, and so our suite of complaint letters are considerately designed to help you to make your point about the overdue payment, while making it clear that you are not a pushover.

What else might you need?

If you are the recipient of an accusation that you owe money, you should use our response template series, starting with the first reply disputing you owe money to another business.

If a payment is late, remember to follow through with your late-payment terms and conditions.

By not charging the late-payment interest (or any other penalties you have detailed in your terms and conditions), your policies will lose their authority – which, as a result, could make any future invoices you send seem less of priority to customers.

Revise your credit allowances (if you offer them) for frequently late payers.

Just remember to add a clause in your terms and conditions that’ll allow you to easily do this.

Our standard terms and conditions templates all contain this wording.

Regularly check up on invoice and payment statuses.

Don’t forget to spend some time each month to go through your records of who has and hasn’t paid you – and then make sure you chase any late payments promptly.

To discover more about managing debt within your small business, take a look at our guide to handling late payers and bad-payers and our step-by-step guide to debt collection for small businesses.

Our guide to invoicing with success will also help to ensure that you have the right payments and invoicing arrangements in place for your business.