How often do your customers have an outstanding payment or pay their invoices late Or if you’re an accountant or bookkeeper, how often do your clients get paid late by their customers? Xero took a look at their data and discovered that 48% of invoices were paid late. The real concern, though, is the knock-on effect this has on businesses. Research from The Federation of Small Businesses uncovered that in the UK, 50,000 small business failures could be prevented each year by eliminating late payments.
Here at Chaser, chasing up payment is our speciality. We’ve been refining our payment-chasing email templates for several years, to produce what we believe are the most effective to get paid on time. Chaser users get those email templates built-in to their account so they can automatically chase all of their customers with best-practice templates (you can try out automated chasing for free, for 10 days).
But while these are a one-size-fits-most solution, they aren’t one-size-fits-all. For those times when you or your clients have bad-paying customers that are a nightmare to get payment from, we’ve assembled the best practice email templates to use, and sending schedule to follow, below.
The definition of what’s considered to be a ‘bad payer’ is something that can drastically differ depending on who you ask.
If customer invoices are regularly becoming late overdue, it may be worthwhile distinguishing your business' bad payers. As follow-ups can be adjusted accordingly for each group, to maximise your chance of prompt payments.
The short of it is: most bad-paying customers are simply those that have built a reputation for paying past the invoice due date. If you were already expecting a customer to miss the due date of an invoice before it rolled around, that’s a classic example of a bad payer. In general, chasing bad payers via email requires more focus on firmness and specificity, doing away with casualness and pleasantries (without being rude, of course). You also want to keep on top of bad payers more frequently than other customers.
Below is our recommended email-sending schedule for bad payers. This schedule is optimised for businesses that sell on 30-day payment terms. For shorter or longer payment terms, we’ve noted the adjustments below.
Every business will have those few tricky customers where email reminders aren’t working, you can see our best practice guide on ‘What to do when customers aren’t paying’, just click here. You can help your business avoid bad payers in the first place, by asking these 4 key questions to all new customers.
--- Invoice due date ---
SUBJECT LINE:
Your invoice <<invoice-reference-number>> - Confirming details
BODY TEXT:
Hi <<recipient-first-name>>,
How are you?
I'm drafting your upcoming invoice for next month. Can you confirm that your billing entity is <<customer-company-name>> and that the amounts and details on the attached invoice are correct?
Please note this is a DRAFT invoice. So please do check your invoices when they come in at the start of the month.
Thanks in advance.
All the best,
<<sender-first-name>
EMAIL SUBJECT:
<<your-company-name>> invoice: <<customer-company-name>> <<invoice-reference-number>>
BODY TEXT:
Hi <<recipient-first-name>>,
I hope you're well.
Please find attached your invoice and statement for <<customer-company-name>>. Our credit term is <<payment-terms-number-of-days>> days. You can also view and pay it online via this link: <<online-invoice-link>>.
Best regards,
<<sender-first-name>>
EMAIL SUBJECT:
<<your-company-name>> invoice <<invoice-reference-number>>
BODY TEXT:
Hi <<recipient-first-name>>,
How are you today?
I just wanted to check in about our invoice <<invoice-reference-number>>. I’ve resent it here as an attachment in case my previous message didn’t reach you.
I understand that this was received quite recently but could you please share the expected payment date? Once a payment date is provided (even if provisory to begin with) we can make a note to stop following up.
Thank you in advance and have a nice day.
Best regards,
<<sender-first-name>>
EMAIL SUBJECT:
<<your-company-name>> invoice <<invoice-reference-number>>
BODY TEXT:
Hi <<recipient-first-name>>,
Hope you are having a great week.
Just a gentle reminder that your invoice <<invoice-reference-number>> is due in <<number-of-weeks-until-due>> weeks. Please let us know if there's anything we can do to assist with the settlement of your invoice. Furthermore, if you have scheduled a payment, please advise us on the value date and we will make a note to stop these reminders.
You can also view and pay the invoice online via this link: <<online-invoice-link>>.
All the best,
<<sender-first-name>>
EMAIL SUBJECT:
<<your-company-name>> invoice <<invoice-reference-number>>
BODY TEXT:
Hi <<recipient-first-name>>,
How are you?
Just a reminder that your invoice <<invoice-reference-number>> is due on <<invoice-due-date>>. Kindly note that late payments will incur extra fees.
You can also view and pay the invoice online via this link: <<online-invoice-link>>.
If you have any questions, please let me know.
Best regards,
<<sender-first-name>>
EMAIL SUBJECT:
<<your-company-name>> <<invoice-reference-number>> for <<customer-company-name>> is Now Overdue
BODY TEXT:
Hi <<recipient-first-name>>,
How are you today?
The invoice <<invoice-reference-number>> is now overdue. Kindly note that late payments can incur extra fees.
Your response on an expected payment date for this transaction is required to prevent penalty charges. We’ve reached out previously and have been unable to receive your response on an expected payment date.
You can view and pay your invoice online via this link: <<online-invoice-link>>.
We thank you for your attention on this and look forward to your reply.
Best regards,
<<sender-first-name>>
EMAIL SUBJECT:
Please act now to avoid late payment penalty for <<customer-company-name>>: <<invoice-reference-number>>
BODY TEXT:
Dear <<recipient-first-name>>,
Please do take note of the following. If we don't receive a reply, we may call to confirm.
The invoice <<invoice-reference-number>> is now <<number-of-days-overdue>> days overdue.
Should we not hear back from you within the next seven days, we will issue a late payment penalty notice. The penalty structure is set out by the UK government under the Late Payment of Commercial Debts Regulations 2002 (SI 2002 No 1674). <<your-company-name>> will charge the statutory interest of 8% plus the Bank of England base rate for business to business transactions, in addition to a fee of £40 to £100 based on the size of the invoice.
To access the invoice and the debit/credit card payment gateway, please follow this link: <<online-invoice-link>>. I've also attached a copy invoice to this email for your reference.
Thank you for your attention on this. I look forward to your reply.
Best regards,
<<sender-first-name>>
EMAIL SUBJECT:
Late Payment Penalty Notice for <<customer-company-name>>: <<invoice-reference-number>>
BODY TEXT:
Dear <<recipient-first-name>>,
Regrettably, we have not received your payment for the overdue invoice <<invoice-reference-number>>. As such, we have to charge the statutory late payment compensation and interest as set out by the UK government under Late Payment of Commercial Debts Regulations 2002 (SI 2002 No 1674), in addition to the outstanding amount.
The amount due as of today for <<invoice-reference-number>> is <<unpaid-invoice-amount>>.
To access the invoice and the debit/credit card payment gateway, please follow this link: <<online-invoice-link>>.
We will issue the penalty separately to this email unless the remaining balance can be cleared today.
Kind regards,
<<sender-first-name>>
EMAIL SUBJECT:
7 days before claim submission at HM Courts and Tribunal Services - <<invoice-reference-number>>
BODY TEXT:
Dear <<recipient-first-name>>,
Regrettably, we have not received your payment, nor have we received a response about the overdue invoice <<invoice-reference-number>>. As such, we’ve had to charge the statutory late payment compensation and interest as set out by the UK government under Late Payment of Commercial Debts Regulations 2002 (SI 2002 No 1674), in addition to the outstanding amount.
The amount due as of today for <<invoice-reference-number>> is <<unpaid-invoice-total-plus-late-payment-penalty-amount>>.
To access the invoice and the debit/credit card payment gateway, please follow this link: <<online-invoice-link>>.
If the total amount due is not paid within the next seven days, this case will be submitted to HM Courts and Tribunal Services. Each of the further claim stages will incur additional fees and greatly increase the balance owed.
Please act now to address this matter.
Kind regards,
<<sender-first-name>>
EMAIL SUBJECT:
Money claim submitted for <<customer-company-name>> invoice <<invoice-reference-number>>
BODY TEXT:
Dear <<recipient-first-name>>,
Regrettably, the overdue invoice <<invoice-reference-number> has not been settled despite multiple attempts to communicate a payment date with your team. Therefore, the money claim for the amount due has been submitted to HM Courts and Tribunal Services by our company whose registered name is <<your-company-name>>.
The court fees have been added to your debt and the amount due is <<unpaid-invoice-total-plus-court-fees-amount>> as stated by the attached document. Every stage in a money claim process incurs extra fees. Please make the payment as soon as possible.
The next stage of this claim will result in a judgment issued against <<customer-company-name>> and this will impact your company’s credit rating. You can avoid this by settling the amount due before the case progresses. Should the claim progress beyond a judgment being issued, a warrant will then be issued and bailiffs will visit your premises to collect the outstanding amount.
Thank you for your attention.
Best regards,
<<sender-first-name>>
The above email templates and sending schedule are, in a generalised sense, the best practice approach you can have to get invoices paid on time by bad-paying customers. The unfortunate reality is that credit control is a process where you can only control the inputs. Even if you do the best you can, it doesn’t guarantee every customer will pay on time.
For the (very small) minority of cases where the above templates do not result in the invoice getting paid, don't simply write these off as bad debts, there are a whole host of options you can take, all outlined in our free guide ‘What to do when customers aren’t paying’.
For bad-paying customers, stick to the templates and schedule above in this post. In the majority of cases, payment will be collected on the invoice without having to proceed with late payment penalties or court proceedings.
But it’s not all doom and gloom. It’s possible to turn bad-paying customers into superstars. We wrote a blog post detailing the one thing that needs to be done, and done regularly, to eventually transform them into good-payers. Give it a try.
For best practice guidance on how to optimise your business' credit control function, see our Ultimate Guide to Accounts Receivable blog. Covering everything from the fundamental cornerstones of your AR procedure, when, how and why to conduct credit checks and distinguishing good and bad payers.