How to chase late payments
A reminder schedule with example emails for each stage, a phone script, late fees and interest, final demands, small claims options and when to write off.
Updated
Most overdue invoices aren't disputes. The invoice went to the wrong inbox, or it's sitting in someone's approval queue. A steady reminder routine sorts these out without damaging the relationship, and it leaves a clear record if you need to escalate.
Prevent late payment before you invoice
Most of the work happens before the invoice goes out:
- Agree terms in writing. Put the due date, accepted payment methods and any late fee in your contract or accepted quote before work starts. Payment terms explained walks through the options.
- Take a deposit on larger jobs. Start work once it clears.
- Get the details right. Use the customer's legal business name, their purchase order number if they issue one, a unique invoice number and a real due date rather than just "net 30". The net 30 due date calculator works it out.
- Send it to the person who pays. Ask who approves invoices and which address accounts payable uses. Larger customers may need you to complete a vendor setup form first; in the US that often includes a Form W-9.
- Make paying easy. Print every payment option, with account details, on the invoice itself.
A reminder schedule
Use the same schedule for every customer:
| When | Tone | What you want |
|---|---|---|
| 3 days before the due date | Friendly | Confirmation they have the invoice |
| On the due date | Friendly and direct | Payment today |
| 7 days overdue | Polite but firm | A payment date |
| 14 days overdue | Firm | Payment this week, or a phone call |
| 30 days overdue | Formal | Payment by a final deadline |
Keep each reminder in the same email thread, attach the invoice every time, and log every contact. If you use Pro, it can send the before-due and overdue reminder emails automatically.
Example reminder emails
These assume invoice INV-1042 for $2,400.00, dated May 13 on net 30 terms, so due Friday, June 12.
3 days before the due date
Subject: Invoice INV-1042 due Friday, June 12
Hi Dana, a quick heads-up that invoice INV-1042 for $2,400.00 is due this Friday, June 12. I've attached it again so it's easy to find. If you need a PO number or anything else to process it, let me know and I'll send an updated copy today.
On the due date
Subject: Invoice INV-1042 is due today
Hi Dana, invoice INV-1042 for $2,400.00 is due today. Payment details, including ACH and card, are on the attached invoice. Could you let me know once payment has been sent? Thanks.
7 days overdue
Subject: Invoice INV-1042 is 7 days overdue
Hi Dana, I haven't received payment for invoice INV-1042 ($2,400.00), which was due on June 12. Can you tell me when it's scheduled to be paid? If something is holding it up, tell me and I'll fix it quickly.
14 days overdue
Subject: Second reminder: INV-1042 is 14 days overdue
Hi Dana, invoice INV-1042 for $2,400.00 is now 14 days overdue, and I haven't had a reply to my last reminder. As set out in our agreement, overdue balances incur a late fee of 1.5% per month. Please arrange payment this week or give me a date I can rely on. If I haven't heard from you by Tuesday, I'll call.
30 days overdue: final notice
Subject: Final notice: INV-1042, payment required by July 24
Hi Dana, invoice INV-1042 is now 30 days overdue. Including the $36.00 late fee in our agreement, the balance is $2,436.00. Please pay in full by Friday, July 24. If I haven't received payment or a signed payment plan by then, I will file a claim in small claims court without further notice.
Phone call script
A call often gets an answer that three emails didn't. Keep it short and factual:
- Reach the right person. Ask for whoever approves or releases supplier payments, and note their name.
- State the facts. "I'm calling about invoice INV-1042 for $2,400.00, which was due on June 12."
- Ask an open question. "Is anything stopping it from being paid?" Then listen.
- Fix what you can. Resend the invoice, supply a missing PO number or W-9, or correct an error the same day.
- Get a commitment. Agree on an amount and a date. If they can't pay in full, agree on installments, such as $800.00 on each of the next three Fridays.
- Confirm in writing. Email a summary the same day: who you spoke to, what they agreed to and when.
Late fees and interest
A late fee is easiest to collect when the customer agreed to it before the work started. At 1.5% a month, a $2,400.00 invoice one month overdue picks up $36.00. The late fee calculator works out other amounts.
United States. Late fees and interest depend on your contract and state law, and states limit what you can charge in different ways. Check your state's rules, or ask an attorney, before choosing a rate.
United Kingdom. Under the Late Payment of Commercial Debts (Interest) Act 1998, a business paid late by another business can claim:
- Statutory interest at 8% plus the Bank of England base rate, as simple interest. The base rate on 31 December applies to debts that become late between 1 January and 30 June, and the rate on 30 June applies from 1 July to 31 December.
- Fixed compensation of £40 for debts up to £999.99, £70 for £1,000 to £9,999.99 and £100 for £10,000 or more, plus reasonable costs of recovering the debt.
If the base rate were 4%, a £5,000 invoice paid 45 days late would carry 12% a year: £5,000 × 12% × 45 ÷ 365 = £73.97, plus £70 compensation. With no agreed payment date, payment is late 30 days after the customer receives the invoice or you deliver, whichever is later, and statutory interest doesn't apply if your contract sets its own rate.
Canada. State a yearly rate alongside any monthly one (1.5% a month is 18% a year). Under section 4 of the federal Interest Act, a written contract that gives only a rate for a period of less than a year limits recoverable interest to 5% a year.
Pause work and put it in writing
Once an account is 14 days overdue, consider pausing new work until it's paid, if your contract allows it. Tell the customer in writing which invoice is overdue, the amount and what will restart the work. Keep delivering anything they've already paid for.
Final demand and letter before action
If the final notice goes unanswered, send a formal final demand before filing anything. It should state:
- the invoice number, date and original amount
- any fees, interest or compensation your terms or the law allow, with the calculation
- a firm deadline, such as 14 days from the date of the letter
- how to pay
- what you'll do next, such as filing in small claims court or passing the debt to a collection agency
Send it by email and tracked mail (certified mail with a return receipt in the US), and keep copies.
In England and Wales, courts expect this step. For a business customer, the Practice Direction on Pre-Action Conduct expects a letter setting out the claim and how the amount is calculated, and a reply within 14 days in a straightforward case. If your customer is an individual or sole trader, the Pre-Action Protocol for Debt Claims applies instead: send a Letter of Claim with the protocol's Information Sheet and Reply Form, and allow 30 days for a reply before you start a claim.
Small claims courts and tribunals
- United States: each state runs its own small claims process, and the limits vary widely. California, for example, allows claims of up to $12,500 for individuals and $6,250 for businesses. Check your state or county court website for limits, fees and forms.
- United Kingdom: in England and Wales you can claim online through gov.uk, using Money Claim Online or the newer Civil Money Claims service. If a claim of £10,000 or less is disputed, you'll have to attend free mediation. Scotland and Northern Ireland have separate processes.
- Canada: each province and territory has its own small claims court and limit. Ontario's Small Claims Court hears claims up to $50,000.
- Australia: claims go to your state or territory's local or magistrates court, or a tribunal such as QCAT in Queensland, which hears minor debt claims. The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) can point small businesses to low-cost dispute resolution.
- New Zealand: the Disputes Tribunal hears claims up to $60,000, a limit that doubled on 24 January 2026.
A judgment still has to be enforced if the customer won't pay, and enforcement has its own fees.
Debt collection agencies
A collection agency takes over the chasing for a share of what it recovers. Compare the percentage, any upfront or minimum fees and what happens if nothing is recovered. If your customer is an individual who bought for personal, family or household purposes, the federal Fair Debt Collection Practices Act controls how third-party collectors can contact them; business debts fall outside that law.
When to write it off
Stop chasing when collecting would cost more than you'd recover, or the customer has closed or become insolvent. Then check what tax relief is available:
- US income tax: the IRS lets you deduct a business bad debt only if the amount was included in your income, so cash-basis businesses generally can't deduct unpaid fees.
- UK VAT: if you've already paid the VAT, you can claim bad debt relief once the debt is 6 months overdue, counted from the later of the due date and the date of supply, and written off in your VAT accounts. Claims must be made within 4 years and 6 months.
- Australia and Canada: the ATO and CRA let you recover GST or HST already reported on a bad debt, subject to conditions. In Australia this applies if you account for GST on a non-cash basis and the debt is written off or 12 months overdue.
If the customer pays after you've claimed relief, the relief usually has to be reversed, so tell your accountant.
Frequently asked questions
How soon should I follow up on an unpaid invoice?
Start before it's late. Send a short reminder 3 days before the due date and another on the due date, then follow up at 7, 14 and 30 days overdue. Early, polite contact catches invoices that went to the wrong inbox or are waiting for approval before they become real problems.
Can I add a late fee to an invoice that's already overdue?
Only if the customer agreed to it before the work started, in your contract, accepted quote or written terms, and within any limit set by your state. In the UK, a business paid late by another business can claim statutory interest and fixed compensation under the Late Payment of Commercial Debts (Interest) Act 1998 unless the contract sets its own rate.
What should a final demand letter include?
The invoice number, date and amount, any interest or fees your terms allow with the calculation, a clear deadline such as 14 days, how to pay, and what you will do if the deadline passes, such as filing in small claims court or using a collection agency. Send it by email and by a tracked mail service.
Should I stop work for a client who hasn't paid?
Often, yes, but check your contract first. Pause new work rather than withholding work the client has already paid for, and tell them in writing which invoice is overdue and what will restart the work. A contract clause that lets you suspend work for non-payment makes this much easier.
When should I write off an unpaid invoice?
When collecting it would cost more than you are likely to recover, or the customer has closed or become insolvent. In the US, a business bad debt is generally deductible only if the amount was already included in your income, so cash-basis businesses generally can't deduct unpaid fees. Ask your accountant before writing it off.