4 Strategies to Get Clients to Pay Their Outstanding Invoices {Plus Email Templates!}

Unpaid invoices are such a bummer, especially when your small business could really use a new industrial-sized oven or gold-plated pens.

In business, the definition of eternity is the time between a job’s completion and getting paid. Collecting invoices can often feel like cattle wrangling. But not in the fun way, like riding an electronic bull after a few shots of tequila *yeehaw.* The truth is, it’s not half as exhilarating. Following up on unpaid invoices gets tiring, and typically it’s the same clients pulling the same stunts as Evil Knievel. This is where the skill and learning experience comes in. Having your own customized outstanding invoices email template is helpful, especially if you have a whole throng of clients to notify. Every industry deals with money transactions in different ways.

Timing is essential, and you need to know how to invoice with finesse. When clients start defaulting with payments on the regular, the true test comes in knowing whether to keep them on in the future or let them go. Some clients are new to the business and just getting on their feet, while others are simply taking advantage of you. You have to be sympathetic enough to tell the difference. Having watertight policies in place will make this process run smoothly, for the most part. However, there will be those rare times where you will need to accommodate specific clients to maintain long-term relationships.

 The Difference between Outstanding Invoices & Past Due Invoices

Let’s dive a little deeper *splash!* You’ll need a cool head for collecting invoices. First, though, let’s get a clear idea of what to prioritize because it’s easy to lose track of things. As a business owner, you will need to cover so many different areas. So, let’s make sure you have a clear understanding of how to approach unpaid invoices. Soon, you will have a simple system in place for tracking invoices. This way, you won’t miss any payments or spend too much time hunting your clients down. Let’s look at outstanding and past due invoices, the differences between them, and the risks involved.

Outstanding Invoices

If an invoice is outstanding, that means—you guessed it—the client hasn’t paid. Before the due date of the payment, sending an outstanding invoices email will help the client see it as a priority and pay on time. Try not to see it as rude or pushy. It’s simply part of the process of following up on unpaid invoices. Remember that the due dates on your invoices aren’t there for show; they affect your cash flow projections. Depending on where you are sitting financially, an overdue account balance can be severe.

The money you planned on having is suddenly not available, and this reduces your liquidity and puts a strain on other areas of your business. This means you should include an expected payment date clearly on your invoice. Be sure to set up email reminders, too, and always prompt your client with an end of the week or month phone call when the payment due date is near. The best strategy to have is one that puts the proper pressure on the client to pay before the due date, not after. Some contracts even have incentives for paying early, which might be helpful depending on which industry you work in.

Past Due Invoices

As in medicine, prevention is better than cure. Your doctor, however, won’t remedy your cash flow trouble. Here, the best method is keeping a close eye on each client and prioritizing their payments. You should always try and make sure that your policy for collecting invoices acts like a safety net to warn you and prevent overdue invoices. Remember that look the librarian gave you? Good! We’ll need to channel that. Instead of being nasty or nice, just think of it as relaying a message. Unpaid invoices that are past due should be your absolute top priority, so your client needs to do the same when catching up on your outstanding payments.

Try to take yourself out of the picture for a second. When your account with a credit or loan service goes into arrears, they don’t stop to ask how your day was. If your clients can pick and choose when they settle their unpaid invoices and simply ignore the dates specified, they might not be worth doing business with. Remember to value your time. Even in a small business where you don’t have an entire legal or accounts department to hunt payment defaulters, your time is just as important as a corporation’s CEO.

4 Strategies to Get Clients to Pay Their Outstanding Invoices

Ok, now we all get a bit jittery when these situations arise. Unpaid invoices can make the hair at the back of your neck stand up. Take a breather! Before we get too hot and bothered, let’s look at 4 reliable ways to help you when you’re collecting invoices.

 1. Do Your Homework

We all love crime shows. Now’s your time to shine, Colombo! Before entering into a long-term contractual agreement with your client, you need to check their background and reputation in their industry. Get recommendations by speaking to companies that have previously worked with them. It’s common to omit details when gathering info because you want an unbiased opinion. Being innocuous means you won’t have an agenda, and the information flows easier than if you actually tell people you are vetoing potential clients. In business, it’s a common practice to protect your interests and relationships, and people often smooth over the cracks.

Payment defaulters often have a track record, so you want to make sure the client you’re looking at doesn’t fall into that category. Pay close attention to their initial response regarding costs. Did they scoff at your rates? Maybe they mentioned they are in a “rebuilding” phase or “reshuffling” with “budget restrictions?” These are all red flags. Politely decline and simply say you’d like to work with them in the future when things are “less chaotic.” Remember to be upfront in your communication from the beginning, as this will avoid any confusion in the future.

2. A Polite Follow-Up

Try refreshing your client’s memory. Most of the time, you’ll find your original invoice just slipped their mind or ended up in the spam folder. What helps is linking the communication. This provides context and emphasizes procedure, so the client doesn’t feel it’s “out of the blue.” Always confirm your outstanding invoices email with a phone call, text, or both. Maybe you communicate with the owner via text and their accounts manager over the phone. When you send a follow-up email, remember to forward the original message and attach the correct invoice, so there are no mistakes or confusion.

Oh, look, we’ve even made a follow-up email template for you:

Email Subject: RE: Invoice #(Invoice Number)

Email body:

Dear (Client),

We trust that you’re well.

This is just a friendly reminder about invoice #(Invoice Number). According to our records, it was sent on (Month) (Day) (Year), could you kindly confirm that you received it?

If not, you can find the invoice in question in the .pdf attached and the original email forwarded below. If you are unsure about any of the details, please don’t hesitate to contact us immediately. We look forward to hearing from you soon.

Best Regards,

(Your Name)

(Original Invoice Email Forwarded)

3. Overdue Reminder

In times like these, persistence does usually pay off. You need to reach the stage where the client simply gets tired from seeing your name in their inbox or hear about your unpaid invoices from their accounts department. Use your discretion, as each client relationship is different. In some cases, you might need to cite the term in your contract regarding late payments and any penalties that may incur when this happens. Always follow up your email correspondence with a phone call to confirm, and make sure you keep it brief. When communicating, always keep in mind that you are simply relaying information and making them aware of policies and terms they have already agreed with. This is not a shakedown!

Oops, we did it again! Here’s an overdue reminder email you can use as a template:

Email Subject: Unpaid Account Balance Invoice #(Invoice Number)

Email body:

Dear (Client),

We trust that you’re well. According to our records, your account is in arrears of (amount) for invoice #(Invoice Number). This amount is now one week overdue.

You can find the outstanding invoice attached; please investigate this and get back to us as soon as possible. If the payment has already been sent, simply send proof of payment, and please disregard this notice.

We appreciate your prompt response on this matter.

Best Regards,

(Your Name)

(Original Invoice Emails Forwarded)

4. Call It

You’ve tried everything and failed *super sad face.* Your terms and expectations on the contract were clearly laid out. You’ve sent a chain of progressively escalating emails, and maybe you tried snail-mail. You’ve made them aware of incentives or even begun to charge penalties. You even set up a timeous reminder system from your accounting software for notifying your clients about their invoices. The difficult now decision falls upon you as a business owner to take legal action. This usually brings instant results, as in most cases, a simple lawyer’s letter works like magic. No one wants a courtroom drama unless it’s on Netflix.

However, you should be aware of the legal costs involved. Also, going the legal route severs the business relationship. There usually isn’t any coming back from that, so you need to be sure. Don’t fire your biggest client when they are going through hard times, like in the pandemic, for instance. You could be shooting yourself in the foot, and the decision might even put you out of business in 6 months. As with anything in business, you need to prioritize according to your financial situation. Sometimes you are just too busy and taking the “L” on an unpaid invoice will mean nothing in the long run.

Yes, tackling unpaid invoices can be a nightmare.

At least now you have some tricks up your sleeve for next time. Even in these challenging situations, the key is never to lose sight of the bigger picture. That’s why your friends over at Alchemy Accounting can give you a clear idea of where you’re at financially. You’ll become better at prioritizing and juggling different sides of your business, so you achieve total balance *namaste.* Staying on top of your cash flow and profits means you need to be future-focused. It always helps to have someone who’s got your back (like us).