Overdue invoice letter – templates and tips for creating your late payment letter

Also known as an ‘outstanding payment letter’, ‘debt recovery letter’ or ‘overdue invoice letter’, a late payment letter template is a handy tool to have on file.

Here’s our guide to writing a polite nudge, clear reminder and final notice – check what works for you and start cutting down on sending emails to chase payment.

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When should I send an overdue invoice letter?

You've received a purchase order from a customer, sent the items, and issued an invoice – yet you haven't received payment. What do you do now?

Most of the time, late payment can be easily settled with a quick email to your customer, gently reminding them that payment is overdue. When that doesn’t work, however, or you get no response, a letter in the post can help to formalise the situation. Make sure you’ve got an up-to-date address for correspondence, and keep a copy (and record) of everything you send and receive.

To get you started, here’s what an outstanding payment letter should include, when to send a ‘nudge’, and how to take further action (if necessary).

What should a late payment letter include?

Hopefully you’ll only ever need to send one polite nudge for late payment. But if not, you may need a couple of other templates to get the message across, including a firm reminder and a final notice letter.

These are the basic details each letter needs to include:

Late payment letter 1: polite nudge

• your company name and address
• recipient’s name and address
• today’s date
• a clear reference and/or any account reference numbers
• the amount outstanding
• original payment due date
• a brief explanation that no payment has been received
• next steps (you could give the recipient the opportunity to contact you and/or pay within a specific number of days)
• payment options
• reference to your payment terms

Late payment letter 2: firm reminder/late payment charges letter

• your company name and address
• recipient’s name and address
• today’s date
• a clear reference and/or any account reference numbers
• the amount outstanding
• a reference to your polite nudge or last communication
• a brief explanation that payment is still outstanding, and any charges that may be added in line with your payment terms (and current government legislation)
• next steps, including a cut-off payment date
• payment options
• reference to your payment terms

Late payment letter 3: final notice/letter before action

• your company name and address
• recipient’s name and address
• today’s date
• a clear reference and/or any account reference numbers
• the breakdown of the total amount outstanding, including any additional charges/interest
• a reference to your reminder letters or last communication
• a brief explanation that payment is still outstanding and now in breach of your payment terms
• explanation of any further costs added
• next steps, including a final cut-off date and consequences for failure to pay (this will depend on your debt recovery arrangements)

Outstanding payment letter template

Here’s a late payment letter template, giving a reminder of the amount outstanding and due date, plus next steps.

You’ll need to edit this according to your business and circumstances, for example it might be more appropriate to mention a specific invoice that hasn’t been paid, rather than an overdue account balance.

Late payment letter online tips and resources

At Simply Business, we often check the most recent legislation and guidance for small businesses, especially when it comes to finance and legal issues. Get hints and tips sent straight to your inbox and check our legal and finance hub for regular updates.

You can also get a lot of insight from gov.uk, especially when it comes to late payments, debt recovery and due compensation. Take a look at their late commercial payments hub for more on charging interest and debt recovery, for quick reassurance of your rights and the proper procedures.

How legal expenses insurance can help

If you have legal expenses insurance as part of your Simply Business policy, you have access to a number of useful services through DAS Businesslaw (you’ll just need your voucher code found in your policy documents to register).

DAS has a legal advice helpline, available whether you’re facing a serious legal issue or just want to check something with an adviser. They also offer a range of legal templates and guides to help you with managing tenancies.

Remember, this article is just a guide, and it's always worth seeking professional legal advice.

Click here to download an overdue payment reminder letter PDF