Best Practices for Writing a Payment Reminder Letter

Best Practices for Writing a Payment Reminder Letter

Best Practices for Writing a Payment Reminder LetterMost online businesses these days sell products with direct online payment at the moment of purchase. But there are still a lot of companies which issue invoices with flexible payment terms, allowing customers a period of up to 30 days to pay for their products and services. While this system is preferred by customers, giving them time to arrange their finances in case of significant payments, it means extra work for business owners.

Although you think that you have built a relationship of trust with your customers, sometimes various situations occur and you do not receive the due payment. It is very frustrating and it is also strangling your cash flow, but you need to identify such situations early on and take action. This action has the form of a payment reminder letter or email.

It is very important to write your letter when you are calm and you are not tempted to use unduly harsh terms. The best solution is to prepare a template and to use it over and over again. This will give your letters a professional look and it has a higher chance of attracting your customer’s attention and prompting them to pay the overdue invoice.

Here are some actionable tips to help you create a polite, friendly but firm payment reminder letter.

  1. Title Your Letter or Email in a Self-Explanatory Way

Many letter and emails get sent to the real or digital bin without having been read. You want yours to be read – so tell your addressee without any obfuscation the reason why you write to them.

Of course, you will be a little discreet in printed mail – you will simply state on the envelope that it carries important content and that it should be read. For emails it is simpler, since no one but the addressee reads the message. Your email subject line must clearly state that this is a payment reminder notice.

  1. Give the Defaulting Customer the Benefit of the Doubt

Be friendly in your description of the situation. Address them in the salutation line using their name, and state the matter in a clear, unbiased fashion. Your customer may have had an extremely busy time and simply forgot about your invoice, or any other unforeseen situation may have occurred.

A friendly approach, giving them the benefit of the doubt, will increase your chances of getting the payment after the first notification than veiled or direct threats with enforcement and collection agencies.

  1. Enclose Copies of All Relevant Documents

One reason why customers do not pay on time is because they lost your invoice one way or another. A payment reminder letter must contain all the relevant documents which helps the customer make the payment without delay: the agreement you signed with the customer (if applicable) and the invoice.

Many payment reminders are not effective because the customer no longer has the documents which help them prepare a wire transfer or payment order.

  1. Highlight Any Delay Penalties

If your agreement with the customer stipulates penalties for delayed payment, then you need to provide the customer with full explanations:

  • Cite the clause in the agreement which stipulates these penalties;
  • Provide a breakdown calculation for the penalties already due;
  • Clarify to the customer the fact that delaying the payment will entail supplementary delayed penalties.
  1. Provide a Deadline and Payment Options

You want to make your letter actionable, so provide the customer with a deadline for making the payment. Give it a friendly approach, just like the rest of the content. In the phrasing you should also include the payment options you agreed with the customer. An effective but friendly approach to this final part of your letter may sound something like: “I am waiting to receive payment from you until May 25 by PayPal, wire transfer or credit card.”

Last, but not least, keep track of these payment reminders. If you still do not get paid, you can follow up with a direct phone call or by sending a firm written reminder which includes references to collection agencies.