How the four letters work together
Each letter does one more thing than the one before. The first assumes the customer forgot, or has a query. The last says what happens next and when. Send them on a schedule, not when someone remembers.
| Days overdue | Letter | What it does |
|---|---|---|
| 1 to 30 | Friendly reminder | Points at the invoice and invites a query. |
| 31 to 60 | Second reminder | Asks for payment or a reason by a date. |
| 61 to 90 | Account on hold warning | Names the date the account goes on hold, and mentions late payment rights. |
| Over 90 | Final notice | The account is on hold. Says what action follows, and when. |
Before you send one
- Check the invoice is right. A short, a return or a price the customer disputes is often why it is unpaid. A reminder for an invoice you owe them a credit on does more harm than good.
- Attach a statement, not just the one invoice. The customer’s accounts team pays from statements.
- Send it to the person who pays, not the person who orders. On a trade account those are often different people.
- Only threaten what you will do. If the account will not really go on hold at 60 days, do not say it will.
Interest and recovery costs
In the UK, when a business pays late you can claim statutory interest at 8% plus the Bank of England base rate. On top of that is a fixed sum of £40, £70 or £100, depending on the size of the debt. You cannot claim statutory interest if your contract sets a different rate. The detail is on gov.uk’s late commercial payments guide.
In Ireland, the European Communities (Late Payment in Commercial Transactions) Regulations 2012 set the rate at the European Central Bank’s main refinancing rate plus 8 percentage points. Compensation is €40, €70 or €100 by invoice value. See the Department of Enterprise’s late payment pages. For Irish customers, replace the UK Act in letters 3 and 4 with those Regulations.
Letter 1: friendly reminder
Subject: Invoice [number] for [amount], due [due date]
Hello [Name],
A quick note to say we have not yet received payment of invoice [number] for [amount], which was due on [due date]. I have attached a copy, with your statement.
If it is already on its way, thank you, and please ignore this. If anything on the invoice needs checking, such as a short, a return or a price, let me know and I will sort it out so it can be paid.
You can pay by [bank transfer to sort code 00-00-00, account 00000000, quoting the invoice number / the payment link below / with the driver on your next delivery].
Thanks,
[Your name] [Business name] · [Phone] · [Email]
Letter 2: second reminder
Subject: Second reminder: [amount] overdue on account [account number]
Hello [Name],
Invoice [number] for [amount] is now [number] days overdue, and I have not heard back about my reminder of [date]. Your account shows [total overdue] overdue in all. The statement is attached.
If there is a reason it has not been paid, a query on an invoice or a problem with a delivery, please tell me this week so we can put it right. Otherwise, please arrange payment by [date, about a week from now].
Payment details: [as in letter 1].
Kind regards,
[Your name] [Business name] · [Phone] · [Email]
Letter 3: account on hold warning
Subject: Overdue account [account number]: payment needed by [date]
Dear [Name],
Your account has [total overdue] overdue, and the oldest invoice is now [number] days past its due date. We wrote on [date] and [date] and have not received payment, or a reason for the delay. Your statement is attached.
Please pay the overdue balance by [date, about a week from now]. If we have not received it by then, we will put your account on hold. That means we will not be able to take or deliver new orders until it is cleared, and we would much rather keep supplying you.
If you need to agree a payment plan, please call me on [phone] before that date.
Please note that under [the Late Payment of Commercial Debts (Interest) Act 1998], we are entitled to charge interest and a fixed sum for recovery costs on late payments.
Yours sincerely,
[Your name] [Job title], [Business name]
Letter 4: final notice
Subject: Final notice: [total overdue] on account [account number]
Dear [Name],
Despite our letters of [date], [date] and [date], [total overdue] remains unpaid on your account, and the oldest invoice is now [number] days overdue. Your account is on hold. Your statement is attached.
This is our final request. Unless the overdue balance is paid, or a payment plan agreed with us, by [date], we will [pass the debt to a collection agency / take legal advice on recovering it]. We will also claim interest and recovery costs under [the Late Payment of Commercial Debts (Interest) Act 1998].
If there is something we do not know about, please call me on [phone] before [date]. Payment details: [as in letter 1].
Yours sincerely,
[Your name] [Job title], [Business name]
Before legal action
Letter 4 is a final reminder, not a formal letter before action. If the customer is a sole trader and you are in England or Wales, the Pre-Action Protocol for Debt Claims applies before you can go to court: a set form of letter of claim, with 30 days for a reply. Take advice before that step.
What makes reminders work
Decide the day each letter goes, and send it every time. A reminder that depends on someone remembering arrives late, if it arrives at all.
For distributors the strongest reminder is often the next delivery. The driver who arrives knowing what the customer owes can ask for it face to face, with the next order on the van. Our article on delivering over the credit limit covers where that breaks down.
