11 Tips for Collecting Payment on an Outstanding Invoice

Polite emails not working? Here’s how to nudge, follow up, and actually get that outstanding invoice paid—without losing your sanity (or your client).

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There’s nothing quite like the frustration of chasing down an overdue invoice. You’ve done the work, sent the invoice, followed up—so why isn’t the payment in your account yet?

Outstanding invoices can mess with your cash flow, throw off your accounts receivables, and even put unnecessary strain on client relationships. And while most clients don’t mean to be late, waiting indefinitely to get paid isn’t an option.

The good news? There are ways to speed up the process. From strategic reminder emails to invoicing software and (if it comes to it) legal action, this guide walks you through proven methods to ensure you get paid—without turning into a full-time debt collector.

1. Follow up immediately

The day after a payment is due, send a friendly reminder. Sometimes, unpaid invoices slip through the cracks, especially for small business owners managing multiple priorities. A quick follow-up ensures your invoice isn’t forgotten and keeps the payment process moving.

A professional reminder should include:

• A polite note that the invoice is overdue.
• The invoice number, total amount, and amount due.
• A clear subject line such as “Follow-Up: Invoice [#] – [Amount Due]”.
• The original invoice attached to remove any confusion.

If you use accounting software, set up automated reminders to streamline this process. This maintains efficiency while preserving positive customer relationships. Keeping communication clear and professional increases the likelihood of prompt payment.

2. Send a past-due invoice reminder email

If a week has passed and the late invoice is still unpaid, it’s time to send a past-due invoice reminder email. This email should be slightly firmer than the initial reminder email while remaining professional and polite.

In your message:

• Clearly state that the invoice is past due and reference the payment due date.

• Reiterate the amount owed as well as the number of days it’s late, and attach the original invoice.

• List available payment methods, such as ACH, credit card, or an online payment option.

• If possible, offer a one-click payment link to make settling the invoice as seamless as possible.

This is also a good time to directly address the client and remind them of any prior agreements regarding payment timelines. Ensuring a company name is included in the email subject line or body can reinforce professionalism and urgency.

3. Call the client directly

When overdue payments start piling up, emails can easily be ignored. A phone call adds urgency and makes it harder for the client to delay. It also allows for real-time problem-solving—if there’s an issue with the invoice payment process, you can address it immediately.

What to say on the call:

• Confirm receipt: Ask if they received the original invoice and whether they need a copy.

• Identify obstacles: Politely inquire if there are any issues preventing immediate payment. Sometimes, delays happen due to internal approval processes, missing details, or accounting errors.

• Get a commitment: Ask for a firm timeframe for payment and, if possible, request that they process it while on the call.

Approaching the conversation with professionalism and a follow-up mindset—rather than immediate confrontation—can increase the chances of a successful resolution while preserving the client relationship.

4. Charge late fees (if stated in your payment terms)

If an invoice is more than 14 days overdue, it’s time to enforce late fees—but only if they were outlined in your payment terms upfront. A clearly stated late payment fee sets expectations from the start and discourages clients from delaying payments.

How late fees work:

• Include them in contracts: Clients are more likely to take payment due dates seriously when they know a penalty applies.

• Use a percentage-based fee: A common approach is charging 2% per month on the outstanding balance. This small but effective penalty incentivizes clients to settle unpaid invoices faster.

• Mention late fees in payment requests: If you haven’t yet reminded them, a firm but professional notice in a follow-up email or invoice past due email template can reinforce the urgency.

Late fees shouldn’t be about punishment—they’re about maintaining cash flow and ensuring your work is valued. If a client consistently ignores deadlines, it may be time to reconsider working with them.

5. Offer a payment plan if necessary

If a client is unable to pay the total amount upfront, offering a payment plan can be a practical solution. Instead of waiting indefinitely for full payment, installments allow you to recover at least part of the outstanding balance while keeping the payment process moving.

How to structure a payment plan:

• Set clear terms: Outline how much they will pay and on what schedule (e.g., “Pay 50% now and 50% in 30 days”).

• Get it in writing: Whether via email or a formal agreement, document the terms to prevent misunderstandings or further delays.

• Automate payments: If possible, set up auto-pay options to avoid chasing each installment.

A structured payment plan is better than receiving nothing at all, but it should be a last resort—clients should understand that timely payment is the standard, not an option.

6. Automate payment reminders using invoicing software

Chasing outstanding invoices can be time-consuming, but invoicing software helps automate the process. Instead of manually sending follow-ups, tools like QuickBooks, FreshBooks, and Xero can handle accounts receivable tasks efficiently.

How automation helps:

• Send reminder emails: Set up automatic reminders before and after the payment due date to keep clients on track.

• Schedule recurring payments: For long-term clients, enable recurring payments to ensure invoices are paid on time.

• Track overdue invoices: Keep tabs on how many days past due an invoice is, allowing you to take action when necessary.

• Apply late fees automatically: Some tools allow you to enforce pricing penalties for overdue payments without extra effort.

By using invoicing software to automate payment follow-ups, you can reduce late payments and free up time for more important work.

7. Offer incentives for early or prompt payment

One way to reduce late invoices is to encourage early payment with small incentives. A slight discount or bonus can motivate clients to prioritize your payment terms over others.

Effective early payment incentives:

• Offer a discount: A 2% discount if paid within 10 days creates urgency and improves cash flow.

• Priority service: Reward on-time payers with faster turnaround times or premium support.

• Exclusive perks: Offer long-term clients better pricing or flexible payment terms for consistently paying on time.

By structuring incentives strategically, you can reduce outstanding invoices, foster stronger business relationships, and create a smoother payment process for everyone.

8. Escalate with a final payment demand letter

If an overdue invoice reaches 30+ days past due, it’s time to send a strong letter for outstanding payment to stress the urgency. This is your final notice before escalating the issue.

What to include in a final payment demand:

• Clear warning: State this is the last reminder before legal action or involving a collection agency.

• Firm deadline: Require payment within 7 days to avoid further steps.

• Consequences of non-payment: Outline the next actions, such as late fees, legal involvement, or reporting the past due invoice to credit bureaus.

A final payment demand is often enough to prompt immediate payment, as most clients want to avoid legal complications. If this doesn’t work, it may be time to explore debt collection options.

9. Consider invoice factoring for immediate cash

If outstanding balances are straining your cash flow, invoice factoring can provide a solution. This process allows you to sell unpaid invoices to a factoring company in exchange for immediate cash—helping you cover expenses while waiting on slow-paying clients.

How invoice factoring works:

• You sell your unpaid invoices to a factoring company.
• They advance you a percentage of the invoice (typically 70-90%).
• Once the client pays, the factoring company sends you the remaining balance, minus their fee.

One major benefit of invoice factoring is that it provides quick access to cash, making it a useful option for businesses struggling with cash flow. Instead of waiting weeks (or months) for a client to pay, you can get most of your money upfront.

However, the trade-off is that you won’t receive the full invoice amount. Factoring companies take a percentage as a fee, which means you sacrifice some of your earnings for faster payment.

Invoice factoring isn’t the right fit for every business, but if you’re constantly struggling with late payers, this could be a practical way to stabilize your cash flow. (It’s also time to replace them!)

10. Take legal action as a last resort

When an invoice payment is 60-90+ days overdue and all other attempts have failed, legal action may be necessary. However, because it can be costly and time-consuming, it’s best used as a last resort rather than a first step.

Options for recovering an unpaid invoice:

• Hiring a collection agency: Agencies specialize in recovering non-payment but typically take a percentage of the amount collected.

• Filing a small claims court case: If the invoice amount falls within the court’s limit, this can be a viable option.

• Writing off the invoice as bad debt: In some cases, cutting your losses and claiming the unpaid invoice as a tax deduction is the most practical route.

Before escalating the situation, weigh the cost vs. benefit of legal action. Sometimes, the expense and effort aren’t worth it—especially for smaller invoices. A collection agency or formal legal notice may be enough to encourage a client to settle their outstanding balance without taking further steps.

11. Prevent future late payments with stronger contracts

The best way to deal with late payments is to prevent them from happening in the first place. A well-structured contract and clear payment terms help set expectations and minimize overdue invoices.

Key elements to include in every contract:

• Payment due dates: Specify exact deadlines (e.g., “Payment is due within 30 days of invoice date”).

• Late fees: Outline penalties for overdue payments to encourage timely transactions.

• Multiple payment methods: Offer options like ACH, credit card, or online payment to make paying easy.

• Upfront deposits: Require a deposit from new clients to secure their commitment and protect your cash flow.

Use invoicing software to streamline the invoicing process, send automated reminders, and track overdue invoices in real time. Stronger contracts mean fewer payment delays.

Take control of your outstanding invoices

Chasing down late payments isn’t fun, but the sooner you take action, the better. The key to getting paid on time isn’t just persistence—it’s setting yourself up for success from the start.

Final reminders:

• Act fast: The longer an overdue invoice sits, the harder it is to collect.

• Use multiple communication methods: Email is great, but sometimes a phone call (or a politely urgent final notice) works better.

• Set strong payment terms upfront: Prevent issues before they start with clear contracts and automated reminders.

Next step? Send that follow-up email today—your bank account will thank you.

And if you’re tired of handling freelance headaches alone, why not join Wordling Plus? You’ll get insider resources, expert advice, and a community that understands the pain of chasing invoices (and the joy of finally getting paid). Click here to check it out—no late fees required!