Outstanding invoice: what it means and how to chase

Published Wednesday 8 April 2026

Table of contents

• How do unpaid invoices affect your business?
• What is an outstanding invoice?
• What's the difference between outstanding and past due invoices?
• How to write professional emails for outstanding invoices
• Outstanding invoice email templates
• When to send payment reminder emails
• How to chase late payments
• FAQs on outstanding invoices

Key takeaways

• Send payment reminders on a consistent schedule: first reminder 1-3 days after the due date, formal follow-up at 14 days, and final notice at 30 days to maintain cash flow without damaging customer relationships.
• Include essential details in every payment reminder email: invoice number, amount due, due date, direct link to the original invoice, and clear payment instructions to avoid confusion and speed up payment.
• Maintain a professional and polite tone in all payment communications, even for significantly overdue invoices, as friendly approaches are more likely to preserve business relationships and result in faster payment.
• Use phone calls for invoices that remain unpaid after email reminders, as direct conversation allows for immediate problem-solving, payment plan negotiations, and creates personal accountability that emails cannot achieve.

How do unpaid invoices affect your business?

Unpaid invoices disrupt cash flow and make it harder to run your business smoothly. When customers don't pay on time, the effects ripple through every part of your operations.

Here's how unpaid invoices affect your business:

• Cash flow disruption: You can't cover essential operating costs when payments are delayed, which contributes to wider financial problems; for example, tax debt accrued by Australian businesses increased from A$26.5 billion to A$44.8 billion in three years
• Supplier relationships: Late payments to your own suppliers damage your credit rating
• Financial planning: Unpredictable income makes budgeting and growth planning difficult
• Business reputation: Your professional relationships suffer when you're constantly chasing payments

Successfully invoicing and managing unpaid invoices supports your business's long-term financial health.

What is an outstanding invoice?

An outstanding invoice is any invoice that hasn't been paid yet, regardless of whether it's still within the payment period or past due. It simply means money is owed to your business.

Every invoice you send becomes outstanding the moment it's issued. It stays outstanding until your customer pays in full. This includes invoices that are:

• within the agreed payment terms (for example, due in 14 days)
• past the due date but not yet in collections
• partially paid with a remaining balance

Understanding how to distinguish between these helps you track what's owed and prioritise which invoices need follow-up.

What's the difference between outstanding and past due invoices?

The key difference between outstanding and past due invoices is timing. Outstanding invoices include all unpaid bills, while past due invoices are specifically those that have passed their payment deadline.

Here's how they compare:

• Outstanding: Includes all unpaid invoices, whether current or overdue
• Past due: Includes only overdue invoices that need urgent follow-up

Distinguishing between them matters when prioritising your collection efforts. Past due invoices require escalation, while outstanding invoices within terms may just need a gentle reminder.

Once you've identified which invoices need attention, the next step is reaching out to customers.

How to write professional emails for outstanding invoices

A professional payment reminder email is often all it takes to get an invoice paid. The right message keeps the conversation friendly while making it easy for your customer to respond and pay.

Here's how to write emails that get results.

What to include in your payment reminder email

To avoid confusion, make sure every reminder email includes these key details:

• Invoice number: The original reference number for easy tracking
• Amount due: The total outstanding balance
• Due date: When payment was or is expected
• Invoice link: A direct link to the original invoice if possible
• Payment instructions: Clear steps on how to pay

Email subject lines that get attention

Your subject line should be clear and easy to understand at a glance. Try one of these simple formats:

• Follow up on invoice [invoice number]
• Invoice [invoice number] is now 7 days overdue
• Reminder: Payment for invoice [invoice number]

Finding the right tone for payment emails

Stay professional and polite, even when a payment is very late. Assume the best: your customer may have simply forgotten or missed the original invoice.

A friendly tone maintains a good relationship. You're more likely to get paid quickly and work together again if you keep things respectful. Experts suggest that stakeholder management makes up 50 per cent of turnaround for a struggling business, highlighting the value of maintaining confidence.

The following templates can help you communicate effectively at each stage of the collection process.

Outstanding invoice email templates

Use these invoice templates to save time. Adjust them to fit your business and situation.

Polite reminder email (1–14 days overdue)

This is a gentle nudge for invoices that are only slightly overdue.

Subject: Follow up on invoice [invoice number]

Hi [customer name],

This is a reminder that invoice [invoice number], due on [due date], is overdue. The total amount due is [amount].

You can view the invoice here: [link to invoice]

If you have already paid, thank you. If you have questions, let me know.

Thanks,

[your name]

Formal follow-up email (15–30 days overdue)

If you haven't received a response, your next email can be more direct.

Subject: Invoice [invoice number] is now 15 days overdue

Hi [customer name],

This is a second reminder that invoice [invoice number] is now past due. Payment for [amount] was due on [due date].

Please let us know when we can expect to receive payment. If there's an issue or you have a question about the invoice, please get in touch.

A copy of the invoice is attached for your reference.

Best regards,

[your name]

Final notice email (30+ days overdue)

When an invoice is significantly overdue, be clear about the next steps.

Subject: Final notice: Invoice [invoice number] is 30 days overdue

Hi [customer name],

This is our third and final reminder regarding the outstanding payment for invoice [invoice number]. The amount of [amount] is now 30 days past its due date of [due date].

Please pay promptly to avoid late fees or referral to a debt collection agency, as set out in your payment terms. Reports show that major creditors can initiate serious action; for instance, Inland Revenue was responsible for around 70 per cent of recent liquidations.

Please contact us immediately to arrange payment.

Sincerely,

[your name]

When to send payment reminder emails

Send your first reminder 1–3 days after the due date, then follow up at 14 days and 30 days if needed. A consistent schedule helps you stay on top of payments without overthinking each one.

Here's a simple timeline to follow:

• 1–3 days after due date: Send a friendly, gentle reminder
• 14 days after due date: Send a more formal follow-up
• 30 days after due date: Send a final notice with clear urgency

Use accounting software to automate these reminders so you can focus on running your business. This also helps with legal compliance, as authorities like New Zealand's Inland Revenue require you to keep all your business records for at least seven years.

Now that you understand when to send reminders, let's explore the specific steps for chasing late payments.

How to chase late payments

1. Write a payment request letter or email

Payment request emails are your first step to resolving late payments. Many overdue invoices are simply oversights, so a polite reminder often does the trick.

Structure your payment request like this:

• Subject line: Include the invoice number and "payment reminder"
• Opening: Start with a professional greeting and brief context
• Details: State the invoice number, due date, and amount owed
• Next steps: Specify a payment deadline and preferred method

The original invoice already contains the payment details.

2. Send an overdue invoice

An overdue invoice is the original invoice marked as 'overdue' to show urgency. Send this as your next step if the initial request doesn't get a response.

Attach the stamped invoice to a follow-up email as a formal reminder. You can manage this manually or use automated invoicing software to send reminders until you receive payment.

3. Send a statement of accounts

A statement of accounts combines all unpaid invoices from one client into a single document. This makes follow-up easier when you're chasing multiple payments.

Benefits of account statements:

• Simplified admin: Chase multiple invoices with one communication
• Clear overview: Show the client their total outstanding debt
• Professional approach: Demonstrate organised record-keeping

To send a statement of accounts:

1. Generate a consolidated statement using accounting software
2. Include all invoice numbers, dates, and amounts
3. Follow up with a phone call to confirm receipt
4. Set a clear payment deadline for all outstanding amounts

4. Make the phone call and prepare to negotiate

Phone calls are often the fastest way to collect overdue payments. Clients respond more quickly to a live conversation than to emails they can ignore.

Why phone calls work:

• Immediate response: Clients must respond in real time during a live conversation
• Personal connection: Speaking directly builds rapport and encourages payment
• Problem solving: You can address concerns and negotiate payment plans on the spot

When you call, have the invoice details ready and be prepared to discuss payment options. Stay professional and focus on finding a solution that works for both parties.

FAQs on outstanding invoices

Here are answers to common questions about managing and chasing outstanding invoices.

What should I do if a customer disputes an invoice?

Listen to their concerns and review the invoice together. If there's a genuine error, correct it immediately and send a revised invoice. If the dispute is unfounded, provide clear documentation of the work completed or goods delivered.

How long should I wait before escalating to a collections agency?

Most businesses escalate after 60–90 days of non-payment, but this depends on your payment terms and the customer relationship. Send at least three reminders before considering collections.

Can I charge interest on overdue invoices?

Yes, if your payment terms include interest charges and you stated this clearly before providing goods or services. Check your local regulations for maximum interest rates allowed.

What payment options should I offer to make it easier for customers to pay?

Offer multiple payment methods such as bank transfer, credit card, direct debit, or online payment platforms. The easier you make it to pay, the faster you'll receive payment.

Should I stop providing services to customers with overdue invoices?

This depends on your business policy and the customer relationship. For ongoing services, consider requiring payment upfront or implementing a credit hold until outstanding invoices are cleared.