How to chase payment from clients for unpaid invoices

Published Wednesday 1 April 2026

Table of contents

• How do unpaid invoices affect your business?
• Tips for avoiding late payments
• How to chase late payments
• FAQs on chasing late payments

Key takeaways

• Send a polite payment request email within one to seven days after the due date to catch overdue payments early and maintain positive customer relationships.
• Request a deposit or partial payment before starting work to protect yourself from non-payment and assess whether a client intends to pay.
• Use accounting software to automate invoice reminders and set up payment tracking systems that prompt customers to pay without manual follow-up.
• Stop working for clients with outstanding invoices until they settle their debts to avoid accumulating more unpaid work and signal you're serious about payment.

How do unpaid invoices affect your business?

Late payments hurt your cash flow. When invoices go unpaid, you can't cover operating costs or plan ahead financially.

Occasional delays happen. But when late payments become regular or stretch too long, the effects compound quickly.

Unpaid invoices create a ripple effect across your business:

• Strained supplier relationships: If you haven't been paid, you can't pay them
• Damaged credit rating: Late payments to suppliers can hurt your own credit score
• Lost future work: A poor payment reputation makes it harder to win new clients

Successfully invoicing and managing unpaid invoices is crucial to sustain your business's long-term financial health.

Tips for avoiding late payments

Preventing late payments is easier than chasing them. Set up the right systems from the start and you'll spend less time following up on overdue invoices.

Set time aside to track outstanding invoices

Check your invoices weekly to catch overdue payments early. The sooner you send a reminder, the faster you'll get paid and the better your cash flow stays.

Take partial payment upfront

Request a deposit or partial payment before starting work. This protects you from non-payment and improves cash flow since you're not waiting for the full amount later.

A deposit also helps you assess whether a client intends to pay. If they won't commit upfront, that's a warning sign.

Offer payment plans to clients

Payment plans let clients pay in instalments instead of all at once. This works well for large projects or long-term work.

Common payment plan structures:

• Phase-based: 25% upfront, 25% midway, 50% on completion
• Monthly instalments: Split the total across three or more months

If a client is struggling to pay after work is complete, offering a plan can help you recover the funds while maintaining the relationship.

Use accounting software like Xero

Xero automates invoice reminders so you don't have to chase payments manually. This feature aligns with the 31% of clients who want their accountants to help manage software and technology.

Set up automatic emails and let the software prompt customers to pay, saving you time and reducing late payments.

Perform credit checks on prospective clients

Credit checks help you avoid non-paying clients. Carrying out credit checks on prospective clients before agreeing to work with them helps you avoid outstanding invoices in the future.

A customer's credit score reveals whether they pay bills on time and settle their debts. A positive score suggests they'll pay you on time with little follow-up.

How to chase late payments

When payments are overdue, take these steps to chase them professionally and get paid faster.

1. Write a payment request letter or email

Send a polite payment request email or letter as soon as you notice a payment is overdue. In most cases, a simple reminder prompts the customer to pay.

If the late payment is intentional, your request letter creates a paper trail for any escalation that follows.

Why you need a payment request letter

Act quickly and professionally to avoid delays, check if the error was made in good faith, and get paid.

How to structure your payment request letter

Keep your payment request brief and professional. Include these key details:

1. Reference the invoice number, due date, and amount owed
2. Ask when you can expect payment
3. Remind them of your payment terms

You don't need to repeat what the payment was for. Those details are already on the original invoice.

Sample payment request email templates

Your payment request email should be polite but clear. Use these templates for different stages of follow-up:

Template 1: Friendly reminder (1–7 days overdue)

Subject: Friendly reminder: Invoice [number] due

Hi [Name],

I hope you're well. I wanted to follow up on invoice [number] for [amount], which was due on [date]. Could you let me know when I can expect payment?

If you have any questions, I'm happy to help.

Thanks, [Your name]

Template 2: Formal follow-up (7–14 days overdue)

Subject: Second reminder: Invoice [number] now overdue

Hi [Name],

I'm following up on invoice [number] for [amount], which was due on [date]. I haven't received payment or heard back from you.

Please arrange payment at your earliest convenience. If there's an issue, let me know so we can resolve it.

Thanks, [Your name]

Template 3: Urgent reminder (14+ days overdue)

Subject: Urgent: Invoice [number] requires immediate attention

Hi [Name],

Invoice [number] for [amount] is now [X] days overdue. I need to receive payment within the next [X] days to avoid further action.

Please contact me immediately if there's a problem.

Thanks, [Your name]

2. Send an overdue invoice

If the request letter doesn't get a response, the next step is to send an overdue invoice.

An overdue invoice is the original invoice with an 'overdue' stamp to create urgency. You can attach this stamped outstanding invoice to a follow-up email to serve as a formal reminder to your customer.

Setting up an invoice reminder schedule helps you follow up on late payments promptly and keeps customers aware of their outstanding invoices. You could carry this out manually, or use automated invoicing software to send payment reminders on your behalf until payment is received.

3. Send a statement of accounts

If you have multiple unpaid invoices with the same client, you could send them a statement of accounts summarising all outstanding payments. Accounting software can help to consolidate your unpaid invoices into one document.

This step works best when combined with other follow-up methods. It helps you streamline your admin by chasing multiple unpaid invoices at once. Consider following up with a phone call to notify them of the statement of accounts.

4. Make the phone call and prepare to negotiate

If your client has ignored your emails, it might be time to call them. Customers find it harder to ignore you when speaking directly.

Structure your call to keep it focused and productive:

1. Greet them and reference the specific invoice by number or date
2. Ask when you can expect payment
3. Wait for their response, even if there's silence
4. Stay on the call until they've committed to a payment date

Sample phone script

"Hi [Name], I'm calling about invoice [number] for [amount], which was due on [date]. I wanted to check when I can expect payment. [Pause and wait for response.] Great, I'll note that down. Thanks for confirming."

You may need to negotiate when you'll receive payment. For instance, if the unpaid invoice is a relatively small amount they can pay soon, you may agree to move the payment date but refuse to do more work until they pay.

Learn which payment negotiation strategy suits your situation. If you're uncomfortable negotiating on the phone, ask your bookkeeper or accountant to handle it.

According to a CPA.com survey, 41% of business owners want their firm to manage various finance operations.

5. Charge a late payment fee

A late payment fee gives clients an incentive to pay on time. Make sure your late-fee policy is clearly stated in your payment terms before you start work.

Keep it simple. A flat fee is easier for customers to understand than a percentage calculation. For example:

• Total due by 1 June: $100
• Total due after 1 June: $110

Simple fees motivate customers to pay on time. If they don't pay on time, notify them that you've charged the late fee.

As a goodwill gesture, you could offer to waive the late fee if the customer pays quickly (for example, within 48 hours).

6. Cut them off until outstanding invoices are paid

If a customer isn't paying you or responding to your messages, stop working for them until they settle their outstanding invoices. This protects you from accumulating more unpaid work and signals that you're serious about payment.

FAQs on chasing late payments

Here are answers to common questions about managing and chasing late payments.

How soon should I follow up on an overdue invoice?

Follow up within one to seven days after the due date. Early reminders increase your chances of getting paid quickly and maintain positive customer relationships.

What should I do if a customer refuses to pay?

First, try to understand why they're refusing. If negotiation doesn't work, you may need to consider debt collection services or legal action as a last resort.

Can I charge interest on overdue invoices?

Yes, but you must state this clearly in your payment terms before starting work. Make sure your interest rates comply with local regulations.

Should I stop working for a client with overdue invoices?

Yes. Continuing to work for a non-paying client increases your risk. Stop new work until they settle outstanding invoices.

How can I prevent late payments in the future?

Use clear payment terms, request deposits upfront, send timely invoices, automate payment reminders, and perform credit checks on new clients before taking on work.