Late payments can severely impact your business’s cash flow and profitability. Writing effective collection letters is a crucial step in recovering outstanding debts. These letters should be professional, clear, and progressively assertive as the debt ages. The goal is to encourage payment without damaging the customer relationship, if possible. This article provides a series of sample collection letters you can adapt to your specific circumstances.
Each sample collection letter below is designed for a different stage of the collection process. We start with a polite reminder and gradually escalate to a more firm demand for payment. Remember to keep accurate records of all communication and to follow up promptly. Legal action should only be considered as a last resort after all other attempts have failed.
Sample Collection Letters
Here are 12 sample collection letters, ranging from gentle reminders to more serious demands. Customize these templates with your company’s information and specific details about the invoice.
1. Gentle Reminder (Invoice Overdue by 1-15 Days)
[Your Company Name]
[Your Company Address]
[Your Company Phone Number]
[Your Company Email]
[Date]
[Client Name]
[Client Address]
Subject: Friendly Reminder: Invoice [Invoice Number]
Dear [Client Name],
This is a friendly reminder that invoice [Invoice Number] for [Amount] is now overdue. The due date was [Due Date].
You can view the invoice online here: [Link to Invoice (Optional)]
If you’ve already made the payment, please disregard this email. If not, we would appreciate it if you could arrange for payment as soon as possible.
Please let us know if you have any questions.
Sincerely,
[Your Name]
[Your Title]
2. Second Notice (Invoice Overdue by 16-30 Days)
[Your Company Name]
[Your Company Address]
[Your Company Phone Number]
[Your Company Email]
[Date]
[Client Name]
[Client Address]
Subject: Second Notice: Invoice [Invoice Number] Overdue
Dear [Client Name],
We are writing to you again regarding invoice [Invoice Number] for [Amount], which is now overdue. Our records indicate that we have not yet received payment. The due date was [Due Date].
Please remit payment within the next 7 days to avoid further action.
You can view the invoice online here: [Link to Invoice (Optional)]
Please let us know if you have already sent the payment or if there is anything we can do to assist you.
Sincerely,
[Your Name]
[Your Title]
3. Third Notice (Invoice Overdue by 31-45 Days) – More Firm
[Your Company Name]
[Your Company Address]
[Your Company Phone Number]
[Your Company Email]
[Date]
[Client Name]
[Client Address]
Subject: URGENT: Overdue Invoice [Invoice Number]
Dear [Client Name],
We have sent you previous notices regarding invoice [Invoice Number] for [Amount], which is now significantly overdue. We have not yet received payment and are concerned about this outstanding balance.
We require payment in full within 5 days. If we do not receive payment or hear from you within this timeframe, we will be forced to consider further action, which may include referring the matter to a collections agency.
You can view the invoice online here: [Link to Invoice (Optional)]
Please contact us immediately to discuss this matter.
Sincerely,
[Your Name]
[Your Title]
4. Final Notice (Invoice Overdue by 46-60 Days) – Strongest Language
[Your Company Name]
[Your Company Address]
[Your Company Phone Number]
[Your Company Email]
[Date]
[Client Name]
[Client Address]
Subject: FINAL NOTICE: Invoice [Invoice Number] – Action Required
Dear [Client Name],
This is our final notice regarding invoice [Invoice Number] for [Amount], which remains unpaid despite our previous attempts to contact you.
Unless we receive payment in full within 3 days, we will have no choice but to refer this matter to our collections agency. This will negatively impact your credit rating and may result in legal action.
You can view the invoice online here: [Link to Invoice (Optional)]
Please contact us immediately to avoid further action.
Sincerely,
[Your Name]
[Your Title]
5. Payment Plan Offer (Invoice Overdue by 30-45 Days)
[Your Company Name]
[Your Company Address]
[Your Company Phone Number]
[Your Company Email]
[Date]
[Client Name]
[Client Address]
Subject: Invoice [Invoice Number] – Payment Plan Option
Dear [Client Name],
We understand that circumstances may sometimes make it difficult to pay invoices on time. We are writing to you regarding overdue invoice [Invoice Number] for [Amount].
To help you settle this debt, we are offering a payment plan option. We can divide the outstanding balance into [Number] equal installments of [Amount per Installment], to be paid [Frequency – e.g., monthly].
If you are interested in this payment plan, please contact us within [Number] days to discuss the details. We are happy to work with you to find a solution.
Sincerely,
[Your Name]
[Your Title]
6. Acknowledgment of Partial Payment (Regardless of Overdue Date)
[Your Company Name]
[Your Company Address]
[Your Company Phone Number]
[Your Company Email]
[Date]
[Client Name]
[Client Address]
Subject: Acknowledgment of Partial Payment – Invoice [Invoice Number]
Dear [Client Name],
Thank you for your partial payment of [Amount] towards invoice [Invoice Number]. We appreciate you taking the initiative to reduce the outstanding balance.
The remaining balance due is [Remaining Amount]. The original due date was [Due Date]. Please remit the remaining balance by [New Due Date – e.g., within 15 days] to avoid further action.
You can view the invoice online here: [Link to Invoice (Optional)]
Please let us know if you have any questions.
Sincerely,
[Your Name]
[Your Title]
7. Inquiry about Disputed Invoice (Regardless of Overdue Date)
[Your Company Name]
[Your Company Address]
[Your Company Phone Number]
[Your Company Email]
[Date]
[Client Name]
[Client Address]
Subject: Inquiry Regarding Invoice [Invoice Number]
Dear [Client Name],
We are writing to inquire about invoice [Invoice Number] for [Amount], which is currently overdue. We want to ensure there are no discrepancies or misunderstandings.
If you have any questions or concerns regarding the invoice, such as a dispute about the services rendered or the amount charged, please contact us immediately so that we can resolve the issue promptly. We value your business and want to ensure your satisfaction.
You can view the invoice online here: [Link to Invoice (Optional)]
We look forward to hearing from you soon.
Sincerely,
[Your Name]
[Your Title]
8. Letter After Agreement on a Payment Plan
[Your Company Name]
[Your Company Address]
[Your Company Phone Number]
[Your Company Email]
[Date]
[Client Name]
[Client Address]
Subject: Payment Plan Confirmation – Invoice [Invoice Number]
Dear [Client Name],
This letter confirms our agreement regarding the payment plan for invoice [Invoice Number], totaling [Amount]. As agreed, you will make [Number] payments of [Amount per Payment], due on the [Day of the Month] of each month, starting on [Start Date].
Please use [Payment Method – e.g., this link, mail to this address] for making your payments. We appreciate your cooperation in resolving this outstanding balance.
Please retain this letter for your records. Contact us if you have any questions.
Sincerely,
[Your Name]
[Your Title]
9. Letter Reminding of Missed Payment Plan Payment
[Your Company Name]
[Your Company Address]
[Your Company Phone Number]
[Your Company Email]
[Date]
[Client Name]
[Client Address]
Subject: Missed Payment – Payment Plan for Invoice [Invoice Number]
Dear [Client Name],
We are writing to remind you that a payment for your payment plan regarding invoice [Invoice Number] was due on [Date]. We have not yet received this payment.
According to our records, the amount due was [Amount]. Please remit this payment as soon as possible to keep your payment plan in good standing. Failure to do so may result in the cancellation of the payment plan.
You can make a payment through [Payment Method – e.g., this link, mail to this address]. Please contact us if you have any questions or require assistance.
Sincerely,
[Your Name]
[Your Title]
10. Letter Before Sending to Collections Agency
[Your Company Name]
[Your Company Address]
[Your Company Phone Number]
[Your Company Email]
[Date]
[Client Name]
[Client Address]
Subject: Urgent: Notice of Intent to Refer to Collections Agency – Invoice [Invoice Number]
Dear [Client Name],
We are writing to inform you that due to the continued non-payment of invoice [Invoice Number] for [Amount], we intend to refer this matter to a collections agency in [Number] days. We have made several attempts to contact you and resolve this issue.
Referring this debt to a collections agency will negatively impact your credit rating. This is your last opportunity to avoid this action. Please remit the full amount of [Amount] within [Number] days.
You can make a payment through [Payment Method – e.g., this link, mail to this address]. Contact us immediately if you wish to discuss this matter further.
Sincerely,
[Your Name]
[Your Title]
11. Letter Confirming Referral to Collections Agency
[Your Company Name]
[Your Company Address]
[Your Company Phone Number]
[Your Company Email]
[Date]
[Client Name]
[Client Address]
Subject: Invoice [Invoice Number] – Account Referred to Collections Agency
Dear [Client Name],
This letter confirms that due to the continued non-payment of invoice [Invoice Number] for [Amount], we have referred your account to [Collections Agency Name] for collection.
All future communication regarding this debt should be directed to [Collections Agency Name] at [Collections Agency Phone Number] and [Collections Agency Address].
Our involvement in this matter is now concluded.
Sincerely,
[Your Name]
[Your Title]
12. Internal Note/Record of Communication (Not for Sending to Client)
Invoice Number: [Invoice Number]
Client: [Client Name]
Date: [Date]
Method of Communication: [Phone, Email, Letter]
Summary of Communication: [e.g., Spoke with client; promised payment by [date]. Sent invoice copy per client request.]
Follow-up Action: [e.g., Check for payment on [date]. Send follow-up email if no payment received.]
Notes: [e.g., Client stated they were experiencing cash flow issues. Offered a payment plan.]
Employing a systematic approach to debt collection, starting with polite reminders and gradually escalating to more assertive measures, can significantly improve your chances of recovering outstanding payments. Remember to document all communication, be professional, and consider offering payment plans to customers facing temporary financial difficulties. While the sample collection letters provided are a great starting point, tailor them to your specific business needs and customer relationships. If all efforts fail, consulting with a legal professional may be necessary.