08.01.2019

Elements of a late payment letter

Elements of a late payment letter

When you run a business, cash flow is a critical factor of success. If you have clients that continuously pay you late, this can have an impact on your cash flow. We have experience working with businesses of all sizes, and here we wanted to share what you should put in a late payment letter to your client. It’s essential to return goodwill with all clients, but at the same time, it is also vital to ensure that all payments are received on time.

Your collections practice should be a mixture of emailed correspondence, verbal communication and statements. Also known as a ‘dunning letters’, these are a crucial part of the collections cycle and should be sent out at least monthly. Three letters are usually enough and start with a polite reminder, a firmer notice and a final demand.

Late payment letters should always be underpinned with the will to take action. Failure to do so will undermine their credibility and customers will soon learn that they are “empty threats”. Below we show the basic details each letter needs to include:

Late payment letter 1: a polite reminder
Your company name and address
Recipient’s name and address
Today’s date
A clear reference and/or any account reference numbers
The amount outstanding
Original payment due date
A brief explanation that no payment has been received
Deadline for payment to be received (usually 7 days)
Payment options
Reference to your payment terms

Late payment letter 2: firmer notice
Your company name and address
Recipient’s name and address
Today’s date
A clear reference and/or any account reference numbers
The amount outstanding
A reference to your last letter
A brief explanation that payment is still outstanding, and any charges that may be added in line with your payment terms (and click to see – current government legislation)
Deadline for payment to be received (usually 7 days)
What happens next if payment doesn’t arrive (suspend orders or services, etc.)
Payment options
Reference to your payment terms

Late payment letter 3: final demand
Your company name and address
Recipient’s name and address
Today’s date
A clear reference and/or any account reference numbers
The breakdown of the total amount outstanding, including any additional charges/interest (and click to see –  current government legislation)
A reference to your reminder letters or last communication
A brief explanation that payment is still outstanding and now in breach of your payment terms
Next steps, including a final cut-off date and consequences for failure to pay (this will depend on your debt recovery arrangements)
Additional charges that may be incurred, such as legal costs.

We hope this has helped. If you would like any more advice, please do get in touch.
  • Late Payments

Comments

Training and Development

If you haven’t got a career mentor, get one!

As the majority of us have, or will, experience, misfortunes in our careers are par for…
Training and Development

Charities! Increase your donations and fundraising by at...

Last week's article was about Not-for-profit organisations, and why they have started.…
Training and Development

Every interviewee should ask this question.

It is certainly true that every failed interview brings you one step closer to success.…

More Articles

Training and Development

Another lesson from my great uncle Ernest.

My great uncle Ernest had a very successful commercial career. I was not surprised…
Training and Development

Increase Donations & Fundraising by at least 30%

In a previous article, I have shared with you my vision as to Why ActionCOACH. I talked…
Training and Development

Do you direct, manage or lead?

Broadly speaking I agree with George S Patton's famous quote, "Don't tell people how to…

Would you like to promote an article ?

Post articles and opinions on London Professionals to attract new clients and referrals. Feature in newsletters.
Join for free today and upload your articles for new contacts to read and enquire further.

Find the right professionals in London

View The Full Index

Search By:

Submit your Enquiry here

Enquiry Details

Contact Details