A payment reminder letter is a document sent to a customer reminding them to pay for the goods or services rendered to them.
On many occasions, following up a customer to pay what they owe, you can be challenging.
Whether running a small business or a large corporation, late payments can be the last thing you want to encounter. This is because it affects your financial management and customer relationships. Late payments can be unpredictable. You don’t know when the client will respond. And when you can’t predict the incoming cash, managing the outgoing one becomes difficult. However, by sending a payment reminder, you can always get your payments being made on time.
According to financial experts, one of the best ways to encourage your clients to made prompt payments is to communicate with them through emails and letters politely.
Contents of an Effective Payment Reminder Letter
Usually, a properly worded payment reminder email/letter should contain the following contents:
Personal information
In your reminder letter, you must adequately introduce yourself to the customer. Mention your name, your title, and your company. A proper introduction will make the customer be aware of where precisely the reminder is coming from.
Write the date
For record-keeping, it’s prudent that you include the date in which the letter is written (only applicable in letters but not email reminders).
Recipient’s personal information
Again, you need to indicate the recipients’ details to avoid miscommunication. Make sure you have the customer’s official names and address right. If you don’t include the correct details, the letter can find its way to an unintended person. Therefore, you need to be as accurate as possible to avoid inconveniences.
First paragraph
The first paragraph of payment reminder letter, also known as the introductory paragraph, is usually precise and direct to the point. Here, you need to alert the reader of the late payment of the invoice. Clearly describe the type of goods or services you offered and still haven’t been paid for. Again, you can include the date in which payments were to be made.
Body paragraphs
Here, you will explain how crucial your company needs the money. If this is the first reminder, you will use a polite and persuasive tone. However, your tone should be professional and assertive if it’s a second or third reminder.
Additionally, you need to let the customer know any repercussions or consequences that may follow should they decline to settle their late payments. By mentioning the repercussions, you simply make the customer be aware of what’s coming so that they can take your reminders more seriously.
At the same time, you can clarify the types of payment you accept. This can either be credit cards, checks, mobile money payments, money orders, or automated clearinghouse, to mention a few.
Closing paragraph
Once you finish the body paragraph(s), you need to conclude your letter with a closing statement. But before that, ensure you reiterate why it’s essential for the customer to heed the letter requirements. To be more professional, you can apologize for any inconvenience that may be caused in the due process. Then, add your name, your official signature, and your title.
Payment Reminder Email Sample
Subject line: Payment Reminder Invoice No. [_]
Dear [Client Name]
I am contacting you on behalf of Dotty Company with regard to the following invoice number [Invoice Number].
This Invoice was due on 2nd August 2020. Despite your busy schedule, it would be great if you spare some time and confirm the receipt of this Invoice. Further, we will highly appreciate it if you make the payments as soon as possible.
Note that for our company to manage its operations and to serve you better next time, we need to organize our finances on time. Therefore, we humbly request you to make the payments in two weeks’ time. Otherwise, we would be forced to seek other alternative interventions necessary.
I have attached a copy of the Invoice for reference. If you have any questions or concerns, please don’t hesitate to contact me through [Put your contacts].
Thank you,
Grace Knuckling
Sales Officer,
Dotty Company.
Payment Reminders Sample Letter
[Senders Name]
[Senders address]
[Senders contact details]
[Date]
[Customers Name]
[Customers Address]
Dear [Customers name]
Our records indicate that invoice number [__] under your name is currently outstanding. The payment was due on [input date], which have already elapsed one week ago. We will be glad if you spend some time to review the Invoice and make prompt payments.
If there is anything we can do to facilitate the payment, please don’t hesitate to inform us. As a courtesy to our customers, we accept both MasterCard and Visa card payments. Attached is a copy of the Invoice for your reference. Thanks for your time.
Best regards
[Senders Name]
[Senders signature]
Title.
Payment Reminder Letter Templates
Following are some free payment reminder letters and emails for you:
How to Prevent Late Payments
In as much as you can arm yourself with payment reminders, there is still a way in which you can prevent late payments from happening in the first place. Remember that if late payments are avoided, you can avoid the discomfort feeling associated with chasing down your customers.
Therefore, implementing these tips will help you stay ahead of your customers:
- Be honest and sincere: Before making any purchase agreement with your clients, you should discuss the payment terms and conditions in detail. Let your customer know when to pay for the goods and services you are about to offer. This way, you won’t leave it up to your customer to dictate when they pay.
- Discuss time limits: The other thing you need to be clear about is the time you would want to be paid. As a recommended option, always indicate your repayment time frame in days. For instance, payments can be made 30 days after receiving the goods/services.
- Charge interest on late payments: This is another excellent way to avoid late payments from happening in your business. Holding your customers financially accountable for late payments can make them stay committed to settling their debts on time. Therefore, you need to state the interest charges accrued to the customer’s account should they fail to make timely repayments.