How quickly should you follow up on an overdue invoice?

The first reminder should go out on day 1-3 after the due date - not after a week or more. Early contact normalizes payment expectations and resolves genuine processing errors before they compound. The longer the gap between the due date and first contact, the lower the likelihood of prompt collection.

What should a formal payment chase include?

Each written chase should include the invoice number, original amount, due date, and exact outstanding balance. Later-stage chasers should reference earlier contact attempts by date. Always attach a copy of the original invoice - customers frequently claim they didn't receive it, and reattaching it removes that reason for delay.

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Workflow Scenario

Finance - Following Up on an Overdue Invoice

Late payment costs you cash. A process costs nothing.

Step by step

Identify Overdue InvoicesInvoices

Generate an aging report and flag all invoices past their due date by one or more days.

Day 1-3 Written ReminderInvoices

Send a professional email reminder with the original invoice attached, stating the invoice number, amount, due date, and payment method.

Day 7 Phone Follow-UpMentions

Call the customer to confirm receipt and identify any query or process issue holding payment. Log the call outcome in writing.

Day 14 Formal Written NoticeMentions

Send a formal notice referencing all previous contact attempts and stating the consequence if payment is not received within 5 working days.

Dispute ResolutionInvoices

If the customer raises a query, investigate and respond in writing within 2 working days. Issue a credit note or corrected invoice only if the dispute is valid.

Day 30 Escalation DecisionInvoices

Decide whether to suspend credit, issue a formal letter of demand, or refer to a collections agency based on payment history and relationship value.

Account Record Update and Accounting SyncXero

Log all contact attempts and outcomes in the account record. Sync outstanding balance status with accounting software.

What this workflow solves

We have overdue invoices spread across multiple customers and no clear view of who needs chasing or how urgently.

By the time we notice an invoice is overdue, it is already 30 or more days past due and the customer has moved on.

We chase payments by memory and email with no central record of contact attempts, making disputes difficult to resolve.

Frequently asked questions

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