Tips for Chasing Unpaid Invoices

It can be frustrating when you’ve done the work but you haven’t been paid. Invoices being paid late is going to happen, but managing unpaid invoices is crucial to sustain your business’s long-term financial health. Here are some tips on chasing late payers.

1. Write a payment request letter or email

When you first notice your payment is overdue, send a polite payment request letter or email. In most cases this will be enough to prompt a customer to make a payment. This allows the customers to pay if they’ve inadvertently overlooked paying the invoice.

Your payment request letter/email should include:

a brief reminder of the outstanding invoice; and
the specific invoice number, due date, and amount owed.

Politely ask when you can expect payment, and offer a brief reminder of your payment terms.

2. Send an overdue invoice/statement of account

If you don’t get a response from step number 1, the next step is to send an overdue invoice. This is the original invoice but with an ‘overdue’ stamp on it. You can attach this to a follow-up email. You can do this automatically by setting up payment reminders in your accounting software. If you have multiple unpaid invoices with the same customer, you could send them a statement of accounts which summarises all of the outstanding payments.

3. Make the phone call and prepare to negotiate

If you haven’t had a response to your emails, it’s time to pick up the phone and give the customer a call. Chasing unpaid invoices by phone can tend to yield better results. Make sure you mention the unpaid invoice numbers, ask when you can expect to receive payment, and don’t hang up until they’ve given you a payment date.

You may need to negotiate when you’ll receive payment. For example, if they agree to pay the outstanding invoices by a certain date, you can agree to this change but put a hold on carrying out any more work/supplying goods until payment is received.

4. Charge a late payment fee

Charging a late payment fee can provide an incentive for customers to pay on time. However, any late-fee policy you use should be clearly communicated upfront in your payment terms when you agree to carry out work for your customer. This can be either a percentage of the outstanding amount, or a set late payment fee.

If they don’t pay on time, notify them that the late-fee has now been added but if they pay within the next 48 hours, you’ll waive the late payment fee.

5. Cut them off until outstanding invoices are paid

If a customer isn’t paying you or responding to your messages, it’s time to cut them off. Let them know that until you receive full payment for the outstanding invoices, you won’t continue any work for them.

Still no payment?

If none of these tips work, it’s time to call in the big guns – a debt collector or lawyer. It’s best to exhaust all other strategies before doing this as it may end the relationship with your customer. Debt collectors specialise in recovering unpaid invoices but take a cut of what you’re owed, typically around 25%, so you’ll need to factor that into the decision. If you don’t have any luck with the debt collector, your last resort is to consult with a lawyer. Taking legal action is complex, so it’s best to consult a specialist lawyer who has experience in professional invoice chasing.

< Older Post

Newer Post >

Becoming an employer of choice

15 October 2025

How to attract great people to your business and how to keep them. Three tips to help you rise to the challenge to become an employer of choice.

What the IRD Expects from You as an Employer

10 October 2025

As an employer, there are several obligations and expectations set by the Inland Revenue Department (IRD) that you must adhere to. Understanding these requirements is essential for maintaining compliance and avoiding any potential penalties. Let's take a closer look at what the IRD expects from you as an employer. Register as an Employer Before you hire your first employee, you are required to register as an employer with the IRD. This is a crucial first step in ensuring that you can meet all tax and payroll obligations. Accurate Record Keeping The IRD requires you to keep accurate and detailed records of all employment-related transactions. This includes: Employee personal details Wages and salary paid Payroll dates and methods PAYE deductions and remittances Details of benefits or allowances provided to employees Maintaining proper records helps ensure that you are reporting and remitting the correct amounts to the IRD. Deduct PAYE Tax You are responsible for deducting PAYE (Pay As You Earn) tax from your employees' pay. This involves calculating the correct amount of PAYE and ensuring it is deducted from each employee's salary or wages before their net pay is provided. Pay Employer Contributions In addition to PAYE, you may also be responsible for contributing to your employees' social security and retirement benefits, depending on the country you operate in. These contributions are typically paid in conjunction with PAYE tax. Issue Statements and Forms At the end of the tax year or upon employment termination, you should provide each employee with a statement showing their total earnings and PAYE deductions. Additionally, filing the appropriate end-of-year PAYE schedules with the IRD is required. File Employer Returns Employers are required to file regular returns with the IRD, which could be monthly, quarterly, or annually, depending on specific regulations. These returns should accurately report all payroll activities, including PAYE deductions. Handle Tax Codes and Changes It's crucial to apply the correct tax codes for each employee's circumstances. Any changes in employment status or tax code must be updated promptly to ensure accurate tax withholdings. Comply with Audit Requests The IRD may audit your business to ensure compliance with employer obligations. As such, being prepared to provide all requested information and records in a timely manner is vital. Adhering to these expectations from the IRD is not just about compliance; it's about fostering a transparent and trustworthy relationship with your employees and the tax authorities. If you need assistance with understanding or managing your obligations as an employer, consider reaching out to a professional accountant. Our team is here to help you navigate these responsibilities seamlessly, ensuring peace of mind and allowing you to focus on growing your business. Feel free to contact us for further information or assistance.

Starting a sole trader business

7 October 2025

Thinking of starting your own sole trader business? The Sole Trader Toolkit from the Ministry of Business, Innovation and Employment has all the basic advice you might need.