Reminding a client to pay an outstanding balance doesn’t have to be hard. Here are some tips on how to write an effective and professional payment reminder letter.
Running a business requires having a firm hand to make tough calls. One of the situations where this quality is most needed is when composing a payment reminder letter.
Not all clients are punctual in settling their accounts with the businesses they deal with. There are various reasons this may happen such as lack of funds, misunderstandings between the client and business, or simply because the client forgot when the payment is due.
As the business owner, it’s up to you to keep track of these balances and remind your clients when they miss payment deadlines. An efficient accounts receivable management system ensures that your business will get the amount that you deserve for the product you provided or service you rendered to the client. After all, the payment is simply part of what both parties agreed upon when the business transaction was made in the first place.
However, most of the time, asking for that much-needed payment is not easy. It’s almost like walking on a tightrope. You don’t want to lose a client by sounding threatening or rude.
Most definitely, you don’t want to sound lax about the due payment and give the impression that it’s not important for the client to settle it immediately.
Confused on what to write on that payment reminder letter? Here are three easy steps to get you started.
- Determine the severity of the uncollected payment.
There’s no one-size-fits-all approach in creating a payment reminder letter. The letter’s contents still depend on the situation at hand.
How much does the client owe? How long has the account been unpaid? Does the client have a history of late payments or is this the first instance? All these should be considered before writing the payment reminder letter.
Determine first the severity of the outstanding balance. Try separating them into categories such as friendly, semi-strong, and severe, for example.
Those who will merit a friendly reminder are clients who missed the payment for the first time, and those who perhaps sent you a message in advance that they may be running late with the payment.
Semi-strong reminders may be given to those who still missed the deadline set on an earlier reminder and repeat offenders. Lastly, you can assign clients under severe if they’ve missed multiple payment deadlines by now, or whether the customer refuses to communicate to the business the reason for the late payment.
Setting categories depending on the severity of the late payments you encounter will also create a more organized accounts receivable management procedure. The system allows you to set which payment reminders are top-priority and which can still wait.
- Keep your tone polite yet firm throughout the letter.
Although you can assign payment reminders under different categories, politeness should still be present in all messages. The key to an effective payment reminder letter is to keep your tone professional yet firm.
Let your clients know that you respect their patronage to your business, but timely payment is vital as agreed upon the transaction.
Instead of threatening them, express genuine concern as to why there’s a delay in their payment—especially if it’s the first time it has happened.
Stress, however, that its works for their best interest to pay the balance as soon as possible. This way, they can maintain a healthy relationship with your business and avoid further complications such as accumulated debt.
- Provide all the details necessary for the payment.
Make payment process easy for the client by stating all the details on the reminder letter. This includes how much the balance is, interests or late fees accompanying the delayed payment, invoice reference numbers, payment due date, and payment options.
If this is not the first reminder you’ll be sending the client, mention in the letter if it’s the second, third, or the final reminder. Also, include how much interest they will acquire should they delay the payment further.
These steps reinforce the idea that your company is serious about getting the payment and should add weight to the reminder on the part of the client.
Reiterate your original business agreement, if necessary. After all, a company that properly delivered the product or service asked by the client is entitled to the pay it deserves.
This sentiment should not be lost when writing the payment reminder letter. Lastly, consider giving an installment payment option for the client. It’s completely up to your discretion, but it does increase the chances of the client paying sooner.
Overall, effective payment reminder letters should be penned with polite yet firm instructions on how the client can settle their balance to your company.
Keep in mind that payments you receive generate consistent cash flow for your business, allowing you to keep your operations afloat. Thus, making sure that they are paid on time is imperative for your business growth.
Meghan Roces works as a content writer and strategist for YayPay, a company that specializes in account receivables performance management such as collections automation and AR invoice processing. When she’s not in writing, she enjoys reading novels, swimming, photography and munching nachos.