What is the usual course of action when a company is owed money? First, it’s a copy of an invoice with a reminder. Then, a warning about the possible legal effects.

The process is almost the same for large and small businesses alike. The critical difference is the volume of overdue invoices. – Nearly half of Americans admit they are late with bills, out of whom 18% provide payment 30 days beyond the due date, and 5% never pay on time. To reduce these alarming rates, corporations deliver demand for payment letters by mail and online channels to optimize financial flows and business operations.

Interested in learning more about how to send an overdue payment letter? Read about:

  • What is an overdue payment letter (demand for payment letter)?
  • When to send an overdue payment letter?
  • Types of overdue payment letters – bank offline and online communications
  • How to send demand for payment letters through automated direct mail?

What Is an Overdue Payment Letter (Demand for Payment Letter)?

billing address

An overdue payment letter (also called a demand for payment letter) is a written document or message that reminds about a debt owed. It is usually sent by a party that provided services or products to someone who has delayed the payment. Overdue payment letters detail the amount of debt, payment terms, resulting fees, and possible consequences in case the debt isn’t repaid by a specific date. The debtor needs to either complete the necessary transaction online, send a cheque, or pay in a bank offline within the indicated deadline.

Demand for payment letters serve as an initial step taken to recover a debt. In many jurisdictions, reminders need to allow the debtor an additional period to pay back before going to small claims court or initiating a lawsuit.

When to Send an Overdue Payment Letter?

Generally, demand for payment letters are sent under two sets of circumstances:

  1. When someone owed your company money but didn’t provide the payment by the agreed date.
  2. When you have been charged for products or services you haven’t received and wait for a refund.

Let’s take a look at several examples to see how it works.

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Case #1:

Imagine you run a company that develops websites for online stores and informational resources. A customer has sent you front money, and you have agreed to receive the rest after the web page is ready. Your company did the job, presented the customer with the bill, but they never paid back. After the due date, it’s high time to deliver an overdue payment letter to recover the debt.

Case #2:

Another common situation is when someone has charged you the money you don’t owe. Such cases happen particularly often with subscriptions and other automatically charged services. For example, you used to order lunches for your team members but, at a certain point, decided to change the provider. You informed the supplier, canceled the subscription, and stopped receiving their services. Nevertheless, the supplier continues to withdraw money from your bank account automatically. When you informed the provider about the problem, they agreed to give a refund but missed the payment date. To make them recover the losses, you will have to send a demand for payment letter.

Since overdue payment letters are usually delivered on a corporate level, they are mailed in large volumes to different people and organizations. That’s why — to manage and optimize the debt collection process — it’s crucial to pick the right communication channel or combine several touchpoints. The effectiveness of this workflow will directly impact the percentage of late payments and, thus, your business processes.

Find out more about the ways to align bank offline and online messages below.

Types of Overdue Payment Letters – Bank Offline and Online Communications

The format of demand for payment letters depends on the chosen mode of communication. If the cooperation relies on online banking and digital systems, an email notification may be more relevant than a written notice. On the flip side, if you want to increase response rates, make the overdue payment letter look more authoritative, or have a more formal relationship with the debtor, direct mail is preferred.

email personalization

Yet the fact that there are two types of overdue payment letters doesn’t mean you cannot use both simultaneously. With automation software for omni-channel notifications, you can connect online notifications with mail to use the more suitable channel at certain stages. Here’s one of the possible communication workflows which unites bank offline and online overdue payment letters.

Overdue Payment Communication Workflow

  1. Before the past due date, send a reminder email to a customer or business entity that owes you money several days before the due date. Say something like: This is just a reminder that the invoice [invoice number] is due [date]. If you have already sent the payment, please disregard this email. Thank you for doing business with us.”
  2. 1-15 days past due. Continue with an overdue payment letter email if you don’t receive the payment on the agreed date. Add the invoice number, attach a copy of the invoice, and don’t forget to stay polite.
  3. 15+ days. Send a demand for payment letter by direct mail to have proof of delivery. Indicate all the details of the debt and choose a formal tone of voice. You can use any of the overdue payment sample letters available online or design your letter template.
  4. 90+days. If the invoice is 90 days overdue, consult with a law firm to get legal advice on the best debt collection options.

And one more thing. Although you mustn’t be too pushy with bank offline and online communications, never wait for too long. It’s essential to pick the right combination of channels to stay in touch with debtors and quickly make them respond. Note that the more time passes after the payment is past due, the fewer chances you have to hear from the customer. This table shows the dependence between time and probability of successful repayment.

(Source: Invoicebus)

Thus, writing the letter within 30 days, you increase the likelihood to have the debt recovered. To control the timing, use automation tools that can deliver personalized communications based on triggers and settings. Inkit supports such functionality for direct mail and connects with digital channels through multiple integrations to synchronize automatic mailing with online events.

How to Send Demand for Payment Letters Through Automated Direct Mail?

Whereas with sending a demand letter by email everything is clear, bank offline communications confuse many businesses. In reality, with mail automation software, the generation and delivery of print overdue payment letters become as simple as email campaigns. If you decide to power or fully replace online notices with direct mail, you can do this with Inkit. Our offline communication platform provides full automation of overdue payment letter rendering, printing, and delivery. It makes direct mail, which has ten times higher response rates than emails, a convenient and affordable channel of communication.

You just need to:

  • Connect Inkit with your database and CRM with a few lines of code.
  • Create communications workflow in the CRM and include demand for payment letters at the necessary stages
  • Set up triggers or timing
  • Enjoy automated mail delivery, tracking, and record-keeping in Inkit’s dashboard.

Want to test Inkit? Request a demo to start upgrading your overdue payment letters now.

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