How to collect unpaid invoices: Templates and scripts

Unpaid invoices can be a pain to chase down. A client misses a deadline, the payment doesn’t come through, and suddenly your team is stuck sending reminders, following up, and figuring out when or if they’ll settle the invoice. It’s a drain on time and cash flow.

Nearly half of B2B invoices in the U.S. are overdue, according to Atradius. The right approach to past-due invoice emails can change the outcome. Clear, professional follow-ups sent at the right time help you get paid faster without damaging client relationships.

What is an unpaid invoice?

An unpaid invoice, also called an open invoice, is any bill not settled by its due date. Late payments, disputes, or a client’s financial difficulties can all cause invoices to go unpaid. If left unresolved, they can disrupt cash flow and slow operations.

Invoices go unpaid for a variety of reasons:

Client-side issues

• Cash flow problems: Clients may delay payments if they don’t have funds on hand
• Disputed charges: Questions about the accuracy or quality of work often stall payments
• Overlooked invoices: Invoices can get lost in email chains or forgotten in busy finance departments
• Internal approval delays: Complex approval processes within a client’s company can hold up payments

Business-side issues

• Unclear payment terms: Vague or inconsistent payment terms create confusion and invite delays
• Inconsistent follow-up: Without reminders, invoices drop in priority
• Invoice errors: Missing details, wrong amounts, or incorrect formatting can cause disputes and rework

Unpaid vs. outstanding invoices

An outstanding invoice is any bill that has been issued but not yet paid, whether still within payment terms or overdue. An unpaid invoice is specifically an outstanding invoice that has passed its due date and remains unsettled.

How do unpaid invoices hurt businesses?

Unpaid invoices lock up cash you count on for payroll, operating costs, and growth investments. For small businesses especially, even one overdue bill can create shortages that force you to chase payments or turn to costly financing.

The impact goes beyond short-term cash flow. Late payments make it harder to cover payroll, purchase inventory, and plan for growth. They strain supplier and contractor relationships if your own obligations slip. And they create accounting headaches: unpaid invoices may eventually need to be written off as bad debt. That reduces taxable income under IRS rules for accrual-based businesses, but it also cuts into profitability.

To protect yourself, document every step of the collection process. Keep copies of invoices, records of emails and phone calls, and notes from any discussions. A clear paper trail not only helps resolve disputes faster but also strengthens your position if you need to escalate to a collection agency or legal action.

Immediate steps to take when invoices are past due

When an invoice is overdue, act quickly while keeping the tone professional. A structured timeline helps you address the issue before it grows into a serious cash flow problem.

Day 1–7 past due

As soon as an invoice slips past its due date, send a friendly payment reminder. Keep the tone light and professional, and include the invoice details so the client doesn’t have to search for them. This is also the time to verify that they received the invoice.

Technical issues or administrative oversights are often the simplest cause of late payments. If there’s a dispute about the invoice, a prompt follow-up helps clarify the issue and keeps the payment process moving.

Day 8–30 past due

If payment still hasn’t arrived after a week, it’s time to escalate communication slightly. A phone call can often cut through delays and help identify obstacles, such as internal approval bottlenecks or cash flow challenges. You may also want to offer payment plan options during this period if the client is experiencing financial strain.

If you don’t make any progress, send a formal past due notice that documents the missed deadline and sets a clear expectation for payment.

Templates for collecting unpaid invoices

Recovering overdue payments requires persistence, professionalism, and clear communication. Using consistent templates and escalation strategies can help you ensure every client receives the right message at the right time.

Initial reminder email

Subject: Friendly Reminder: Invoice [#Invoice Number] Due on [Due Date]

Dear [Client’s Name],

We hope you're doing well. Just a quick reminder that invoice [#Invoice Number] for [Invoice Amount] is due on [Due Date].

For easy access, we've attached the invoice to this email. Please let us know if you have any questions or need any details.

We appreciate your timely payment and your continued business. Let us know if there’s anything we can assist with.

Best,

[Your Name]
[Your Company Name]
[Your Contact Information]

‘Payment due today’ email

Subject: Payment Reminder: Invoice [#Invoice Number] Due Today

Dear [Client’s Name],

We hope you're doing well. Just a quick reminder that invoice [#Invoice Number] for [Invoice Amount] is due today, [Due Date].

For your convenience, we've attached the invoice again. Please ensure payment is processed today to avoid any delays. If payment has already been made, kindly disregard this message. We’d appreciate a confirmation for our records.

Let us know if you have any questions or need any assistance. We appreciate your prompt attention and your continued business.

Best,

[Your Name]
[Your Company Name]
[Your Contact Information]

Phone call script: 8–30 days past due

“Hi [Client’s Name], this is [Your Name] from [Company]. I wanted to follow up on invoice [#Invoice Number] for [Invoice Amount], which is [X days] past due. I’m checking to see if you’ve run into any issues with the invoice or if there’s anything we can do to help move payment forward. Would you be able to provide a timeline for when payment will be made?”

First overdue notice: 30 days past due

Subject: Urgent: Invoice [#Invoice Number] Now 30 Days Overdue

Dear [Client’s Name],

We hope this message finds you well. We wanted to follow up regarding invoice [#Invoice Number] for [Invoice Amount], which is now 30 days overdue.

A late fee of [Late Fee Amount] has been added to your balance. Please arrange payment as soon as possible to prevent further delays. If you’ve already processed the payment, kindly send us a confirmation.

If you're experiencing financial difficulties, let us know—we're happy to discuss potential payment arrangements. Please reach out at your earliest convenience.

We appreciate your prompt attention to this matter.

Best,

[Your Name]
[Your Company Name]
[Your Contact Information]

Second overdue notice: 60 days past due

Subject: Immediate Action Required: Invoice [#Invoice Number] 60 Days Overdue

Dear [Client’s Name],

We’re reaching out regarding invoice [#Invoice Number] for [Invoice Amount], which is now 60 days overdue. An additional late fee of [Late Fee Amount] has been applied to your balance.

To avoid further action, please process payment immediately. If payment has already been made, kindly send us the transaction details for confirmation.

If you need to discuss payment options, please reach out as soon as possible. We’re here to help find a resolution.

We appreciate your prompt attention to this matter.

Best,

[Your Name]
[Your Company Name]
[Your Contact Information]

Final notice before escalation: 90 days past due

Subject: Final Notice: Immediate Payment Required for Invoice [#Invoice Number]

Dear [Client’s Name],

Despite multiple reminders, invoice [#Invoice Number] for [Invoice Amount] remains unpaid and is now 90 days overdue. An additional late fee of [Late Fee Amount] has been applied to your balance.

Immediate payment is required to prevent further action, which may include service suspension or referral to a collection agency. If payment has already been made, please provide transaction details as soon as possible.

If there are any outstanding issues preventing payment, please contact us immediately to discuss resolution options.

This is the final notice before escalation. We appreciate your urgent attention to this matter.

Best,

[Your Name]
[Your Company Name]
[Your Contact Information]

5 strategies for collecting unpaid invoices

Collecting unpaid invoices requires immediate action to prevent delays from disrupting cash flow. While similar to handling outstanding invoices, collecting overdue invoices requires proactive intervention to prevent payment delays from becoming chronic cash flow issues.

Below are invoicing best practices to recover unpaid invoices efficiently:

1. Send payment reminders promptly: As soon as an invoice is overdue, send a clear, professional reminder
2. Engage in direct communication: If reminders fail, call or email to identify payment obstacles. Clients may need clarifications or face temporary financial setbacks.
3. Offer alternative payment methods: Faster payment options can resolve unpaid invoices more quickly. Multiple ways to pay reduce friction and speed up settlements.
4. Enforce late fees and payment policies: Clearly stated late fees encourage on-time payments. Ensure penalties are outlined in contracts and reinforced in reminders.
5. Determine when to escalate: If multiple attempts fail, assess whether to involve collections, adjust terms, or take legal action to prevent long-term revenue loss

How automation streamlines unpaid invoice collection

Manual collections take time and are easy to fall behind on. Automating invoice management helps you stay ahead of late payments with:

• Scheduled invoicing: Invoices go out on time, every time
• Automated reminders: Reduce the need for manual follow-ups
• Online payment options: Give clients faster, more convenient ways to pay
• Real-time tracking: Spot overdue invoices and patterns before they become problems
• Accounting integrations: Keep records accurate and make reconciliation easier

The right tools cut down on unpaid invoices, speed up collections, and improve cash flow without adding more manual work.

How to prevent unpaid invoices

While collections are sometimes unavoidable, you can reduce the chances of invoices going unpaid by setting clear expectations up front and building guardrails into your process.

• Make terms clear from the start: Spell out payment deadlines, late fees, and accepted methods in your contracts and invoices. Clear language removes excuses for delay.
• Vet new clients: For large projects, run a quick credit check or request a deposit. A small upfront payment helps gauge commitment.
• Automate reminders: Use invoice software to schedule follow-ups automatically so invoices don’t slip through the cracks

Taking these steps won’t eliminate every overdue bill, but they make it less likely you’ll have to chase payments later.

Legal options and when to use them

If internal efforts to collect an invoice fail, you may need to escalate beyond reminders and negotiations. Legal options should be a last resort since they can be costly and may damage client relationships. However, they can also prevent unpaid invoices from turning into losses.

Collection agencies

A collection agency can pursue payment on your behalf once invoices reach 90 days past due or longer. Agencies typically charge a contingency fee of 20–40% of the recovered amount, and it’s important to understand their pricing model before committing. While this cuts into your recovery, it shifts the burden to professionals who specialize in pursuing delinquent accounts.

When choosing an agency, look for licensing in your state, a track record in your industry, and clear upfront fee structures. Be sure to provide them with thorough documentation of the invoice, contracts, and communication history.

Legal action

If the amount owed is significant, businesses may consider filing in small claims court or pursuing litigation with an attorney. Small claims court is often the most cost-effective option for smaller invoices, but limits vary by state:

• California: Up to $12,500 for individuals; $6,250 for businesses (effective Jan. 1, 2024)
• Texas: Up to $20,000
• New York: Up to $10,000 in New York City; $5,000 in Nassau County and Western Suffolk County City Courts; $3,000 in Eastern Suffolk County, Town Courts, and Village Courts; $5,000–$10,000 in other counties (varies by county; contact local clerk for specific limit)
• Illinois: Up to $10,000
• Florida: Up to $8,000

For larger amounts, you may need to work with an attorney. Legal fees can be substantial, so weigh the potential recovery against the costs and the likelihood of collecting after judgment.

In some cases, mediation or arbitration may offer a faster, less adversarial way to resolve disputes without going to court.

Streamline your invoice management with Ramp

Automating invoice processing can significantly reduce the time spent on invoice matching, data entry, and approvals for businesses managing a high volume of transactions. Ramp’s finance platform simplifies automation, making it easy to process invoices faster and more efficiently.

Ramp automates routine tasks such as coding, verification, and approvals, giving your AP team more time to focus on high-value work. Don’t take it from us; take it from clients such as Quora, who reduced invoice processing time to just 1–2 minutes per bill with Ramp.

Imagine what your team could accomplish with that kind of time savings. Explore Ramp’s invoice management software to get started.