With the average SME said to be owed £30,000 in late payments, having a late payment letter template on file makes business sense.

Also referred to as an outstanding payment letter or debt recovery letter, a later payment letter formalises your request for payment when previous email and phone reminders have been met with no response.

Below, we provide three late payment letter templates to cover everything from a first gentle nudge to a second chasing reminder and a final letter before action. We’ll also outline how you actively reduce late payments by making the switch to Direct Debit for your payment collections.

Letters for late payment: Three templates

Firstly, before using the templates a little administrative note: make sure that you have up-to-date address details for your clients. Take copies of all correspondence that you send and receive in case you need to refer to it at a later date.

Template 1: The gentle reminder

late payment letter 1
Use this template in the first instance to provide a gentle nudge that payment is due. As a minimum you should include: your company name and address; the date, payment (or invoice) reference, the amount outstanding and payment options.

Template 2: Chasing payment more than 14 days overdue

late payment letter 2
If you fail to receive payment within 14 days of the due date, a second firm reminder can be sent. Reference your previous communication and the exact amount outstanding, plus the invoice number. You are also entitled to reference any charges that you may add as per your payment terms.

Template 3: The final reminder before action

late payment letter 3
A letter before action should only be used if all other avenues of communication have been exhausted. This template gives your debtor one last chance to arrange payment before you take further legal action.

Avoid late payments with Direct Debit

If you are experiencing problems with late payments, Direct Debit can help you solve this issue. As a trusted and convenient automated payment method, Direct Debit enables you to get paid on time, every time.

Choose a Direct Debit provider such as FastPay to manage your collections and the entire process is managed for you. With pricing from as little as 3p a transaction and fast set up within 24 hours, FastPay is a cost-effective, time-effective solution that works.

Contact Fastpay

Discuss your payment collection needs with a member of the FastPay team on 0161 737 5290.

Alternatively, you can request a bespoke quote or find out more about our services by filling in our simple contact form with your details. We are here to help.

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    Key Tax Year Dates for Small Business 2021/22
    Scott Sewards