Wiki

Outstanding invoices

Sanne de Vries March 8, 2023 Updated on: September 24, 2025

Outstanding invoices are a common bottleneck in the accounts receivable management of organizations. They affect your cash flow, create administrative burdens, and can even lead to financial risks if they remain unresolved. Fortunately, there’s a lot you can do to maintain control of your invoicing process.

In this article, you’ll learn everything you need to know, starting with what is an outstanding invoice, followed by how to follow up, prevent, and automate the process with Payt.

Table of contents:

What is an outstanding invoice?

What is an outstanding invoice? It’s an invoice that has not yet been (fully) paid by the customer, while the payment deadline has either passed or is about to expire. These outstanding invoices can place significant pressure on your company’s liquidity, especially when large or multiple amounts are involved.

It’s essential to monitor and track outstanding invoices closely and take action in time to get them paid. You can manage this manually, or—as more and more businesses are doing—through an automated accounts receivable process.

How to follow up on outstanding invoices?

Managing outstanding invoices requires a structured and consistent process. Below is a practical step-by-step guide.

Step-by-step plan:

Make contact
Start with a personal approach. Call or email your customer to check if they’ve received the invoice and whether they have any questions. Often, the cause is as simple as a missed email.
Send a payment reminder
No result from the contact? Send a friendly payment reminder stating clearly what is an outstanding invoice in question, along with the due date and payment details
Send a second reminder or dunning letter
If the payment still hasn’t arrived, it’s time for a more formal tone. Send a dunning letter and indicate that additional charges will apply if payment is not received.
Charge statutory interest and collection costs
According to the law, you may charge interest and collection fees for overdue payments. Be transparent about this in your communications.
Offer a payment plan
If the customer is temporarily unable to pay in full, consider offering a payment plan. This helps you collect the amount owed while avoiding escalation.
Consider legal action
This may involve sending a formal notice of default or contacting a collection agency. Be sure to proceed in a legally correct and respectful manner.
Claim VAT on uncollectible Invoices
If it’s clear that the invoice is uncollectible, you may be eligible to reclaim the VAT through your local tax authority.
File for bankruptcy
As a final step, you may file for the customer’s bankruptcy. This puts pressure on the debtor to pay but is a significant and impactful measure.

Want more details? Read our article “Customer does not pay – now what?”

How to prevent outstanding invoices?

Preventing outstanding invoices is just as important as following up on them. You can reduce the risk by taking the following measures:

Automate payment reminders: Set up automated reminders to notify customers on time.
Clear payment terms: Clearly define payment deadlines and conditions in writing.
Check creditworthiness: Assess a customer’s financial reliability before doing business.

How to write a reminder for an outstanding invoice?

A well-written reminder for what is an outstanding invoice should be short, friendly, and clear. Include the following:

The invoice number and total amount
The original due date
The updated payment deadline
Payment details (including a clickable payment button such as PayPal or credit card)
A contact option for questions

Make it easy for your customer to pay—less effort increases the likelihood of timely payment.

For more tips, read our article on writing effective payment reminders.

Automating payment processes with Payt

Payt offers a complete solution for automating your accounts receivable management. With our software, you can effortlessly schedule reminders and dunning letters, saving valuable time on manual admin.

Payt also helps you maintain a clear overview of all outstanding invoices and allows for quick action when a payment is overdue. The automated process improves cash flow and minimizes the risk of late or missed payments.

Curious what Payt can do for you? Download our brochure below.

By Sanne de Vries

Sanne is a business consultant at Payt. She helps companies optimise their financial flows with attention to detail and a deep understanding of business processes.