Do you frequently encounter the issue of customers not paying their invoices on time? When this happens too often or to a significant extent, it can negatively impact your business’s cash flow. To ensure your customers—whether consumers or businesses—pay their outstanding invoices, you can send a payment reminder. This blog provides tips on how to approach customers effectively.
Payment reminder: What is it?
Noticed that some invoices remain unpaid? In this case, you can send a friendly payment reminder to inform the customer that the payment deadline has passed. In the reminder, you can set a new deadline by which the outstanding amount should be paid. However, it is advisable to keep several key points in mind when sending the payment reminder, which we will explain in this blog.
When to send a payment reminder?
If a customer has not paid an invoice, it is recommended to follow a fixed timeline for sending a payment reminder. When you do this depends on the original payment deadline. It is advisable to give the customer enough time to pay after the payment deadline has passed before sending a reminder. Later in the blog, we’ll explain the appropriate timeline. Striking a balance between sending the reminder promptly and giving the customer room to pay is crucial. There may be legitimate reasons, such as unforeseen circumstances, for the outstanding invoice. At the same time, you don’t want to give the impression that paying on time is optional.
Additionally, sending a reminder demonstrates respect for the customer while also emphasising the importance of adhering to agreements. Especially in business-to-business relationships, this fosters stronger connections and helps prevent potential issues.
Is sending a payment reminder a legal requirement?
It’s understandable that you would want to remind a customer after a payment deadline has passed. Depending on the type of customer, there may or may not be legal obligations associated with this process. This largely depends on whether your organisation deals with consumers (B2C) or businesses (B2B).
Consumers
If your target group falls under B2C and a customer has not made a payment, you can send an initial reminder. If this does not have the desired effect, you must send a ‘WIK letter’ or ‘14-day letter.’ Under the requirements of the Debt Collection Costs Act (WIK), you can formally request the customer to pay the outstanding amount within 14 days. You cannot charge additional collection fees for this reminder. If payment is still not made after the 14-day period, collection fees may be charged.
Business customers
If an invoice addressed to a business remains unpaid, you are not legally required to send a reminder. However, it is advisable to remind the debtor about the outstanding invoice. This helps maintain a smooth business relationship. By proactively sending payment reminders to debtors, communication remains professional and efficient.
Difference between a payment reminder and a formal demand
The difference between a payment reminder and a formal demand lies primarily in tone and urgency. A payment reminder is generally friendly and serves as an initial nudge for the customer. A formal demand, on the other hand, is more urgent and formal, often accompanied by additional collection fees for late payments.
Information to include in a payment reminder
When sending a payment reminder, it’s important to include key details. By clearly outlining the information and expectations, you can fully inform the customer of the current situation. Be sure to include the following:
Customer details: Ensure the customer’s name and contact details are correct.
Invoice information: Include the invoice number, due date, and the outstanding amount.
Payment instructions: Provide clear instructions with available payment options, such as bank details, a payment link, or a QR code. If the payment process is too complicated or inaccessible, the customer may delay payment further.
Example of a payment reminder
To encourage prompt payment, we recommend using a clear and customer-friendly tone. Below is a sample template you can use for sending payment reminders:
Date: DD-MM-YYYY
Subject: Payment reminder
Dear [Customer Name],
We would like to remind you of the outstanding invoice [Invoice Number], which was due for payment on [Due Date]. The outstanding amount is [Amount in Euros]. The invoice is attached to this message.
To ensure a smooth payment process, please refer to the following payment details:
Payment details:
IBAN: NL01 BANK 1234 4568 90
Account holder: [Account Holder Name]*
Reference: Payment Reference/Invoice Number*
Payment link/QR code*
We kindly request that you complete the payment within [Number of Days] from the date of this letter to avoid further action.
If payment has already been made, please disregard this reminder.
Thank you for your cooperation. Should you have any questions, feel free to contact us.
Sincerely,
[Company Name]
[Contact Details]
Tips for sending payment reminders
To increase the likelihood of timely payments, follow these tips when sending reminders:
Attach the outstanding invoice
Customers may not have paid an outstanding invoice because they didn’t receive it properly. Always attach the invoice as a reference to make it easier for the customer to review the charges.
Set a fixed and short payment deadline
Maintain a consistent and reasonable deadline for payment. The timeline will depend on the original due date. Recommended timelines:
- Original payment term: 0–14 days → New term: 5 days.
- Original payment term: 15–30 days → New term: 7 days.
- Original payment term: 31+ days → New term: 10 days.
Send only one payment reminder
Sending multiple numbered reminders can confuse customers. Instead, follow up with a formal demand or collection action if the new deadline is missed.
By limiting reminders to one, you save administrative effort and create a direct and clear approach for customers, increasing the likelihood of prompt payment.
What is a reminder invoice?
A reminder invoice, often used as a synonym for a payment reminder, serves a similar purpose. It can be structured in the same way as a payment reminder. Occasionally, the original invoice is modified into a reminder invoice, with changes made to the original details. However, this practice is prohibited in the Netherlands. Instead of altering the existing invoice, a new revised invoice must be created.
Possible last resort
Have you done everything within your power to collect payment from a customer? As a last resort, you may consider starting a collection procedure. In practice, this is rarely done, as collection procedures leave no room for the debtor to make payment voluntarily. However, it’s understandable that you might see no other option. Make sure to thoroughly explore your options before taking this step. At Payt, we are happy to assist with advice and support.
Automating payment follow-ups with Payt
We understand that following up on payments and sending reminders can be time-consuming. With Payt’s automated follow-up software, the process becomes much easier for you and your team. Benefits include:
- Time and effort savings: Automate time-consuming follow-ups.
- Complete control: Pause or adjust collection processes with a single click.
- Improved cash flow: Consistent credit management enhances cash flow.
- Invoice tracking: Monitor the status of all invoices through an online dashboard integrated with your accounting software.
Sending payment reminders with Payt’s software
Sending payment reminders is one of the tasks within your business that you want to spend as little time on as possible. To make your accounts receivable management more efficient, we offer support with our automated follow-up services. Additionally, we provide expertise to help optimise your payment processes.
Do you have questions about drafting and sending payment reminders or want to know more about our services? Feel free to contact us. We are ready to assist you in maintaining a healthy cash flow for your business.
Frequently asked questions
Can I automate payment reminders?
Yes, with accounts receivable management software, you can automate payment reminders, saving time and effort.
What should I do if the customer does not respond to the payment reminder?
If there is no response, it’s necessary to send a more formal demand. You may also consider contacting the customer by phone. If payment remains overdue, you can initiate a collection process using Payt’s accounts receivable management software. A clear record is maintained, which you can easily download and hand over to your bailiff or lawyer.
Can I charge fees for a payment reminder?
In the Netherlands, reminder fees can be charged, but only after the first payment reminder. The amount of these fees depends on the principal sum and is capped at 15%, with a minimum of €40. Please refer to the relevant legislation. Additionally, we recommend charging fees only after a friendly letter or phone call has failed to resolve the issue.
What are the legal aspects of payment reminders?
Payment reminders must comply with legal requirements. They should be clear, fair, and reasonable and must not unnecessarily pressure the customer.
My customer did not receive the payment reminder. What should I do?
This can cause delays, but it doesn’t affect the payment. Simply resend the payment reminder.
Can I send a payment reminder for an old invoice?
This depends on how old the invoice is. For consumers, the statute of limitations is two years, and for business customers, it is five years. The period begins when the payment deadline of the original invoice has passed.