Contractor late payment letters - free templates

So despite your best efforts, your limited company was not paid on time, writes Adam Home of Safe Collections.

This articles provides you and your contractor business with three downloadable ‘late payment’ letter templates:

1. A Letter Hinting At Action (to be sent when your payment is 7 days overdue)

2. A Letter Before Action of Sorts (to be sent 14 days overdue)

3. A Letter Before Action (a ‘Final Demand’ to try and extract payment, to be sent almost 31 days overdue).

1. Seven Days Past Your Due Date

So you were meant to have been paid a full week ago. At this stage, with your invoice seven days overdue, you should stop with the casual reminders. Instead, you ought to now send your first formal letter.

It’s still a reminder, albeit it’s official. You must be firm, polite, clear and concise in stating you’re owed money. It’s not a ‘Letter Before Action,’ more a ‘Letter Hinting At Action.’

Late Payment Letter or Email 1)

• To be used when your firm is unpaid seven days beyond your ‘due date.’

Date: DD/MM/YY (-Insert numbers/date)

Payment references: (-Insert if applicable or delete this row)

Dear Sirs, (-Insert name if known)

Outstanding Account Value: £….(-Insert numbers/outstanding fee, and put this row in bold & italics)

The above sum was due for payment on DD/MM/YY (-Insert numbers/date) but as at today's date no payment has been received.

Should your company have any questions or queries regarding this balance, please contact us within the next seven days.

If no query exists, please be aware our payment terms are strictly XX (-Insert numbers) days and we make no provision for extended credit terms in our pricing structure.

Please make payment as soon as possible.

Regards

XXXXXXXX (-Insert your name)

Notes to ‘Letter Hinting at Action’ / Letter for Seven Days Unpaid

[Download it, and save it for future use, here]

This letter template is designed following the principle of KISS, Keep It Short & Simple! The aim is to give your late-paying customer a gentle, yet written reminder that they are now overdue. You can amend the template as necessary and send it by post or email, but don’t overcomplicate it or delve into many other details. But do include the unpaid invoice (so enclose or attach it) and / or include a Statement of Account showing the balance owed.

Already sent this ‘7 days overdue’ letter?

• Follow up on the letter with a telephone call after 48 hours
• Be polite but firm on the phone and aim to secure a definite date for payment
• Keep in mind – there may be a simple explanation. So don’t jump the gun.
• Do not assume your client is acting nefariously at this stage, as you may unnecessarily harm your relationship.

Need more help?

• Consider buying a credit report (get 50% off with Experian here) to see your late-payer’s financial position and ability to pay.
• Speak to one of our debt recovery team on +(0) 1772 454505

2. Fourteen Days Past Your Due Date

After two weeks of waiting, you have a right to know what the hold-up is. You can now push to know in stronger terms. It’s still not time for your Final Demand letter, also known as a Letter Before Action, but it is time for what we can call the ‘Letter Before Action of Sorts.’

That’s because in this letter or email, you should now explicitly inform the late payer that they might incur additional fees and charges – on top of the invoice sum -- due to their non-payment.

Late Payment Letter or Email 2)

• To be used when your firm is unpaid 14 days beyond your ‘due date.’

Date: DD/MM/YY (-Insert numbers/date)

Payment references: (-Insert if applicable or delete this row)

Dear Sirs, (-Insert name if known)
 

Outstanding Account Value: £….(-Insert numbers/outstanding fee, and put this row in bold & italics)

As at today's date, we have yet to receive payment of the outstanding amount, which is now considerably overdue.

Our company has not yet levied any late payment or interest charges under “the Late Payment of Commercial Debts (Regulations) 2013”. However should payment in full not be received within the next seven days, we may add these charges to your account. 

[Optional] Please also note that our company has a policy of ceasing supply of work/services to any organisation with an account more than XX (-Insert numbers) days in arrears.

We trust this will not be necessary and look forward to receiving your immediate payment by return.

Regards

XXXXXXXX (-Insert your name)

­­­ Notes to ‘Letter Before Action of Sorts’ / Letter for 14 Days Unpaid

[Download it, and save it for future use, here]

If Late Payment Letter 1 and your follow-up phone call did not result in your errant customer making payment of what they owe, then use the above template to up the ante and remind them that you are entitled to add further costs, and interest, to the balance under UK late payment legislation.

Already sent this ‘14 days overdue’ letter?

• Follow up on this late payment letter with a telephone call after 48 hours
• Directly remind the late-paying party that they are now considerably beyond their agreed payment terms.
• State that you expect payment to be made by return.

Want to take further action?

• Use the previously recommended credit report or other sources to pay close attention to any record of County Court Judgments against the client/late payer.
• CCJs almost always indicate ongoing problems with supplier payments. If you do find your overdue customer does have CCJs, then you should take immediate steps to reduce your risk and halt any future deliveries of goods or services. Hence, the optional line in the template above.

3. At Least a Fortnight Past Your Due Date

After three weeks, you should now be thinking about issuing a Final Demand letter  -- the Letter Before Action. As these names imply, this is unfortunately where things get more serious.

As a contractor, you probably don’t want to be seen to ‘rock the boat.’ But at the same time, you need to use a strong tone and make abundantly clear that you’ve allowed plenty of time for payment.

If you’re wary of sending this letter, you’re not alone. Few contractors enjoy doing it. But remember: the law is on your side. As long as you’re polite and professional, don’t be afraid to pursue the matter. Sensible credit control procedures reinforce the ability of your business to operate effectively in all areas.

Late Payment Letter or Email 3)

• For use when your firm is unpaid more than a fortnight past your ‘due date.’

Date: DD/MM/YY (-Insert numbers/date)

Payment references: (-Insert if applicable or delete this row)

Dear Sirs, (-Insert name if known)

Final Demand

(-Leave in large font, bold, centered, underlined)

Outstanding Account: £….(-Insert numbers/outstanding fee, and put this row in bold)

Late Payment Costs: £….(-Insert numbers/outstanding fee, and put this row in bold)

Late Payment Interest: £….(-Insert numbers/outstanding fee, and put this row in bold)
 

Total Outstanding £….(-Insert numbers/outstanding fee, and put this row in bold)

Despite previous reminders, we are disappointed to note that the above amount remains outstanding.

As your company is now in breach of our agreed payment terms, we have reluctantly added further statutory late payment costs and interest in line with “The Late Payment of Commercial Debts (Regulations) 2013”.

It is now imperative that this amount is settled in full, including late payment costs and interest charges, within the next seventy-two hours. (-Leave in bold)

Failure to settle this now extremely overdue account will leave our organisation with little option but to pass this account to our chosen debt recovery agency [-Insert name, e.g. Safe Collections Ltd ], who will add further debt collection fees, in addition to the penalty charges as outlined above.

We would respectfully suggest that you treat this matter with the urgency it deserves and remit the full balance due today.

Regards

XXXXXXXX (-Insert your name)

­­­ Notes to Letter Before Action / Final Demand Letter – for 14+ days unpaid

[Download it, and save it for future use, here]

If your previous phone calls and two late payment letters have fallen on deaf ears, then we recommend sending the Final Demand /Letter Before Action, at between 28 and 31 days after the invoice ‘due date.’

The aim of the letter is to let your errant customer know that you will not accept late payment, and that you will use both the late payment legislation and a debt collection company to secure your funds if necessary.

If you need help to calculate the late payment costs and interest chargeable under the legislation you can use our free app (on either Android or Apple), or just refer to our previous guidance.

Already sent this ‘28-31 days overdue’ letter?

• Follow up on this final late payment letter after 72 hours
• Tell them you’re ringing “to confirm that payment has finally been made” to you
• If it hasn’t, be prepared to take further action to recover the debt -- be that with a debt recovery company or via a solicitor.

What’s next?

• Weigh up the pros and cons of further action by asking yourself key questions you need to know the answers to in relation to the financial viability of your ‘further action’ e.g. Will you likely pay out more in solicitor’s fees or legal costs than the initial outstanding balance? And if your customer already has a handful of County Court Judgments against them, is another likely to make much difference?
• Speak to an expert in the field of recovering monies for unpaid contractors by contacting us at here.