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Late Payment Letter

Late Payment Letter

Drafting reminder and explanation letters for late payment can be a difficult task. They have to be worded immaculately, as these letters can be crucial in case of legal proceedings. This article will not only provide samples but also give you an in-depth information about writing reminder as well as explanation letters for delayed payments.
Penlighten Staff
Delayed payment letters can be classified into two basic types; a reminder and an explanation letter. Reminder letters are sent to alert the defaulting person or a company that their payment is overdue. On the other hand, an explanation letter is written by a person who has been late in paying his debt or bill. So, if you are given the responsibility of writing a delayed payment letter, referring to the following letter samples will give you a fair idea about drafting both reminder as well as explanation letters.
Delayed Payment Reminder Letters
Most people will come across companies and clients who do not make payment against invoices on time. In such situations, many people find it awkward to call the company, or send letters repeatedly to demand money. However, there are many companies who wait for their suppliers to make calls and send letters for them to make the payment. Also, it is said that companies who are more persistent in the matters of payment are likely to get paid immediately. So, if you are facing a problem where one of your clients is not clearing his bills even after repeated calls, it is time for you to send a reminder letter for delayed payment.
Reminder Letter Examples
First Reminder for Late Payment
Jeremy Thompson
Accounts Manager - Payment
Reading Tree Publications

10th December, 2012

Subject: First Reminder for Late Payment

Dear Mr. Thompson,

This letter is to remind you that invoice number : ABC1234 that had been sent to you on 1st September, 2012 is still overdue for payment. As per our terms, the payment of $100,000 should have been made by 1stNovember, 2012.

Since you are our regular client, we are offering you additional days to make the payment. I request you to make full payment of $100,000 by 5th January, 2013. If not, the company will be forced to take legal action to recover the debt along with the interest and other associated costs.

I sincerely believe that such an action will not be required in your case. I have attached another copy of the invoice for your convenience. If you have any queries, you are free to call on my office number (000) 000-0000 during working hours.

Please ignore this letter, if you have already made the payment.

Sincerely,
Sharon Adams
Account Manager - Recovery
Ace Printers
Second Reminder for Late Payment
Jeremy Thompson
Accounts Manager - Payment
Reading Tree Publications

10th January, 2013

Subject: Second Reminder for Late Payment

Dear Mr. Thompson,

This has reference to our letter dated 10th December, 2012. We have not yet received payment against invoice number : ABC1234 which is now overdue for more than two months.

As we share a long-term association with you, we have still not levied any interest charges. However, clause 9A of our agreement clearly states that in case of non-payment of invoices within a month from the due date, we are entitled to levy an additional interest of 10% on the outstanding payment.

Also, as per clause 9B of our agreement, if the full payment in not made within the next ten days, we will be debiting your account with the default charges of $1000 for late payment. Please note, as per the payment terms of clause 9C, failure to make payment of the accrued account over 90 days can also lead to termination of the agreement.

We believe that these actions will not be necessary and we look forward to remittance of our outstanding amount by the end of this week.

Please disregard this letter, if the necessary action has already been taken.

Sincerely,
Sharon Adams
Account Manager - Recovery
Ace Printers
Final Reminder for Late Payment
Jeremy Thompson
Accounts Manager - Payment
Reading Tree Publications

21st January, 2013

Subject: Final Reminder for Late Payment

Dear Mr. Thompson,

Outstanding Account - $100,000
Late Payment Default Charges - $1,000
Late Payment Interest - $10,000
Total Outstanding (Till date) - $110,000

This has reference to our letters dated 10th December, 2012 and 10thJanuary, 2013. In spite of our previous reminders we have not yet received payment against invoice number : ABC1234 which is overdue for the last two and half months.

As the delay in payment is a breach of terms in our agreement, we are left with no choice but to debit your account with late payment default charges of $1000 and the interest of $10,000. It is now imperative that you will have to settle a total outstanding amount of $110,000 at its earliest to avoid accrual of further charges.

In case of failure to make payment of the dues by the end of the month, we will have to reluctantly seek the intervention of our debt recovery agency - Assured Recoveries. As informed to you earlier, we may be forced to terminate the agreement with your company after 90 days.

We kindly request you to treat this matter with utmost urgency and make the payment for the outstanding amount immediately in order to settle this account.

Please ignore this letter, if you have already made the payment.

Sincerely,
Sharon Adams
Account Manager - Recovery
Ace Printers
Delayed Payment Explanation Letter
Many people must have gone through trying times when they were not able to pay their bills at the right time. This is one of the common occurrences during an economic recession, where people lose their jobs and do not have money to pay back. Though this is a difficult phase, writing a letter to the company asking them to give you some more time to pay your debt can be helpful. You have to mention the reason that caused the delay in the payment and the amount of time that you require to make the necessary payment. Your letter should reflect that you are serious and willing to pay all the dues as soon as possible.
Explanation Letter Examples
Late Payment Explanation Letter
Sharon Adams
Account Manager - Recovery
Ace Printers

21st January, 2013

Subject: Late payment, Invoice number : ABC1234

Dear Ms. Adams,

We are in receipt of your letters regarding payment of the outstanding dues of $100,000 along with late payment default charges of $1000 and the interest of $10,000. However, due to an internal process delay at our end we could not communicate with you earlier.

Under the current prevalent market conditions, it is difficult for us to make the whole payment at once. I kindly request you to extend our credit period by a month. For the time being, we are attaching herewith a check of $50,000 towards part payment of the outstanding dues.

We will be in a position to make the payment of the balance dues by the end of the next month. In the light of our successful association of five years, we request you to consider our situation.

Thank you. Hoping to get a favorable reply from your end.

Respectfully,
Jeremy Thompson
Accounts Manager - Payment
Reading Tree Publications
Explanation Letter for Late Payment of Credit Card Dues
Whom it may concern
Standard Credit Card

22nd February, 2013

Subject: Late payment, Account number : 12947

Dear Sir/Madam,

This letter is to inform you that I have received last month's credit card status from your company. However, it is going to be difficult for me to pay my dues immediately because of a sudden and inevitable financial crisis.

Due to the current economic conditions, my company, MRE Sales and Retailers has closed down in January, 2013. From then onwards, I have been looking for a job but have not been quite successful yet. Due to this, I have been unable to pay my dues to your company for the last month. I have never been late in paying my dues before, and I assure you that I will pay the entire amount as soon as I find a job.

I have attached a copy of a proof that my company has indeed closed down and the spreadsheet of my monthly expenses for your reference. I expect that my situation is a temporary one and hence, would like to discuss the matter of a loan forbearance with your company.

Thank you for your time. I am looking forward to hearing from you regarding this matter.

Respectfully,
Marcus Samson
Phone number: (000) 000-0000
Tips for Drafting Late Payment Letters
Reminder Letters
Letter should be printed on the company letterhead.
Use a stern yet polite formal tone in the letter.
Always mention the reminders in the subject line and number them.
You may treat the third reminder as the final one.
The intensity of warning should go on increasing with each reminder.
Mention the date on which the payment was expected.
You can also ask the defaulter to make payments in installments.
Always write a line stating that the letter should be ignored if the necessary action is taken at the end of the letter.
Mention the end date of the payment in the letter.
To maintain a long-term relationship, give due consideration to the problems faced by the defaulter.
Explanation Letters
Establish that you are aware about the late payment in the first paragraph itself.
Mention a strong valid reason for the late payment in the body of the letter.
Remind your creditor of your positive payment history.
Keep the tone of the letter formal and refrain from using slang.
Write on the company letterhead and in case of a personal letter, give your contact details.
Sending the letter as soon as you realize the payment is due is necessary.
Ask for an extension of time period to make a pay back.
Substantiate your stand by providing an honest reason and if possible, support it with a proof.
Mention a repayment strategy, you can also propose to pay in installments.
Fix a day for repayment and see to it that you stand by your commitment.
Clients may not pay much heed to your phone call for a delay in payment. However, a letter has a favorable impact and prompts the person to spring into action. Explanation letters for delay in payment that give a transparent account of facts are to be considered by extending the credit, but not at the cost of your company's interests. However, a frequent defaulter's account can be handed over to a strict debt recovery agency. Once you write the letter, read it thoroughly for spelling, typos and grammatical errors, and send it to the company or person. Both types of late payment letters are preferably hand-delivered, posted or sent in the form of fax. It is advisable to get the receipt of acceptance signed by the receiver. Remember to keep a photocopy of the letter with you for your own records. This can be useful in case of legal proceedings.
Disclaimer: The content on this page is intended for educational use and not to be construed as legal or professional advice.