You completed the work, sent the invoice and waited for the due date.

The payment still has not arrived.

An overdue invoice does not always mean the customer is refusing to pay. It may be sitting with the wrong person, missing a purchase order number or waiting for internal approval. Whatever the reason, acting early gives you a better chance of resolving the issue before it affects your cash flow.

Here is a practical process for chasing overdue invoices professionally while protecting the customer relationship.

1. Check the invoice and agreed payment terms

Before contacting the customer, make sure the invoice is accurate and payment is genuinely overdue.

Check:

• the customer’s legal or trading name
• the invoice number and issue date
• the amount due, including GST where applicable
• the agreed payment terms and due date
• the purchase order or job reference
• the description of the work, goods or services supplied
• the payment details
• whether the invoice went to the person responsible for approving it

Also review the relevant quote, contract, purchase order, emails or messages. These records can confirm what was agreed, when payment was due and what steps may be available if payment is late.

If your bank details have recently changed, confirm them with the customer using a trusted phone number. This simple check can also help reduce the risk of invoice redirection scams.

2. Send a friendly payment reminder

If the invoice has only just become overdue, start with a short and polite reminder. A missed payment may be an administrative oversight rather than a deliberate delay.

Include the invoice number, amount and original due date. Attach the invoice again so the customer does not need to search for it.

Overdue invoice email example

Subject: Invoice [number] is now overdue

Hi [Name],

Invoice [number] for [$amount] was due on [date]. Could you please confirm that it has been received and advise when payment will be made?

I have attached another copy for reference. Please let me know if you need any further information to process it.

Regards,
[Name]

The purpose of the first reminder is to confirm receipt and identify anything holding up payment.

3. Ask for a specific payment date

Avoid relying on vague responses such as “it is being processed” or “we will pay it soon”. Ask the customer to confirm a specific payment date.

For example:

Thanks for the update. Can you please confirm the date the payment
will reach our account?

A firm date creates a clear commitment and makes the next follow-up easier. Record the date in your accounting system or calendar and follow up promptly if it is missed.

4. Pick up the phone

If the customer does not respond to your email, call them. A brief conversation can uncover an issue more quickly than a chain of reminders.

Ask:

• Has the invoice been approved?
• Is any information or documentation missing?
• Is any part of the invoice disputed?
• What date is the payment scheduled?
• Who else needs to be involved?

Stay calm and focus on the facts. After the call, send a short email confirming what was discussed, including the payment amount and agreed date. Written records are useful if the matter needs to be escalated later.

5. Deal with disputes and cash flow problems separately

The right response depends on why the invoice has not been paid.

If the customer disputes the invoice

Ask them to explain the issue clearly and provide any relevant details in writing. Check the concern against the quote, scope of work, delivery records and contract.

If part of the invoice is not disputed, ask whether that amount can be paid while the remaining issue is resolved. Keep the discussion factual and document any agreement.

If the customer cannot pay in full

A realistic payment plan may be more effective than repeated demands for an amount the customer cannot currently pay. If you agree to a plan, record:

• the total amount owing
• each instalment amount
• each payment date
• the payment method
• what happens if an instalment is missed

Do not agree to terms that create an unacceptable risk for your own business. Consider obtaining professional advice before entering a payment arrangement, particularly for a large or disputed debt.

6. Escalate overdue invoices consistently

Every business should have a clear accounts receivable process. The exact timing will depend on your payment terms, industry and customer relationships, but a simple process could look like this:

Use the same process across your customer base where appropriate. Consistency helps prevent overdue accounts from being missed or followed up only when cash flow becomes tight.

Before pausing work, withholding goods, adding late fees or taking formal recovery action, check that the step is permitted by your contract and applicable law.

7. Consider formal recovery options

If reminders and direct discussions do not resolve the unpaid invoice, the next step may be more formal.

Options can include:

• sending a letter of demand
• using mediation or another dispute resolution service
• engaging a debt collection agency
• seeking legal advice
• making a claim through the relevant court or tribunal

The best option depends on the value of the debt, the strength of your records, the cost of recovery and whether preserving the commercial relationship is important.

The Australian Government’s business guidance recommends reviewing the contract, sending reminders and considering dispute resolution before moving to debt collection or legal action. Businesses also need to follow their legal obligations when contacting customers about a debt.

How to reduce overdue invoices in the future

Chasing payment is necessary once an invoice is late, but prevention usually costs less than recovery.

Set payment expectations before starting work

Put the price, scope, payment terms and due dates in writing. For larger jobs, consider whether deposits, milestone payments or progress invoices are appropriate.

Invoice promptly

Send the invoice as soon as the work is completed or the agreed milestone is reached. Delaying the invoice delays the payment process.

Make invoices easy to approve and pay

Ask customers what information they require before submitting the first invoice. Include clear payment instructions and practical payment options.

Monitor outstanding invoices weekly

Review your accounts receivable at least once a week. Look at the total amount outstanding, which invoices are overdue and whether any customer’s payment behaviour is changing. For more practical ideas, read our guide to improving business cash flow.

Review credit before extending it

For new or higher-risk customers, consider appropriate credit checks, deposits or shorter payment terms before committing significant time or materials.

Frequently asked questions

When should I follow up on an overdue invoice?

Follow up as soon as the invoice becomes overdue. You can also send a courtesy reminder a few days before the due date to confirm the invoice has been received.

What should I say when chasing an unpaid invoice?

State the invoice number, amount and due date, then ask the customer to confirm when payment will be made. Keep the message polite, direct and easy to action.

Can I charge interest or a late payment fee?

This generally depends on your contract, payment terms and applicable law. Do not add a fee that was not properly agreed or permitted. Seek legal advice if you are unsure.

Can I stop working for a customer who has not paid?

That depends on your contract and existing obligations. Review the agreement and obtain advice before stopping contracted work, withholding goods or cancelling an order.

When should I send a letter of demand?

A letter of demand may be appropriate after reasonable reminders and attempts to resolve the issue have failed. It should clearly identify the debt, the deadline for payment and the action you may take next. Consider having a legal professional review it.

The bottom line

The most effective way to chase an overdue invoice is to act early, ask for a specific payment date and keep clear written records. Start with a polite reminder, move to a phone call if necessary and use a consistent escalation process when commitments are missed.

Clear payment terms, prompt invoicing and regular follow-up will not eliminate every late payment, but they can reduce the time your business spends waiting to be paid.

If delayed payments are putting pressure on upcoming equipment purchases or business expenses, learn more about our asset and commercial finance solutions >

This article provides general information only and does not constitute legal, financial or debt recovery advice. Consider obtaining advice appropriate to your circumstances before taking  formal action.

Need to review your finance position?

If overdue payments are affecting your cash flow or plans for new equipment, our team can help you review your finance options. Contact MKP Group or call 1300 000 657 for a confidential discussion.

Authoritative resources

• What to do when you haven’t been paid – business.gov.au
• Handling debts – Australian Small Business and Family Enterprise Ombudsman
• Debt collection guideline – ACCC and ASIC