WORDING OF A PAYMENT REMINDER

Your client doesn’t seem to pay you?  What to do?  You should send him a payment reminder.  But what should be written in there?

The essential elements are as follows:

• How to contact you.  Provide your client (debtor) with easy ways to contact you.  Indeed, if the client has an issue with your invoice, you want to know about it, hence your phone, email, etc. should be clearly mentioned.
• Why you require this payment: it is always better to join a copy of the original invoice (or invoices) because otherwise it’ll take some more time for the cases where your client needs one.  In any event, your client should be able to identify easily what you are talking about.
• What you are exactly requiring: you require the payment of X EUR on your bank account (with BIC & IBAN) before a precise date.

Keep it simple.  Delete anything that is not essential.

The tone of the reminder

On the one hand, you wish to be taken seriously, on the other hand, hard words are counterproductive.  You are just requiring something that is in fact quite obvious: you delivered goods or service and want to be paid as agreed.  Use a neutral tone.

Avoid threatening.  When you tell your client what you will do next if he doesn’t pay, you provide him with an information and a choice.  The information is that you consider it possible that he would not pay.  The choice is that he can opt for the treat (like going to courts) and gamble over your determination.  Besides, you limit yourself to the options you gave: pay or courts for instance.  Hence, if the payment doesn’t come and you don’t go to courts, you lose credibility.

Generally speaking, use an ‘informative language’ and don’t show irritation or open the way for useless discussions.

You want to be paid.  But are also interested to know why you have not been paid in time.  Reasons like “we have not received your invoice” are interesting.  Such reason can be an excuse but can also be true.  If it happens regularly, you may want to send your invoices by pdf, for instance.   So, your reminders need be professional and inviting to contact you if there is a problem.  A sentence like: “Please contact me if you wish, I’ll be very happy to answer your questions:  John Smith on +32 xxxx or x@x.com.” will make wonders.  If they have a valid reason, you’ll learn about it.  If the reason is not valid, you’ll have a chance to explain in a very positive and professional way why it is not acceptable.

The timing

Depending on many factors like the type of your clients (consumers, small companies, bigger companies), their payment process may vary.  Some will attend to it daily; some will do it once a week.  Some will have a longer process but, in such event, they should advise you.

A payment performed today by your client is at the latest within three days on your bank account.  That is if the client is located in Europe.  If outside Europe, mainly within 5 days.

Hence, 10 days seems a reasonable maximum term for you to receive the payment.

A good way to word it is: “we summon you to pay XX EUR within 7 days (that is before xx/xx/20xx) on our bank account number IBAN xxx”.  Please use the reference xxx/xxxx/xxxxx in the payment communication.”

Apply interests and costs

If your contract with the client includes provisions about the consequences of delayed payment, you should apply them.  The interests and charges are usually expressed in the original contract like “automatically after due date and without specific warning an interest of 12% on a yearly basis from the date of invoice and a fixed charge of 10% subject to a minimum of 75 EUR”. See also our explanation (24 Aug 2016) on the fixed collection charge.

You can add these charges to the amount requested.  But be clear in the composition of your letter about the initial (“principal”) amount part and the charges for delayed payment.

Many a client (debtor) will pay the initial (“principal”) amount without the charges upon receipt of your letter (so as to avoid these charges).  Adding these charges to your reminder acts also as a motivation to pay.

We summon you to pay

The Belgian law has it that when you go to courts for an unpaid item, it is necessary to prove that you requested this payment clearly and with some precision.  That is why the wording “we summon you to pay XX EUR” is advisable.

Letter, registered mail, email

If the case ends up in courts, you will need to prove that you required payment.  Registered mail provides you with a proof that is accepted by Belgian courts.  It is therefore useful to send the first letter by registered mail.

The next one doesn’t need to be sent by registered mail but could be copied in an email or could be only by email.

The law

The law on consumer debt collection stipulates a list of things that are forbidden, inclusive about written messages (see Art.3).

The law on late payment in commercial transactions grants some protection to the creditor but doesn’t cover reminders contents.

Why and when to use a debt collection agency

When you have sent two reminders, the first one 5 days after due date and another one 10 days after the first one, you can try a phone call.  But if these three efforts don’t trigger a concrete reaction (payment or valid dispute or valid promise), then you should acknowledge that there is a problem.  For strategic clients, personal contact is necessary.  But not all clients are “strategic”; probably only about 10% of them are. For the other 90%, further in-house efforts are not cost-effective.  You should probably sub contract these claims.

TCM is used to the more difficult claims.  We apply the same positive and professional tone in our communication with debtors but we have additional advantages, the first one is that the debtor knows that we won’t “forget about it”.

Conclusion

The structure of your reminder letters could read as follows:

<<

In a visible place: M. John Smith – Please contact me on +32 0 000 0000, Email x@x.com

Dear Sir

We contact you about [the product/service] that we delivered to you.  We do not seem to be able to trace your payment.

Your debt is as follows:

Invoice abcd  = XX EUR – Interests form date1 to date2 at 12%/year = x EUR

Invoice abef  = YY EUR – Interests form date1 to date2 at 12%/year = y EUR

Total invoices = [XX+YY]

Total Interests = [x+y]

Indemnity late payment 10% of invoices subject to minimum AA EUR = ZZ EUR

Total to be paid = [Total invoices + Ttl interests + Indemnity]

As far as necessary, we summon you to pay [Total to be paid] EUR within 7 days (that is before xx/xx/20xx) on our bank account number IBAN xxx”.  Please use the reference xxx/xxxx/xxxxx in the payment communication.

Please contact me if you wish, I’ll be very happy to answer your questions:  John Smith on +32 xxxx or x@x.com.

>>

Be positive and professional in all communication with your indebted clients.  Send two letter, make a phone call and sub-contract the claim if not paid by then.

If you need further help for your reminders process, please don’t hesitate to contact TCM.  Surf our website or contact us!

18/4/2018: see also “How to chase payment of an invoice by phone“.

WORDING OF A PAYMENT REMINDER

Your client doesn’t seem to pay you?  What to do?  You should send him a payment reminder.  But what should be written in there?

The essential elements are as follows:

• How to contact you.  Provide your client (debtor) with easy ways to contact you.  Indeed, if the client has an issue with your invoice, you want to know about it, hence your phone, email, etc. should be clearly mentioned.
• Why you require this payment: it is always better to join a copy of the original invoice (or invoices) because otherwise it’ll take some more time for the cases where your client needs one.  In any event, your client should be able to identify easily what you are talking about.
• What you are exactly requiring: you require the payment of X EUR on your bank account (with BIC & IBAN) before a precise date.

Keep it simple.  Delete anything that is not essential.

The tone of the reminder

On the one hand, you wish to be taken seriously, on the other hand, hard words are counterproductive.  You are just requiring something that is in fact quite obvious: you delivered goods or service and want to be paid as agreed.  Use a neutral tone.

Avoid threatening.  When you tell your client what you will do next if he doesn’t pay, you provide him with an information and a choice.  The information is that you consider it possible that he would not pay.  The choice is that he can opt for the treat (like going to courts) and gamble over your determination.  Besides, you limit yourself to the options you gave: pay or courts for instance.  Hence, if the payment doesn’t come and you don’t go to courts, you lose credibility.

Generally speaking, use an ‘informative language’ and don’t show irritation or open the way for useless discussions.

You want to be paid.  But are also interested to know why you have not been paid in time.  Reasons like “we have not received your invoice” are interesting.  Such reason can be an excuse but can also be true.  If it happens regularly, you may want to send your invoices by pdf, for instance.   So, your reminders need be professional and inviting to contact you if there is a problem.  A sentence like: “Please contact me if you wish, I’ll be very happy to answer your questions:  John Smith on +32 xxxx or x@x.com.” will make wonders.  If they have a valid reason, you’ll learn about it.  If the reason is not valid, you’ll have a chance to explain in a very positive and professional way why it is not acceptable.

The timing

Depending on many factors like the type of your clients (consumers, small companies, bigger companies), their payment process may vary.  Some will attend to it daily; some will do it once a week.  Some will have a longer process but, in such event, they should advise you.

A payment performed today by your client is at the latest within three days on your bank account.  That is if the client is located in Europe.  If outside Europe, mainly within 5 days.

Hence, 10 days seems a reasonable maximum term for you to receive the payment.

A good way to word it is: “we summon you to pay XX EUR within 7 days (that is before xx/xx/20xx) on our bank account number IBAN xxx”.  Please use the reference xxx/xxxx/xxxxx in the payment communication.”

Apply interests and costs

If your contract with the client includes provisions about the consequences of delayed payment, you should apply them.  The interests and charges are usually expressed in the original contract like “automatically after due date and without specific warning an interest of 12% on a yearly basis from the date of invoice and a fixed charge of 10% subject to a minimum of 75 EUR”. See also our explanation (24 Aug 2016) on the fixed collection charge.

You can add these charges to the amount requested.  But be clear in the composition of your letter about the initial (“principal”) amount part and the charges for delayed payment.

Many a client (debtor) will pay the initial (“principal”) amount without the charges upon receipt of your letter (so as to avoid these charges).  Adding these charges to your reminder acts also as a motivation to pay.

We summon you to pay

The Belgian law has it that when you go to courts for an unpaid item, it is necessary to prove that you requested this payment clearly and with some precision.  That is why the wording “we summon you to pay XX EUR” is advisable.

Letter, registered mail, email

If the case ends up in courts, you will need to prove that you required payment.  Registered mail provides you with a proof that is accepted by Belgian courts.  It is therefore useful to send the first letter by registered mail.

The next one doesn’t need to be sent by registered mail but could be copied in an email or could be only by email.

The law

The law on consumer debt collection stipulates a list of things that are forbidden, inclusive about written messages (see Art.3).

The law on late payment in commercial transactions grants some protection to the creditor but doesn’t cover reminders contents.

Why and when to use a debt collection agency

When you have sent two reminders, the first one 5 days after due date and another one 10 days after the first one, you can try a phone call.  But if these three efforts don’t trigger a concrete reaction (payment or valid dispute or valid promise), then you should acknowledge that there is a problem.  For strategic clients, personal contact is necessary.  But not all clients are “strategic”; probably only about 10% of them are. For the other 90%, further in-house efforts are not cost-effective.  You should probably sub contract these claims.

TCM is used to the more difficult claims.  We apply the same positive and professional tone in our communication with debtors but we have additional advantages, the first one is that the debtor knows that we won’t “forget about it”.

Conclusion

The structure of your reminder letters could read as follows:

<<

In a visible place: M. John Smith – Please contact me on +32 0 000 0000, Email x@x.com

Dear Sir

We contact you about [the product/service] that we delivered to you.  We do not seem to be able to trace your payment.

Your debt is as follows:

Invoice abcd  = XX EUR – Interests form date1 to date2 at 12%/year = x EUR

Invoice abef  = YY EUR – Interests form date1 to date2 at 12%/year = y EUR

Total invoices = [XX+YY]

Total Interests = [x+y]

Indemnity late payment 10% of invoices subject to minimum AA EUR = ZZ EUR

Total to be paid = [Total invoices + Ttl interests + Indemnity]

As far as necessary, we summon you to pay [Total to be paid] EUR within 7 days (that is before xx/xx/20xx) on our bank account number IBAN xxx”.  Please use the reference xxx/xxxx/xxxxx in the payment communication.

Please contact me if you wish, I’ll be very happy to answer your questions:  John Smith on +32 xxxx or x@x.com.

>>

Be positive and professional in all communication with your indebted clients.  Send two letter, make a phone call and sub-contract the claim if not paid by then.

If you need further help for your reminders process, please don’t hesitate to contact TCM.  Surf our website or contact us!

18/4/2018: see also “How to chase payment of an invoice by phone“.