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The Simple Approach on Collecting Past Due Invoices

Topics: Finance, Credit & Payments, Accounts Receivable

Past due invoices are a serious drag on small businesses.

According to the Export-Import Bank of the United States, a whopping 60% of world-wide invoices are paid late. And these late payments are negatively impacting cash flow in U.S. businesses. An article on Entrepreneur.com noted that 79% of small business owners hold back from paying themselves because of cash flow issues resulting from past due invoices.

In addition to the cash flow problems, past due invoices also require time and attention from your company that could be better spent elsewhere. In fact, Globe-News Wire reports that American businesses are spending an average of 15 days per year just chasing past due invoices. Wow!

We estimate that small businesses have $825 billion in unpaid invoices(source)

Unfortunately, past due invoices are part of doing business. We can't avoid them completely, but there are ways to make the collection process faster and easier, while simultaneously providing a more pleasant experience for both the payer and the payee.

Here’s a super simple approach to collecting on past due invoices.  

Step 1. Keep Copious Records

Collecting on past due invoices starts with careful record-keeping.  Accounting software, like Quickbooks, can help you keep accurate financial records. You want to have invoice dates, invoice numbers, invoice amounts, and customer payment ledgers at your fingertips. Because there are few things more embarrassing than contacting your customer about a “past due invoice” that isn’t actually past due yet!

And having all this information in an at-a-glance view will help your collections calls go faster. When your customer asks what day that invoice was sent, and to whom, you'll be able to provide an immediate answer.

Step 2. Uncover any Issues

Does your customer have a legitimate (or semi-legitimate) reason for failing to pay their invoice? Sometimes past due invoices are a result of a simple misunderstanding. Perhaps there was some ambiguity in the payment terms noted on the invoice. Or maybe the client had a problem with the product or service as delivered and is waiting for a remedy of some type before they will pay the invoice.

"We never received the invoice" is another common issue. Sure, it could be a stalling tactic, but it's also possible that your customer actually never received the invoice. Confirm the billing contact information you have on file. Then ask for a secondary billing contact you can copy on future invoices to make sure all future invoices are received.

One quick discussion with your customer might be all you need to uncover the issue and address it so you can get paid.

Step 3. Adopt the “Pleasantly Persistent” Collection Method

Passive collections methods, like reminder emails, are largely unproductive in getting those past due invoices paid. It’s just too easy to ignore an email. At the opposite end of the spectrum, harassing your customers for payment is also rarely effective. Demanding or threatening tones put the payer on the defensive and strain the business relationship, which can impact future transactions. 

Mildly annoying your customers with a pleasantly persistent approach to collections calls, however, can be very effective.

Try this:

Before you pick up the phone, put a big smile on your face. You want to sound friendly, and smiling while speaking will give your voice that warm tone. Then dial your client and start your call.

    Hi Sarah, it’s Michelle from Apruve. I’m calling to check the status of payment on invoice #123, which currently shows as being past due.

After this opening line, stop talking. Don’t ask if the payment is being processed or if the payment is in the mail. Because the customer will generally just respond “yes” in order to put a quick end to the phone call. Don’t give them the easy out. Leave your end of the conversation open so they have to come up with the status of the payment on their own. 

Their response will dictate how you proceed. If they have a legitimate issue, you'll be able to address it. Or maybe your customer is just giving you excuses. Check out our list of the most common excuses for late payments and how to respond.

Regardless of the direction of the conversation, every call should end with a promise to follow up. 

    Thanks for your help, Sarah. I’ll call you again for a status update on Thursday if we haven’t received payment by then. Hope you have a great day! 

There’s no unpleasantness and no threat. Just a promise to help your customer stay on top of that payment.

credit management

Step 4. Follow Up on Past Due Invoices

Of course the only way the pleasantly persistent method works is if you follow through. If you say you’re going to call on Thursday, you must call on Thursday. After each call, send a quick email to the customer to summarize the call. These emails provide written documentation of each discussion so both parties have a record of every conversation. This practice ensures transparency and boosts accountability. 

To keep your collection efforts organized, you should also document your collections conversations in your accounting/collections software. This will make it easy to get a quick overview of the status of all past due invoices, including the dates of your next planned communication. 

All you have to do from there is continue to make your pleasantly persistent calls until that invoice is paid.

Or, Simply Automate Your Past Due Invoices

Even the super simple approach to collecting on past due invoices requires some amount of time and manual effort. If your company is struggling with an overwhelming volume of past due invoices, you may want to consider automating your collections efforts. 

Innovative fintech companies are creating clever solutions to billing and collections. Some small businesses are even eliminating their accounts receivable through automation. These small businesses are getting paid immediately, even on invoices with net terms, so they never experience a delay in payment, and they avoid subsequent cash flow issues.

Collecting on past due invoices doesn't get any easier than the super simple approach. Except when automation eliminates the need to collect on any past due invoices.


  • 60% of invoices are paid late, which can negatively impact cash flow for your business
  • It’s almost impossible to avoid past due invoices, so it is important to take a few steps to help get paid faster.
  • You should keep records, uncover issues, adopt a “pleasantly persistent” collection method, and follow up.
  • Collecting on past due invoices is very hard and frustrating at times, but if you take the right approach, it can work out for your business in the end.

Net terms accounts receivable

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Apruve enables large enterprises to automate long-tail credit and A/R so you can stop spending 80% of your time and resources on 20% of your revenue. We partner with each of our customers to solve their unique credit, payment, and accounts receivable challenges and build the right credit solutions for your markets, customers, and goals. 

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