GuideFeb 12, 2026
How to automate invoice reminders in Xero (2026 guide)
Step-by-step guide to setting up Xero's built-in reminders — and how to go beyond its limits with SMS, smart scheduling, and auto-stop.
Read articleYou did the work. You sent the invoice. And now… silence. No payment, no response, no explanation. That sinking feeling in your stomach? Every freelancer and small business owner knows it.
Don't panic. This is a step-by-step action plan for chasing unpaid invoices, from a friendly Day 1 check-in all the way to small claims court. With timelines, sample scripts, and escalation strategies you can use today.
Non-paying clients are one of the most common problems freelancers and small business owners face. Here's what real people are saying:
“Don't do any work for free. Ever. Don't start a job without a contract and without some form of deposit.”
r/freelance · 803 upvotes
“Had to sue my first client. Make sure you always have a contract!”
r/webdev · 1,649 upvotes
“I handle invoicing for a small business and still do everything manually in excel. it works, but it still eats up time.”
r/Accounting
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Before assuming the worst, rule out simple mistakes. A surprising number of “unpaid” invoices are actually just lost, misrouted, or stuck in an approval queue.
Check your email sent folder or invoicing system. Did it go to spam? Did the email bounce? If you use Xero or similar software, verify the invoice shows as 'Sent' not just 'Draft.'
If you sent the invoice to your day-to-day contact, they may not be the person who processes payments. Ask for the accounts payable contact or the email address for invoice submissions.
Double-check that your payment details on the invoice are accurate. A wrong sort code, BSB number, or routing number means the client literally cannot pay you -- even if they want to.
Sometimes clients withhold payment because they're unhappy with the work but haven't said anything. A quick 'Is everything okay with the project?' can surface issues before they become full non-payment situations.
Some companies only process payments on specific dates (e.g., the 1st and 15th of each month). If your invoice arrived just after a payment run, you may be waiting for the next cycle.
The most common reason invoices go unpaid: your client is busy and it simply fell off their radar. A polite nudge is usually all it takes. Don't assume malice when forgetfulness is more likely.
A timeline-based escalation plan for chasing unpaid invoices. Start gentle, increase urgency, and know exactly when to escalate. Each step includes what to do and what to say.
Need overdue invoice email templates? We have a full library of unpaid invoice email templates ready to copy-paste.
Most unpaid invoices are simply forgotten. Your first touchpoint should assume good faith. A short, friendly email or SMS is all you need.
Hi [Client Name], Just a quick note -- invoice #[NUMBER] for [AMOUNT] was due on [DATE]. I wanted to make sure it didn't slip through the cracks. I've re-attached it here for easy reference. Let me know if you have any questions or if there's anything holding up payment. Thanks! [Your Name]
A week has passed. It's possible your first message was missed or deprioritized. This follow-up should be slightly more direct while still professional.
Hi [Client Name], Following up on my email from [DATE] regarding invoice #[NUMBER] for [AMOUNT]. This was due on [DUE DATE] and I haven't yet received payment. I've attached the invoice again in case it's needed. Could you let me know the expected payment date, or if there's anything we need to address? Happy to jump on a quick call if that's easier. Best, [Your Name]
Two weeks overdue. The tone shifts from friendly to firm. This is where you reference your payment terms and mention consequences.
Hi [Client Name], Invoice #[NUMBER] for [AMOUNT] is now 14 days past due. I've reached out twice previously regarding this payment. Per our agreement, a late payment fee of [RATE]% per month applies to overdue balances. To avoid additional charges, please arrange payment by [SPECIFIC DATE -- 5 days from now]. If there is a reason payment has been delayed, I'd appreciate hearing from you so we can work something out. Regards, [Your Name]
Three weeks. Emails can be ignored, but phone calls are harder to dodge. This is your escalation to a direct conversation.
Hi [Client Name], Following our phone conversation today (or: I tried reaching you by phone earlier today), I'm writing to confirm the status of invoice #[NUMBER] for [AMOUNT], which is now 21 days overdue. [If payment date agreed]: As discussed, I have noted that payment will be made by [AGREED DATE]. I appreciate you confirming this. [If no response]: I have not been able to reach you regarding this outstanding balance. Please contact me by [DATE] to arrange payment or discuss any concerns. Late fees of [AMOUNT] have been applied per our payment terms. Regards, [Your Name]
One month overdue. This is a formal, written demand for payment. The tone is no longer conversational -- it's business correspondence with legal weight.
Dear [Client Name], FORMAL DEMAND FOR PAYMENT This letter serves as a formal demand for payment of the following outstanding invoice: Invoice: #[NUMBER] Original amount: [AMOUNT] Late fees accrued: [LATE FEE AMOUNT] Total due: [TOTAL] Original due date: [DATE] Days overdue: 30 I have attempted to resolve this matter through multiple communications on [list dates]. To date, I have not received payment or a satisfactory response. Payment of the full amount of [TOTAL] is required within 10 business days of this letter. Failure to remit payment may result in: - Referral to a collections agency - Filing a claim in small claims court - Reporting to credit agencies I trust we can resolve this matter without further escalation. Sincerely, [Your Name] [Your Business Name]
Six weeks. This is your final attempt at direct resolution. After this, you are escalating to third parties.
Dear [Client Name], FINAL NOTICE BEFORE FURTHER ACTION Despite multiple attempts to collect payment for invoice #[NUMBER], the balance of [TOTAL INCLUDING FEES] remains outstanding. This invoice is now 45 days past due. This is my final attempt to resolve this matter directly. If full payment is not received within 7 days of this notice ([SPECIFIC DATE]), I will proceed with one or more of the following: 1. Engagement of a debt collection agency 2. Filing a claim in [your jurisdiction] small claims court 3. Pursuing legal action for the full balance plus court costs I would prefer to resolve this without involving third parties. If you are experiencing financial difficulty, please contact me within 48 hours to discuss a payment arrangement. Sincerely, [Your Name] [Your Business Name]
Two months. You've given every reasonable opportunity to pay. It's time to take formal action.
At this stage, you are no longer sending messages to the client -- you are taking action: SMALL CLAIMS COURT: - File at your local courthouse or online (many jurisdictions allow electronic filing) - Filing fees: typically $30-$100 - You generally don't need a lawyer - Bring: signed contract, all invoices, proof of delivery, all correspondence COLLECTIONS AGENCY: - Choose an agency that specializes in your industry - They'll typically take 25-50% of the recovered amount - The debt may be reported to credit bureaus - You can usually continue to pursue legal action simultaneously LEGAL ACTION: - Consult a business attorney for amounts over the small claims limit - Many attorneys offer free initial consultations - Legal fees may be recoverable if your contract includes a prevailing party clause
The first four steps of this action plan (the friendly check-in, the polite follow-up, the firm reminder, and the phone-call follow-up) are the ones that eat up your time and emotional energy. They're also the steps that resolve 80% of unpaid invoices.
ChaseBot connects to your Xero account and handles all of this automatically. It sends friendly payment reminders via email and SMS on a schedule you control, escalates the tone over time, and stops the moment your client pays.
Email and SMS sequences that fire automatically based on how overdue the invoice is. No manual follow-up required.
Starts friendly, gets firmer. Each message in the sequence is calibrated to the urgency level -- just like this action plan.
Syncs with Xero in real-time. The moment payment is received, all reminders stop. No embarrassing duplicate messages.
That Reddit user who said they “still do everything manually in Excel”? That's exactly the problem ChaseBot solves. Instead of tracking overdue invoices in a spreadsheet and sending awkward emails one by one, you set up your reminder sequence once and let it run. Learn more about how invoice reminder software works.
The best unpaid invoice is the one that never happens. Here are five practices that dramatically reduce the chance of a client not paying.
As the r/webdev community learned the hard way: 'Had to sue my first client. Make sure you always have a contract!' A contract doesn't need to be 20 pages. It needs to cover: scope of work, total cost, payment schedule, due dates, and what happens if payment is late. A one-page agreement signed by both parties is infinitely better than a handshake.
See our invoice payment terms guideA deposit does two things: it gives you cash flow to start the project, and it filters out clients who were never planning to pay. If a client pushes back hard on a 50% deposit, that's a red flag. For large projects, consider milestone-based payments -- 50% upfront, 25% at midpoint, 25% on completion.
Late fees aren't about making extra money -- they're about creating urgency. A 1.5% monthly late fee on a $5,000 invoice adds $75/month. That's enough to make most clients prioritize your invoice over others in the pile.
Get copy-paste late fee wording for your invoicesNet 30, Net 15, Due on Receipt -- whatever you choose, make it explicit. Include it in the contract, on the invoice, and in your onboarding email. Ambiguity is the enemy of timely payment. The clearer you are upfront, the less chasing you'll do later.
Read our complete payment terms guideDon't wait until an invoice is overdue to start thinking about follow-up. Set up automated reminders that fire on the due date and escalate from there. Most clients pay within the first reminder. The ones who don't will get progressively firmer messages without you lifting a finger.
Calculate late payment interest with our free toolUnderstanding the real cost of unpaid invoices helps you prioritize collection and justify the time you spend chasing payment.
| Days overdue | Probability of collection | Action required |
|---|---|---|
| 1-30 days | ~95% | Friendly reminders (Steps 1-3) |
| 31-60 days | ~85% | Formal demand + escalation (Steps 4-5) |
| 61-90 days | ~70% | Final notice + collections warning (Step 6) |
| 90-120 days | ~50% | Collections agency or legal action (Step 7) |
| 120+ days | <30% | Write off or pursue through courts |
The takeaway: act fast. The first 30 days are critical. After that, every week that passes reduces your chances of getting paid. Use our late payment interest calculator to see exactly how much a late fee adds up to over time.
You now have the action plan. ChaseBot handles the execution: automated reminders via email and SMS, escalating tone, and real-time sync with Xero. Steps 1 through 4, completely on autopilot.
Try ChaseBot freeStep-by-step guide to setting up Xero's built-in reminders — and how to go beyond its limits with SMS, smart scheduling, and auto-stop.
Read articleLearn how to automate your AR process. Reduce DSO, eliminate manual follow-ups, and get paid faster. Step-by-step for small businesses.
Read articleCopy-paste late fee clauses for your invoices and contracts. Percentage-based, flat fee, payment terms, and early discount wording.
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