It’s Monday afternoon here in Cape Town. You’ve had a productive day, but a nagging thought is in the back of your mind. You check your bank account again, hoping to see the payment for that large invoice from June has finally landed. It hasn’t. For any SMME owner, the stress and frustration of an unpaid invoice is a familiar, unwelcome feeling. It can strain your cash flow, sour client relationships, and drain your valuable time.
However, chasing overdue payments doesn’t have to be a confrontational or chaotic process. In fact, the most effective approach is the opposite: a calm, systematic, and professional system that escalates logically. Having a clear plan in place removes the emotion from the situation and significantly increases your chances of getting paid without burning bridges. This is your practical, step-by-step guide to chasing unpaid invoices and protecting your business’s cash flow.
Step 1: The Pre-emptive Strike (One Week Before the Due Date)
The best way to handle a late payment is to prevent it from ever being late in the first place. A week before the invoice is due, send a short, friendly email. This isn’t a chase; it’s a proactive customer service check-in.
What to do: Send a polite email confirming they have everything they need.
Example Template:
“Hi [Client Name],
I hope you’re well. This is just a friendly check-in regarding invoice #1234, which is due for payment next week. I’ve attached a copy for your convenience. Please let us know if you have any questions.
Kind regards,”
This simple step achieves three things: it confirms they received the invoice, it puts it on their radar for their upcoming payment run, and it opens the door for them to flag any potential issues early on.
Step 2: The Gentle Nudge (On the Due Date)
If the due date arrives and the payment hasn’t reflected in your account, it’s time for another gentle prompt. Don’t assume malice; invoices are often simply overlooked or caught in administrative processes.
What to do: Send a factual, unemotional email reminder.
Example Template:
“Hi [Client Name],
Just a quick and friendly reminder that invoice #1234, for the amount of R[Amount], is due for payment today.
We’d appreciate you settling it at your earliest convenience.
Thanks,”
This message is a clear but non-confrontational nudge. It keeps the tone professional and serves as an official record that you have followed up on the due date.
Step 3: The First Follow-Up – The Phone Call (3-7 Days Late)
An email is easy to ignore. A phone call is not. After a few days have passed, it’s time to pick up the phone. The goal of this call is not to demand payment, but to understand the situation.
What to do: Make a polite, inquisitive phone call.
How to approach it:
- Stay calm and friendly: “Hi [Name], I’m calling from [Your Company]. I’m just following up on my email about invoice #1234, which is now a few days overdue. I wanted to check if there was a problem with the invoice or if you had any questions about it?”
- Listen: Let them explain. The issue could be a simple administrative error, a query on the invoice, or a genuine cash flow problem on their end.
- Get a Commitment: The most important part of the call is to secure a firm commitment. Don’t accept vague promises like “I’ll sort it out soon.” Ask for a specific date: “Thank you for clarifying. When can we expect to receive the payment?” Note this date down.
Step 4: The Formal Chase – The Overdue Statement (14 Days Late)
If the promised payment date from your phone call has been missed, or if two weeks have passed without payment, it’s time to escalate the formality.
What to do: Send a more formal email with a clear subject line and attach a Statement of Account.
Example Template:
- Subject: Overdue Invoice: #1234 from [Your Company Name]
- Body: “Dear [Client Name],
Our records indicate that invoice #1234 remains unpaid and is now 14 days overdue. Please find your updated Statement of Account attached.
As per our agreed terms, we may begin to charge interest on overdue amounts. We urge you to settle this outstanding balance immediately to avoid further charges and any potential disruption to your account services.
Please confirm when we can expect payment.”
This email clearly signals that the situation is becoming more serious and officially documents your attempt to collect the debt.
Step 5: The Final Warning – The Letter of Demand (30 Days Late)
After a month, the debt is now significantly overdue and poses a serious risk to your business. Your communication must reflect this. The Letter of Demand is a formal, pre-legal step.
What to do: Draft a formal letter (saved as a PDF and attached to an email).
Key elements to include:
- The words “Letter of Demand” clearly at the top.
- The date, invoice number, and outstanding amount.
- A reference to all previous attempts to recover the payment.
- A final deadline for payment (e.g., “within seven (7) working days from the date of this letter”).
- A clear statement of consequences: “Failure to settle the full outstanding amount by this deadline will result in your account being permanently suspended, and we will instruct our debt collection agency or legal representatives to commence formal recovery proceedings without further notice.”
This letter shows the client you are serious and often produces results where previous attempts have failed.
Step 6: The Last Resort – Taking Action (45+ Days Late)
If your Letter of Demand is ignored, you have spent enough time chasing. It’s time to hand the problem over to professionals.
Your main options in South Africa:
- Debt Collection Agency: These firms specialise in debt recovery. They will take your case on, usually for a commission based on what they successfully recover. They understand the legal process and can pursue the debt professionally, saving you the stress.
- Legal Action: For debts under R20,000, the Small Claims Court is a cost-effective option for SMMEs.1 You do not need a lawyer to represent you. For larger amounts, you will need to consult with an attorney to issue a summons. This should always be your final resort.
- Proactive Solutions: To avoid this situation in the future, consider financial tools like Invoice Factoring. A factoring company can advance you the cash for your invoices immediately and will often manage the entire collections process for you, ensuring you get paid while you focus on your business.
Conclusion
Chasing unpaid invoices is an unavoidable reality of business, but it doesn’t have to be a source of constant anxiety. By implementing this calm, systematic, and escalating process, you maintain professionalism, protect your client relationships where possible, and assert your right to be paid. This structured approach is your best defence for protecting your cash flow and building a financially resilient SMME.
