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How to Effectively Follow Up on Past Due Invoices in Construction

Managing past due invoices can be a challenging aspect of running a business. Late payments not only affect cash flow but also strain customer relationships. As an experienced construction company owner, understanding the nuances of effective invoice follow-up can significantly enhance your financial stability. This guide will provide you with actionable advice, practical tips, and the best practices to efficiently handle overdue invoice follow-ups.

past due invoices

What Are Past Due Invoices?

Past due invoices are invoices that have not been paid by their specified due date. When a customer fails to settle an invoice by the agreed-upon deadline, it becomes overdue. This can occur for a variety of reasons, such as oversight, financial difficulties, or disputes over the billed amount.

Every invoice should have a clear due date, which is the final date by which payment is expected. Common terms include:

  • Net 30: Payment is due 30 days after the invoice date.

  • Net 60: Payment is due 60 days after the invoice date.

  • Due on Receipt: Payment is due immediately upon receipt of the invoice.

Why Are Invoice Follow-Ups Important?

Before delving into specific strategies, it's crucial to know why prompt invoice collection should be a top priority for your contracting business. Not handling late payments can have far-reaching consequences, including:

  • Cash Flow Disruptions: Unpaid invoices can create a domino effect, making it challenging to meet your financial obligations, such as paying suppliers, employees, and overhead expenses.

  • Strained Relationships: Consistently chasing delinquent customers for payments can strain your business relationships and potentially damage your reputation.

  • Additional Costs: Pursuing debt collection through legal means or hiring a collection agency can be expensive and time-consuming.

  • Missed Opportunities: Limited cash flow can prevent you from taking on new projects or investing in growth opportunities for your business.

7 Steps to Follow Up Payment on Past Due Invoices

Here’s a comprehensive approach to ensure you handle past due invoices professionally and effectively.

1. Establish Clear Payment Terms

Before delving into follow-ups, ensure that your payment terms are explicitly stated and agreed upon by both parties. This includes:

  • Payment due dates

  • Accepted payment methods

  • Penalties for late payments

Having these terms in writing and agreed upon can prevent future misunderstandings.

2. Send a Friendly Reminder

When an invoice is slightly overdue, start with a friendly reminder. This could be an invoice follow up email or a phone call, and should:

  • Politely remind the client of the overdue payment

  • Provide a copy of the original invoice

  • Offer assistance in case they have any issues with making the payment

Here’s an example of a friendly reminder email:

Subject: Friendly Reminder: Invoice '12345' Overdue

Dear [Client's Name],

I hope this email finds you well. This is a friendly reminder that Invoice '12345' for $1,500, due on [due date], is now overdue. We would appreciate it if you could make the payment at your earliest convenience.

If you have any questions regarding this invoice, please do not hesitate to contact us.

Thank you for your prompt attention to this matter.

Best regards,

[Your Name]

[Your Contact Information]

3. Follow Up with a Phone Call

If the email reminder does not receive a response, make a phone call. Speaking directly to the client can be more persuasive and allows you to understand any issues they may have with the payment.

4. Send a Second Invoice Payment Reminder

If there’s still no response, send a more assertive reminder. This time, emphasize the urgency and possible late fees. Here’s an example:

Subject: Urgent: Invoice '12345' Overdue - Immediate Action Required

Dear [Client's Name],

We previously reached out regarding Invoice '12345', which is now [number of days overdue] days overdue. Please note that late fees may apply if the payment is not received by [new due date].

Please arrange the payment as soon as possible or contact us to discuss any issues.

Thank you for your cooperation.

Best regards,

[Your Name]

[Your Contact Information]

5. Implement Late Fees or Interest Charges

If your payment terms include late fees or interest charges, inform the client that these will be applied unless the payment is received by a specified date. This often motivates clients to pay sooner to avoid extra charges.

6. Offer a Payment Plan

In some cases, clients may be facing financial difficulties. Offering a payment plan can help you recover the owed amount over time. Be flexible and work out a schedule that suits both parties.

7. Escalate to a Final Demand

If previous attempts have failed, you can send a final demand letter. This communication should clearly state the consequences of non-payment, such as legal action or involving a collections agency.

Subject: Final Demand: Overdue Invoice '12345'

Dear [Client’s Name],

This is a final notice regarding invoice '12345', dated [Invoice Date], which remains unpaid despite our previous reminders.

Please be aware that if payment is not received by [specific date], we will have no choice but to take further action, which may include legal proceedings or engaging a collections agency.

We hope to resolve this matter amicably and urge you to settle the outstanding amount immediately.


[Your Name]

[Your Company]

Common Questions about Invoice Follow-Ups

1. When Should I Start Following Up on Past Due Invoices?

Begin your follow-up process the day after the invoice becomes overdue. Prompt action shows your clients that you are serious about getting paid and helps keep your accounts receivable in check.

2. How Often Should I Follow Up?

Follow up frequently but not excessively. A good rule of thumb is to follow up every week until payment is received. However, tailor your approach based on your relationship with the client and their payment history.

3. What Are the Best Ways to Follow Up?

The most effective methods include email reminders, phone calls, and even letters. Use a combination of these methods to ensure your message is received and taken seriously.

Leveraging Accounting Software for Efficient Invoice Management

Tools like QuickBooks can automate reminders and track overdue invoices, significantly reducing the manual effort in managing accounts receivable. By setting up automated reminders, you ensure that clients receive timely notifications about their outstanding payments, improving the chances of getting paid on time.

At Construction Cost Accounting, we are experts in using these advanced accounting software solutions. Our outsourced bookkeeping services can help your business navigate these challenges seamlessly. We take the hassle out of invoice management, allowing you to focus on what you do best - running and growing your construction business. Let us handle the intricacies of invoice follow-up and accounts receivable so you can maintain a healthy cash flow and a stress-free financial operation.


Effectively following up on past due invoices is essential for maintaining a healthy business cash flow. By implementing the strategies and tips outlined in this guide, you can reduce the incidence of late payments and enhance your financial stability. Remember, consistent and professional communication is key to ensuring timely payments.

invoice follow up email - Construction Cost Accounting


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