What is an overdue invoice?
An overdue invoice is any invoice where the payment due date has passed without full payment being received. It becomes overdue on the first business day after the due date (or after any specified grace period). An overdue invoice does not mean the debt is cancelled — the client still legally owes the full amount, plus any late fees specified in your contract or invoice payment terms.
What should I do first when an invoice becomes overdue?
Send a professional overdue notice the first business day after the due date. Keep it brief and factual: reference the invoice number, original amount, due date, and include a direct payment link. Most overdue invoices result from forgetfulness — a single prompt reminder resolves the majority of cases without friction. Only escalate tone and add late fees if the client fails to respond within 7 days.
How many follow-up messages should I send before escalating?
A standard escalation sequence: (1) friendly reminder on Day +1, (2) firmer notice with late fee reference on Day +7, (3) formal demand with late fee applied on Day +14, (4) final warning before escalation on Day +21, (5) collections/legal action at Day +30 to +45. Most invoices are resolved by Day +7. If a client does not respond after 3 follow-ups, escalation is warranted.
Can I charge a late fee on an overdue invoice?
Yes — if the late fee was disclosed in your contract and/or on the original invoice before the due date. You cannot retroactively add a late fee to an invoice that did not originally include one. The standard rate is 1.5% per month (18% annually) on the outstanding balance. If your original invoice did not include a late fee clause, you can still apply one on all future invoices going forward.
Should I stop working for a client with an overdue invoice?
Yes — pause new work for a client who has an outstanding overdue invoice, especially if it is more than 14 days past due. Continue delivering work against unpaid invoices only if you have strong reasons to trust the client (long track record, large relationship). Pausing work is a professional and effective lever: most clients respond immediately when they realize new deliverables are contingent on resolving the outstanding balance.
When should I write off an overdue invoice as a bad debt?
Consider writing off an overdue invoice as bad debt when: the client has stopped responding entirely, the invoice is 90+ days overdue, collections efforts have failed, and the amount is too small to justify legal action. For tax purposes, bad debts must be written off in the year they become uncollectible (using the specific charge-off method for cash-basis taxpayers). You cannot deduct income you never received if you use cash-basis accounting — the deduction applies only if you previously recognized the income.