How and When to Send Failure of Payment Notice to Clients Effectively?
Canadians under the age of 35 have an average debt of $69,500. Also, people between 35 to 44 and 45 to 55 years owe $105,100 and $130,000. It means companies have thousands of dollars stuck in debt and must strengthen their collection process!
However, getting your customers to pay on time can take time, mainly for B2B businesses that work on credit. You risk hurting personal and professional relationships with your clients and tarnishing your reputation. Hence, it is essential to improvise your collection and draft compelling failure of payment notice letters to regulate your incoming payment flow.
It is common for companies to send payment reminders or past-due letters to their clients to speed up payments. But if your efforts are in vain and they still don’t honour their dues, you may need to send a failure of the payment notice.
Ensure this notice has all the details, and encourage the recipient to pay quickly. Most people are too busy to realize that they missed a payment. By sending reminders, you can get paid faster, and they can avoid any potential legal trouble.
Some companies send out reminder emails a few days before the due dates. Though that works well for some clients, others need more push. Therefore, send your failure of payment notice via a more effective channel, like direct mail. It is attention-grabbing, upfront, and personal.
Keep reading further to learn what a payment failure notice is and how it is helpful to businesses! We have also included a failed payment mail template to enhance your understanding of how to draft these letters.
What is a Failure of Payment Notice?
A failure of payment notice is a letter a company writes to its customers who have yet to complete their payments. It acts as a reminder for the client to honour their unpaid invoices speedily.
These letters don’t have legal implications and only serve as informative correspondence. Yet, it is the last method before charging late fees or filing a lawsuit against the client. Try sending at least three failure of payment notice mail before you take the matter to court, as it gives the customer enough time to resolve it.
How Does a Failure of Payment Notice Work?
Suppose you manufacture construction equipment and sell it on credit. Your staff would draft an invoice and mention the payment terms during purchase. Then, they would send a copy to the client and retain one for records.
Often, you would not do anything until the due date arrives. If you receive the payment, your staff will send a receipt or an acknowledgement letter. Otherwise, it is now time to send a failure of the payment notice. Remember to save all copies of your correspondence with your client for future reference.
The process applies to all companies wherein they send past-due letters after the due date. You can send reminder emails a few days before the last date, but it is best to avoid being too pushy.
Generally, a failure of payment notice consists of the following details:
- Your full name and company name
- Your mailing address
- Amount due and the last date
- Specifics of the unpaid payment
- Your plans in case the client fails to make the payment
- Overdue charges (if any)
- Contact information
- Payment options
- Attached invoice
When Should Businesses Use a Failure of Payment Notice?
There is no hard and fast rule about when you should send a failure of payment notice, as long as it is after the due date. Some businesses wait over a month to send their first past-due letter template, whereas others ship their letters in less than a week. It depends on your client relationships, the payment terms, and the industry you work in.
Initial Failure of Payment Notice
It is more like an informal reminder to ensure your clients don’t forget to make the payments. You would be surprised how many debts you can recover simply by keeping in touch with your customers and reminding them of their dues.
Try sending the first failure of payment notice in the first week after the due date to receive payments faster. It is the ideal time to create urgency and motivate clients to act quickly. Attach a copy of the invoice for quick reference.
This letter should let your clients know you care about them and want to save them from overdue fees and penalties. Avoid mentioning legal hassles in your initial failure of payment notice, as it may seem unnecessary at this point.
Find below a failed payment mail template or sample that you can send out two to ten days after a client misses the due date:
Michael Trevino Architects
7 Islington AVE
Toronto ON M8V 3B6
Date: 1st June 2025
To,
David Mendes
Elements Inc
2088 5th AVE
Sherbrook QC J1H 1R6
Hello Mr. David,
I hope you are doing well! This letter is with regard to the renovation we finished at your office a few weeks ago. We wanted to inform you that the due date for invoice #78 associated with this contract was on 25th May 2025, and we are yet to receive the payment.
The total due amount is $_______, and you can pay by either cash, check, or online transfer. If you have any doubts, kindly call me at the number on the letterhead. I will be happy to assist you in any way possible.
I have also attached a copy of your invoice with this failure of a payment notice for your reference. You can get our bank information from it.
Please pay your dues at the earliest as our company policy dictates an overdue fee of 10% after the 20-day mark.
We look forward to hearing from you soon!
Kind Regards,
Jane Collins
Vice President (Sales and Marketing)
The Second Failed Payment Mail Template
This letter is a little more intense and discusses the consequences of not paying the dues. It is a warning failure of payment notice and lets your clients know that you are considering taking a legal approach to this matter if they don’t pay fast.
Again, this letter does not have legal force, but its intensity can help you recover payments.
Below is a second failed payment mail template you can draft and send if your first letter does not get any response after two to three weeks.
To,
Richard Burke
Lifeson Hospitals
10 Maple Grove RD
Kitchener, ON N2L 3V2
Hello Dr. Burke,
We are writing this failure of payment notice to bring to your attention that your invoice #806 is still unpaid. Its due date was 30th April 2025, and we wrote to you earlier regarding this bill on 9th May 2025. However, we are still awaiting a reply from your end about your payment status.
It would be greatly appreciated if you could call us back or respond to this failure of payment notice with an update. Please understand that failing to complete your payment can result in legal action and immediate termination of our sales contract.
According to our payment terms, you can transfer the amount of $_______ to our account online or send a check to our office address. Please find our banking information and mailing address in the invoice attached to this failure of the payment notice.
Feel free to contact us if you have any questions or concerns.
Sincerely,
Zack Cooper
Head of Sales (Medical Equipment)
Three-Day Final Failure of Payment Notice
It is the last reminder and warning to your clients who didn’t respond to your requests. At this stage, it becomes clear that they are ignoring your letters deliberately and have no intention of paying soon. Hence, keeping up with your efforts and sending a final failure of payment notice is significant.
This notice informs the client that they have only three days to honour their dues before your company takes legal action. However, please note that, though this letter helps you initiate a legal proceeding, you still need to talk to a legal representative and complete the necessary formalities.
Here’s another sample you can refer to for sending the final failure of payment notice:
To,
Mary Sturgis
BETA Group of Industries
58 Robson ST
Vancouver BC V6B 3K9
Hello Mrs. Mary,
We write this letter to inform you that we have still not received the payment for invoice no.105, due weeks ago. You purchased 15 carpets from our showroom in New Jersey City on 15th February 2025.
We tried contacting you via call and email, but there was no response. We even wrote to you two times before sending this failure of payment notice, and didn’t get a reply.
Please consider this letter our final warning to BETA, and pay the dues within three days. Your total due amount is $____________, and the bill clearly states that failure to make the payment will result in legal action.
Kindly resolve this issue right away to avoid legal consequences and late charges. You can contact us to resolve any queries or doubts.
Regards,
Jackson Clarke
Malarkey Rugs Pvt. Ltd.
How to Create and Send a Failure of Payment Notice Using PostGrid?
Now that you know when to send payment failure letters, here’s how to create them:
Step-By-Step Guide For Creating And Sending a Failure Of Payment Notice
Collect the Necessary Information
Make sure to have all the information concerning the payment involved. It must consist of the date it was due, the sum due, and the reference of the invoice or agreement done originally. Include any prior communication with the debtor. The accuracy of information is important as this guarantees the clarity and legitimacy of what you are saying. You can also put a list of all your debtors and prepare to personalize your letters. The best way is to use an automated direct mail service like PostGrid that offers variable data printing. It can also fetch the required data within seconds and help you autofill letters efficiently.
Choose a Template
Choose a failed payment mail template that best suits your needs and explains your concerns. PostGrid offers several failure of payment notice letter templates you can choose from, along with handwriting fonts and sizes. You can customize your letters any way you like, including adding your logo, signature, etc.
Present a Resolution or Payment Alternative
Although the purpose of the notice is to make the debtor know about default, it is useful to resolve the problem. This can either be a demand for payment on the spot or a payment plan. You can also call the creditor to agree on a payment alternative. Flexible payment terms enhance the opportunity to get the payment and build a positive relationship.
Review and Proofread
It is necessary to check the letter in terms of mistakes or inconsistencies before it is sent. Check all the financial particulars, dates, and message tone. You must handle it professionally despite the frustrations of the situation. A well-written and precise notice with formal language will not make the debtor challenge it.
Deliver the Failure of Payment Notice
It is advisable to use a mailing system that has evidence of receipt. It can be Registered Mail, Certified Mail, or an email with a read receipt request. These methods ensure that the debtor is aware of the situation.
Take Follow-Up Action If Necessary
In case the debtor fails to answer the notice within the required time, send follow-ups immediately. It can be a second letter or telephone messages. You can also take the issue to court based on the conditions of the agreement and the type of debt.
Wrapping Up
Sending payment collection letters is a regular task for many companies. Such correspondence allows them to lower their debts and increase incoming payments. Hence, planning carefully and taking the essential steps to connect with your clients and push them to pay is crucial.
Sending a failure of payment notice can aid your company significantly. It informs your clients that you still remember their unpaid dues and look forward to receiving them soon. Also, it warns them against any legal problems, which could motivate them to pay immediately and resolve the matter.
But it can be daunting and time-consuming to draft and send these failures of payment notice letters frequently. Hence, PostGrid offers automated direct mail services to help you complete this job online. Also, our all-inclusive solutions and affordable rates make it more convenient and effective for your company.
Request a demo now to learn more about how PostGrid can help you send failure of payment notice letters to your clients and boost your collections!
FAQs
What Should I Do in Case the Client Fails to Make the Payment as Indicated in the Notice?
In case the client fails to act on the failure of the payment notice, then you can escalate the issue. It might include making a second or third notice more strict with claims for legal action. In case of non-resolution of the issue, you can take it to the court for a lawsuit or a collection agency.
Is the Failure of Notice of Payment Legally Binding?
Failure of the payment notice is not legally enforceable. It is an informative reminder and warning that the creditor wants the debt to be cleared. But it is a form of formal communication, and it can be included as evidence in the court procedure. It can be useful in legal action in case the client does not pay.
What Is the Difference Between Traditional and Automated Failure of Payment Notices?
In conventional notices, you have to do the printing, stuffing, and posting of letters manually. But automating them using solutions like PostGrid’s Print & Mail, you get an easy way to generate and mail failure of payment notices. Automation minimizes errors, prevents time and money wastage, and ensures consistency in messaging.
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