The terms “past-due invoice” and “outstanding invoice” are often used interchangeably, but they mean separate things. An outstanding invoice is an invoice submitted to a client that has yet to be paid. However, your business and your client likely agreed to a due date that gives the client some time to pay the invoice—usually 30, 60, or 90 days. A “past-due invoice” is an invoice that is outstanding and beyond the due date agreed to by your business and your client. Let’s look at both a little more closely. Outstanding Invoice “Outstanding payment” refers to any type of balance owed that remains unpaid. If you have a balance with a client, utility company, or financier, the unpaid balance is called your outstanding payment. The moment you send off an invoice to a client, it becomes outstanding. This doesn’t mean it's overdue, just that you’re owed money that you have yet to be paid. Even if an invoice is not past due, you might opt to send regular reminders to the client if they seem to be waiting until the deadline to pay you. Past Due Invoice A past-due invoice is an invoice that remains unpaid even though the invoice’s due date has passed. A past-due invoice means that the owing party has broken its original payment agreement and is now delinquent. An invoice can move from outstanding to past due for many reasons, ranging from innocent oversight to fraud. Regardless, the party owed the money now must wait longer than expected, which could impact cash flow. Unfortunately, past-due invoices are fairly common in business, and—in most cases—it is a matter of waiting a bit longer before receiving payment. The Export-Import Bank of the United States states that 60% of invoices are paid late, 20% of invoices are paid more than 2 weeks late, and most invoices are paid 6 days late on average. Nevertheless, it's a good idea to develop a past-due invoice collection process to address this concern. How Do You Follow Up on an Outstanding Invoice? The time between submitting an invoice and its payment is known as the invoice-payment period. Both parties should have agreed to a timeframe for the invoice’s due date. If you have not been paid but an invoice is not technically due yet, it is still good practice to remain in contact with the client. Polite reminders can often result in you receiving payment earlier than the invoice’s due date. After submitting an invoice, you might want to contact the client right away to confirm receipt of the invoice. Phone calls, in this case, might get better responses than emails. A phone call also shows that you’re paying attention. How Do I Email an Outstanding Invoice? It is common to send email reminders while you’re waiting on payment—you can even say “payment reminder” in the subject line. You don’t have to resend the invoice every time, but in all communication about an invoice, remember to include your business’s name and the invoice number. You can even put your company name and invoice number in all your subject lines, just to be direct. You can also set up automated reminders in most billing software. How Long Can an Invoice Be Outstanding? This will be a negotiation between you and your client, but depending on your industry and state, there might be laws requiring clients to fulfill invoices within a specified period of time. Federal law says that invoices remain outstanding for up to 6 years; i.e., you can pursue a client for an unpaid invoice even if that invoice is 6 years old. Past that point, you’ll probably need to seek legal action if you want to receive your payment. How Do You Deal with a Past Due Invoice? If an invoice is past due, increase the tempo of reminders. “Don't be aggressive; just don't stop asking," Hunter Hoffmann, an executive for business insurer Hiscox, told Business News Daily. "Emphasize that you want to settle up the accounts so you can both focus on more important things. It will become much easier for them to pay you than to keep dodging your calls and making excuses.” Hopefully, the late invoice is due to a bureaucratic oversight or a processing error. As an invoice becomes more and more delinquent, though, it becomes necessary to take a firmer approach. If the client is uncommunicative, the first step is to send a letter demanding the unpaid amount. After that, you might wish to contact an attorney or collection agency. Disclaimer: The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice and is provided for general informational purposes only. Readers should contact their attorney, business advisor, or tax advisor to obtain advice on any particular matter.