Payment Reminder: Meaning, Types, and Best Practices

In today’s fast-moving economy where payment experiences are expected to be instant, payment collections are generally not. As predictable cash flow continues to be a sustainable driver for business growth, delayed payments can lead to operational friction and strained client relationships. 

This is where payment reminders add value. Far from being mere follow-up messages, today’s payment reminders are an essential medium of strategic communication. They help companies in maintaining the required cash flow while preserving healthy relationships with clients. 

As numerous platforms enable automated payment reminders, and eliminate the need for manual hassles, businesses have reliable solutions that can make payments faster  and more efficient. 

In this blog, we explore what payment reminders are, how they are essential for modern businesses, and how they can be used to transform payment collections into a user-friendly experience.

A payment reminder is a polite and professional form of communication through SMS, email, or physical letters sent to clients or borrowers for receiving timely payments for upcoming or overdue invoices. It usually includes invoice details, pending amount, payment method and deadline. 

In India, recurring payment reminders are governed by the guidelines issued by the Reserve Bank of India- specifically under the e-mandate framework for recurring transactions.

Payment Reminders are essential for businesses because they help with:

• Maintaining cash flow: Having a steady cash flow is substantial for any business. Sending your customers reminders at the right time helps you collect payment quicker and have enough cash for your ongoing and emergency expenses. 
• Reduce Delay in Payments: You can reduce the number of overdue invoices at the end of each month by sending our reminders before the due date. 
• Maintaining Professional Relationships: Timely reminders are key to maintaining healthy professional rapports as it reduces the need for uncomfortable and harsh collections later. 
• Improve Financial Planning: Having funds helps you plan better for the future, preventing revenue leakage.

An effective payment reminder is based on your specific timeline: 

Advance Reminder (3-5 days before overdue)

Advanced reminders helps your customers plan payments in advance and lowers their chances of slipping into an overdue status. This is useful for recurring and high-volume invoices. 

Due Date Reminder (On the due date)

A due date reminder brings immediate attention to the pending payment and help with achieving on-time collections. 

Follow-up Reminder (3-4 days after the due date)

Follow-ups are effective reminders to address delayed and prevent prolonged receivables. It can be helpful to clients who may have missed the deadline unintentionally. 

Escalation Reminder (12+ days overdue)

Escalation reminders are more serious communications that can help you move towards resolution when payments are delayed beyond a certain time. It helps make the consequences of non-payment clear. 

Types of payment reminders

Payment reminders are essential financial communication practices which can vary according to your business needs. They are designed to ensure transparency, prevent delays, and maintain fair customer treatment. They are broadly classified based on the following: 

• The point of contact (customer or institution) 
• Communication medium (via email, SMS, or letter)
• Tone used for communication (friendly or formal)
• Stage of payment cycle (before, on, or after due date) 

Payment reminders used for common purposes usually include: 

1. Payment reminder for customers (B2C)

Payment reminder for customers is used by businesses for retail purchases, subscriptions, or service renewals. 

The RBI’s e-mandate structure requires pre-debit notifications, along with advance alerts before auto-debit execution to ensure a fair communication practice between businesses and consumers. 

Your notifications should convey the total amount due, the debit date, your account and business details and the option to approve, pause, or cancel payment. The intent behind this is to ensure informed consent, customer control, and reduce any disputes. 

2. Payment reminder for clients (B2B) 

These are generally common in B2B businesses involving invoices or milestone payments. They are generally polite, concise, and ideally sent a week before. 

Universally, timely invoice reminders are considered a financial practice aligned with receivables management frameworks, also discussed by World Bank. Effective reminders reduce capital gaps, enhance day sales outstanding (DSO) and maintain the trust between the supplier and the buyer. 

3. Payment reminder for rent 

This is sent to tenants for recurring monthly payments, before or on the due date to ensure that there is no delay. These are widely used across co-living businesses, housing societies, and property management platforms. 

4. Payment reminder for EMI or loan

This is used in structured and compliance-sensitive repayment cycles. Most banks have built-in features in their apps to set up EMI/Loan payment alerts. Banks and NBFCs usually send reminders before the due date to reduce credit risk, and avoid penalties.

Payment Reminder Messages can vary in format and tonality based on the relationship you have with the respective person. These include: 

1. Polite payment reminder message 

These could be sent to customers or clients and have a gentle, warm tone. The language style is mostly conversational, and it is sent on or after the due date. Soft reminders improve repayment probability with the possibility of a sustainable long-term relationship.

2. Professional payment reminder message

Courteous and clear form of communication usually for clients and B2B businesses to ensure timely cash flow while maintaining a healthy relationship. It generally has a concise subject line, with the details regarding the payment mentioned with a link to pay. 

3. Payment reminder via email 

Email payment reminders are ideal for formal business transactions, high value payments, and corporate clients. They also help in creating an audit trail for recordkeeping. 

Email reminders become especially important under financial recordkeeping and documentation standards such as those encouraged by the Financial Conduct Authority for transparent customer communication.

4. Payment reminder via whatsapp or SMS 

Whatsapp reminders serve as a quick nudge and are best suited for immediate, local transactions. They also have a quick response time. 

Even though they are ideal for time-sensitive and action-driven payments, all entities must ensure consent-based communication under digital privacy norms such as India’s telecom guidelines overseen by Telecom Regulatory Authority of India.

Here are some key components of writing an effective payment reminder: 

• Clear subject line: You should always mention invoice number and due date in the subject so that the customer can access it easily. 
• Concise body: Avoid sending long, winded messages as these would usually get ignored. Keep your reminders short and easy to understand and act upon. 
• Essential details: Include all important details like the amount due, due date, invoice number, and the link to make the payment. 
• Attachment: Attach your invoice in PDF format so your client easily knows which invoice is due. This also adds continuity to your client communications. 
• Tonality: Maintain a firm and professional tone while being direct.

When you have to send payment reminders at scale, the easiest way to keep all your communications consistent in tone and quality is to use templates for your reminders. You can prepare a few templates for various situations that your team or system can automatically fill and send to your client. 

Here are some templates we’ve created to get you started. 

Example 1: Advance reminder 

Subject: Advance reminder for invoice #(invoice number)

Hi XYZ, 

I hope you’re doing well. This is a gentle reminder on behalf of (mention creditor/original lender name) to remind you that your payment of (amount due) is due on (due date).

This reminder will help you avoid any late fees or potential service interruptions. You can conveniently complete your payment using (Payment Method/Link).

If you have already made the payment, we thank you for your promptness. Please contact us at (Phone) or (Email) to confirm your payment or for any assistance. We’re here to help with any questions you may have.

Best regards,

ABC Collection Agency

Example 2: Due-date reminder 

Subject: Due date reminder for invoice #(invoice number)

Hi XYZ,

Hope you’re doing well! We are reaching out on behalf of (mention creditor name) to remind you that your payment of (amount due) is due today, (due date).

You can avoid late fees or potential service interruptions by paying today. 

Complete your payment in just a few minutes using the given link (payment method/link).

If you have already made the payment, thank you for your promptness! Please contact us at (phone) or (email) to confirm your payment or for any assistance. 

We’re here to help with any questions you may have.

Best regards,

ABC Collection Agency

Example 3: Follow-up reminder 

Subject: Follow-up reminder for invoice #(invoice number)

Hi XYZ, 

We hope you’re doing well! I am reaching out on behalf of (mention creditor name) to just follow up on the invoice #(invoice number) which was due on (due date), and is still pending. 

We wanted to confirm if everything is in order from your end. 

Please make the payment as soon as possible to avoid late fees or potential service interruptions. 

You can conveniently complete your payment using (payment method/link).

Do let us know if you need any assistance! 

Best regards,

ABC Collection Agency

Example 4: Escalation reminder 

Subject: Urgent: Overdue payment for invoice #(invoice Number)

Hi XYZ,

We hope this message finds you well. Despite our previous reminders, payment for invoice#(invoice number), due on (due date), remains outstanding. 

This is an urgent matter and needs your immediate attention and action.

You can easily make your payment using (payment method/link).

If you have any questions about this bill or if there is an issue delaying payment, please let us know at the earliest so we can assist you on this.

We will appreciate your prompt action on this matter.

‍Best regards,

ABC Collection Agency

A well-written payment reminder is a way to maintain professional relationships while also collecting the amount that you are due. The templates we’ve shared above are some examples you can customise further. 

Common mistakes when sending payment reminders 

Payment reminders can be quite a sensitive matter to handle and can ruin customer relationships if not managed correctly. 

• Accusatory/rude tone: Using language and phrases that read like you're blaming your clients or accusing them of purposely not paying you can leave a bad taste. This can harm your long-term customer relationships and create a negative impression. 
• Inconsistent reminders: If you wait for too long before sending out a reminder or send out reminders at random intervals, clients can easily forget what they are paying for. Create a reminder schedule and stick to it for better collection success rates. 
• Long messages: Clients and customers usually prefer short and clear reminders that include all details. 
• Not attaching payment details: Always try to make payments as easy as possible by attaching bank details and invoices. 
• No escalation plan: If reminders are consistently missed, there should be an escalation strategy which makes the reminders sound firmer.

Manual payment reminders can be prone to errors and don’t scale with growth, which is why automated reminders are the best for creating an efficient reminder schedule. Here are some automation tools for payment reminders: 

• Accounts Receivable Automation Software: Some AR automation software can automatically track the amount that is due to you and send reminders based on specific pre-loaded templates. You can also set up reminder schedules within the software. 
• Accounting Software with Reminders: Modern accounting platforms have built-in reminders which notify customers of payments and sync payment status in real time. 
• Workflow Automation Tools: Zapier-style integrations automate reminders across systems, including email/SMS reminders, and escalation reminders for overdue payments. 
• CRM based Reminders: Customer Relationship Management tools help in sending personalised reminders and maintain client relationships.

Sound payment reminders are a balance of professional, polite, and firm communication to ensure timely payments. Some legal and professional considerations for sending out payment reminders include: 

Fair communication practices 

Financial regulators globally, including the RBI, require businesses to adopt fair, non-coercive communication practices. Under RBI’s Fair Practices Code and recovery conduct guidelines:

• Communication should not hint at any form of harassment 
• Frequency of reminders must be limited (as and when necessary) 
• Messages must remain professional 

Consent-based Communication

Under India’s Unsolicited Commercial Communication (UCC) Regulations:

1. Customers must consent to receive messages digitally 
2. Businesses need to register sender IDs and templates
3. You have to provide clients with a clear opt-out mechanism. 

Not complying with these regulatory requirements would classify your reminders as unsolicited commercial communication. This can expose you to unnecessary business penalties. 

Documentation and recordkeeping

Regulators constantly emphasise the importance of documented communication trails. Email communication can be very helpful for maintaining these traceable trails.

For instance:

• RBI mandates transparency in lender communication
• Financial conduct frameworks globally (including those aligned with the Financial Conduct Authority principles) encourage traceable interactions with clients/customers

Payment reminders are a simple yet effective way to help you maintain financial stability and operational efficiency in your business. 

They are even more essential when dealing with cross border payments, which is where platforms like Xflow come in, where invoices are tracked with timely reminders, and payments are visible in a single system. 

Xflow enables companies to receive payments with greater speed by integrating faster settlement timelines, built-in compliance, competitive FX rates, and more. It helps businesses move from manual follow-ups to proactive receivables management. 

Sign up with Xflow now to make your payments hassle-free!