Outstanding payments are the last thing a business needs. Since your bills and staff need to be paid on time, you need to efficiently collect your earnings. To keep a steady cash flow, you cannot let unpaid invoices stack up.
That’s where an accurate outstanding invoice can make a difference, letting your clients know how much they still owe you in a professional and friendly way.
What Is an Outstanding Invoice?
An outstanding invoice is a document you send your clients to remind them of the amounts they have yet to pay. It’s an efficient way of keeping the payment a priority so that you can receive the money by the due date.
Once the first invoice is issued, it gets to your client’s accounts payable department for scheduling. But when the volume is high, errors can happen, and your invoice may end up missing its turn. Outstanding invoices are reminders that your balance hasn’t been settled yet, and they reiterate the payment terms.
So, to get an accurate outstanding invoice definition, it’s the collection document that the seller sends as a backup in case the initial invoice hasn’t been taken care of yet. It’s a notice that you still haven’t received the money or a way of requesting feedback on when the payment is scheduled.
An outstanding payment by itself may not seem that big of a deal, but if more add up, it can cause severe disruption in your activity. Due dates are set with a purpose, and not receiving the payment by that date means you won’t be able to use that money for your business’ essential expenses.
What Are the Differences between Outstanding Invoice and Past Due Invoice?
Both outstanding invoices and past due ones are important in high-volume commercial activities. They are both issued after the initial invoice because the seller hasn’t received the payment by that point. So, they are collection tools, but with specific differences between them.
To compare the two, let’s first answer the question ‘what does outstanding payment mean?’. An outstanding payment means that the buyer has already received the initial invoice and hasn’t paid it yet, but the due date is yet to come; they can still cover the debt without delays. So, the outstanding invoice aims at having the balance cleared before the deadline and acts as a useful reminder that the money is still to be paid.
On the other hand, the past due invoice is issued and sent when the due date has already passed and the client hasn’t made the payment. It’s still a memento on the due amount, but in this case, taking care of the payment is more urgent. Unlike outstanding invoices, past-due ones can also include penalties for not respecting the due date.
While the outstanding invoice can be sent after the initial invoice but before the due date, when the payment can still be made on time, the past due invoice stands in when the payment is already late.
What Is Included in an Outstanding Invoice?
A certain strategy is involved in dealing with an outstanding payment, meaning you need a mixture of clearly underlying the payment terms, reminding the client what they need to pay for, and mentioning the problems that come from past due payments.
Since the outstanding invoice is issued while the deadline can still be respected, it needs to have a friendly tone and act as an aid you offer the client to help them keep track of the due amount. Not all delayed payments come from bad intentions; sometimes, your initial bill may get lost in the client’s accounts payable sector. By sending outstanding invoices, you help them avoid penalties.
The easiest way to write an efficient reminder for an outstanding payment is by using an excellent template. That way, your document will include all the relevant sections:
- Your logo or other branding elements
- Your company’s name and contact information
- Your client’s name and contact information
- The initial invoice’s number
- The goods and services the outstanding payment is for
- The amount due and the deadline
- A mention of the late payment policy and whether penalties are included
- A friendly and polite reminder, underlying your good intentions
Once the outstanding invoice is sent, you can consider taking other follow-up steps if you don’t receive any answer or the payment.
Past due payments are a problem both for the seller, who doesn’t receive the due earnings on time, and for the buyer, who may have to pay penalties for the delay. Come to your clients’ assistance by preventing them from losing track of the due amounts.
Using an efficient outstanding invoice template like the one provided by the invoicing software like WeInvoice, you increase your chances of getting paid on time. You can also try some of the other invoice templates and invoice generators on the website; they can be genuinely helpful for your business.