Payment Plan Proposal Email Template for Overdue Invoice

If immediate payment isn’t realistic, proposing a payment plan can get your overdue invoice paid and keep relationships positive. Use these templates for fast setup, fair terms, and clear documentation. Templates only — not legal advice.

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When to use / when to send

The client asks for more time but is willing to commit to payment.
You need to avoid collections and preserve the business relationship.
The overdue amount is significant and one payment isn’t feasible.
AP/Finance requests a written payment plan.
Previous reminders failed or resulted in partial payment only.

Checklist / what to include

Invoice #{{InvoiceNumber}} and original due date.
Total amount outstanding, including any interest.
Proposed payment amounts and due dates.
Pay links for each installment.
Clear approval/acceptance instructions.
Deadline to confirm or counter-propose.
Escalation policy if schedule is missed.
Contact details for coordination.
Update thread each time a payment is received.

Copy/paste templates

Hi {{Name}},

To help resolve invoice #{{InvoiceNumber}}, we can offer the following payment plan: [X payments of $Y due on Z dates].

Please reply to confirm or propose an alternative.

First payment link: {{PayLink}}

Can AP confirm receipt and acceptance of the plan for invoice #{{InvoiceNumber}}?

Once each installment is paid, please confirm by reply or provide the remittance advice. We will update your account status accordingly.

Just a reminder, the next payment under our plan is due on {{DueDate}}. Please use this link: {{PayLink}}. If you need to reschedule, let us know ASAP.

If the next payment is missed (or not rescheduled), we will need to escalate as outlined in the plan agreement.

Congratulations—your payment plan for invoice #{{InvoiceNumber}} is now complete. Your account is current; thank you!

How to use these templates

Send proposal as soon as you agree that full payment isn’t possible immediately.
Get all plan details in writing (amounts, dates, acceptance).
Update payment status after each installment.
Keep AP/Finance copied in on all plan communications.
Escalate per plan only if payments are missed.

Recommended timing / follow-up plan

Day 1: Send the plan proposal.
Day 3: If no confirmation, follow up once more.
On each due date: send payment reminder.
After completion or failure: close with a final status message.
Do not restart plan if payments are missed more than once; escalate per policy.

Best practices / common mistakes

Do: Get all terms clearly, in writing—avoid phone-only plans.
Do: Include pay links for every installment.
Do: Keep every plan message in the same email thread for easy audit.
Do: Confirm each payment and thank the client as they proceed.
Don’t: Give leniency on missed payments without documentation.
Don’t: Propose a plan if you can enforce full payment with confidence.
Don’t: Accept verbal promises—always confirm in writing.
Do: Be proactive if a due date is approaching with no payment.

FAQ

Payment plans help resolve overdue invoices when full payment isn’t immediately possible. They show flexibility and can preserve the client relationship.