Overdue invoices get chased when someone remembers, in whatever tone that person feels like that day. Debtor management works better as a plan: set days, set words, a rule for when to stop, and a named person for the exceptions.
The short answer: a debtor chase plan has seven stages, from a reminder before the due date to a letter of demand after 60 days. Your software sends the first three. People make the calls and decide every exception, such as a dispute, a part payment or a payment plan. The plan comes with an Excel template.
Scene 7 of 7
The plan, applied to invoice INV-6120. Customer A (sample) is 14 days overdue. Three reminders have gone, on the days and in the words the owner approved once.
Then the customer replies. The reply says the freight line was quoted as free. It says nothing is wrong with the rest.
Accounting software · INV-6120Overdue
Customer A (sample)
Due 17 Sep 2026 · 14 days overdue
- GoodsSupply$1,200.00
- Install2 days$700.00
- FreightDelivery$300.00
- Total, incl. GST
- $2,200.00
Reminders sent: 3. A statement went with the third.
Email · Reply to INV-6120New
Customer A (sample)
Received after the call
- FreightQuoted as free$300.00
- Goods and installNo problem
- Disputed
- $300.00
The customer will pay the rest this week.
Claude reads the reply against the invoice. Claude, Anthropic's AI model, turns the reply into the same lines as the invoice. It decides nothing.
Plain rules pick the stop that applies. A disputed line pauses that amount. The rest of the invoice stays in the plan. The same rules run every time.
Read by Claude Invoice INV-6120
Read by Claude Customer's reply
Goods
GoodsInvoice INV-6120: $1,200.00
✓GoodsCustomer's reply: Not disputed
Install
InstallInvoice INV-6120: $700.00
✓InstallCustomer's reply: Not disputed
Freight
FreightInvoice INV-6120: $300.00
✕FreightCustomer's reply: Disputed: quoted as free
Total
TotalInvoice INV-6120: $2,200.00
✕TotalCustomer's reply: $1,900.00 not disputed
- A line is disputed: pause that amount only
- Not a wrong debtor or a paid invoice
- No payment plan in place
What is paused, in dollars. $300.00 of the $2,200.00 is on hold. The other $1,900.00 keeps its reminders.
INV-6120 after the dispute
Invoice total$2,200.00
13.6%Disputed line$300.00
- Still chased
- $1,900.00
- On hold, disputed
- $300.00
- Reminders continue on
- $1,900.00
The disputed line is $300.00 of $2,200.00.
A person decides. You choose: credit the freight, or hold the line and explain it. Claude and the rules only bring it to you.
Messages · INV-6120
- Claude, for the accounts leadCustomer A disputes the $300.00 freight line: it was quoted as free. The goods and install lines, $1,900.00, are not disputed. Reminders are paused on the freight line only.
Disputed line Waiting for the ownerCredit draftedExplanation drafted
Credit the freight, or hold the line?
Only a person can change what the customer owes.
Drafted for you to approve.Held, with an explanation drafted. A credit note for $300.00 is drafted. A person approves it. Reminders carry on for the other $1,900.00.A reply about the freight charge is drafted for a person to send. The $300.00 stays on hold until the customer answers.
Accounting software · Credit noteDraft
Customer A (sample)
For approval
- FreightCredited$300.00
- Balance still due
- $1,900.00
A person approves it. Nothing goes to the customer from here.
Accounting software · INV-6120On hold
Customer A (sample)
Freight line paused
- FreightHeld, disputed$300.00
- Still chased
- $1,900.00
A person sends the reply. Reminders continue on the rest.
End of the day Reminders go out from your accounting software, in words the owner approved once. Claude reads each reply and the rules pick the stop that applies. A person handles every exception. The build never sends a call, a fee or a letter.
The whole plan, stage by stage
| Stage | Channel and sender | Stops if | Who approves |
|---|---|---|---|
| 7 days before due | Email, from the software | Paid, or disputed | Owner, once |
| Due date | Email, from the software | Paid, or disputed | Owner, once |
| 7 days over | Email with a statement, from the software | Paid, or disputed | Owner, once |
| 14 days over | Call by staff, then an email | Dispute, part payment or plan | Owner, for the call script |
| 30 days over | Firm email, then a call after 3 working days | Plan agreed, or disputed | Owner, for any change of terms |
| 45 days over | Final reminder from the owner | Paid, or plan agreed | Owner, each message |
| 60+ days over | Letter of demand | Paid, or plan in writing | Owner and accountant or lawyer |
These days are a starting point, not a legal rule. Change them to suit your terms. Xero’s guide gives the same order: “Start with polite payment reminder emails, then escalate through overdue notices, phone calls, late fees, and a formal letter of demand”.3 From day 14 a person is in every step, because a call or a letter needs judgement.
Sample wording for each stage
Sample wording written for this plan, in Australian English. Replace the [square-bracket] fields and check it against your own terms.
7 days before due. Hi [first name], a friendly heads-up that invoice [INV number] for $[amount] (incl. GST) is due on [due date]. You can pay here: [payment link]. If you have already paid, thanks, and please ignore this.
Due date. Hi [first name], invoice [INV number] for $[amount] (incl. GST) is due today. Pay here: [payment link], or by bank transfer to [BSB and account]. If it is already paid, reply with the date and we will update our records.
7 days over. Hi [first name], invoice [INV number] for $[amount] was due on [due date] and is now 7 days overdue. A statement of your account is attached. Could you let us know when it will be paid? Pay here: [payment link].
14 days over, the call. Hi, it’s [name] from [business] about invoice [INV number] for $[amount], which was due on [due date]. Is anything stopping payment, or can you tell me when it will be paid?
30 days over. Hi [first name], invoice [INV number] for $[amount] is now 30 days overdue. Please pay by [date, 7 days from now]. If you cannot pay in full, reply by [date] and we will talk about a payment plan.
45 days over. Hi [first name], this is a final reminder before we take further steps on invoice [INV number] for $[amount], now 45 days overdue. Please pay by [date], or reply to this email before then.
60+ days over. This letter is a formal demand for payment of $[total] for the unpaid invoices listed below. Please pay by [date, 14 to 21 days from this letter]. Xero’s guide says a letter of demand should give a final deadline, “typically 14–21 days from the date of the letter”.3
Download the debtor chase plan
Stages
Seven stages by days overdue, with channel, sample wording, stop rule and approver.
Exceptions
Eight cases that stop or change the chase, with who decides and the source.
Debtor days
Your debtors and revenue, before and after. It works out the days and the change.
Read me
How to use it, the rules it follows and its sources, read 31 October 2026.
Download the debtor chase plan (Excel, four sheets). Replace the [square-bracket] fields, name an approver for each stage and put your own figures in the yellow cells. The wording and the days are templates. They are not legal advice.
What to set in your accounting software
MYOB Business
Up to five reminders before, on and after the due date, each with a tone. Set per customer if needed.
Xero
Xero's own guide says to automate reminders in your accounting software. Check your plan's limits.
Any other system
A spreadsheet or a mail merge can send stages 1 to 3. The stages, stops and approvers stay the same.
Let the software send stages 1 to 3, which is three of the five reminders MYOB allows.2 Keep the calls and letters with a person. MYOB reminders “won’t be sent where the invoice terms is set to Prepaid or Cash on delivery”, so chase those another way.2 Switch on one customer first, using the per-customer setting, and check that a paid invoice sends nothing.
What the MYOB and Xero pages say
MYOB. “Set reminders before the due date, on the due date, and at a specified number of days after the due date”, “up to a total of five”. Each reminder has a tone: “Friendly, Neutral, Firm or Urgent”. You can “exclude specific contacts from getting reminders”. In AccountRight, “Invoice reminders can only be sent if you email directly from AccountRight”.2
Xero. The Australian guide says to “Use accounting software to automate invoice tracking and payment reminders”.3 Check the reminder settings in your own Xero plan before you rely on them.
Contact hours and how often
| Rule | RG 96 recommends | What the plan does |
|---|---|---|
| Phone, Monday to Friday | 7:30 am to 9 pm | Calls inside these hours |
| Phone, weekends | 9 am to 9 pm | Calls on working days |
| National public holidays | No contact recommended | No calls |
| How often | No more than three times a week, or 10 times a month at most, when contact is made | Stages are days apart |
| Whose time | Local time in the debtor’s state or territory | Check the customer’s state |
RG 96 is written mainly for individual debtors. It says many of its principles “will also be relevant to the collection of corporate, business, and in particular, small business debts”.1 Treat the hours and the limit as the standard to follow, not as a rule it states for business customers.
A note on the Spam Act
Schedule 1 of the Spam Act 2003 lists “designated commercial electronic messages”. A message qualifies if it consists of “no more than factual information” plus certain extra details, such as the sender’s name and contact details. It must still say who authorised it, and it is exempt from the unsubscribe rule.5 Whether your reminder qualifies is a legal question. Ask your adviser.
What stops the sequence
Not the debtor, or paid
Stop all collection on the invoice until identity and liability are confirmed.
A disputed line
Pause that amount and keep chasing the rest. The pause is a suggestion, not a rule.
A part payment
Record it, send a new statement and chase the balance from the original due date.
A payment plan
Pause calls while it is kept. Keep sending any statements you promised.
RG 96 says collection “should be suspended” while identity and liability are unconfirmed and the person says they are not the debtor, never incurred the debt or have paid it.1 Carrying on without investigating risks breaching the law. For a plain dispute, Xero says: “Pause collection efforts and contact your client to understand their concern.”3 Pausing only the disputed amount is a suggestion, not a rule from either source.
While an arrangement is in place, RG 96 says the debtor “should not be contacted unless” they ask, you propose a genuine alternative, or they do not keep to it. Statements you promised should still go out.1
Who decides each exception
| Case | What the plan does | Who decides |
|---|---|---|
| Wrong debtor, or already paid | Stops all reminders on the invoice and checks the records | Accounts lead |
| A disputed line | Pauses that amount, keeps chasing the rest | Owner, with whoever did the work |
| A part payment | Records it, sends a new statement, chases the balance | Accounts lead |
| A payment plan | Pauses calls while it is kept. Restarts at the matching stage if missed | Owner |
| Cannot pay now | Pauses calls. Agrees a later date or a plan in writing | Owner |
| Interest or late fees | Adds them only if the original terms say so | Owner |
| Credit hold | Only if the written terms allow it. Tells the customer first | Owner |
| Write-off | Records the decision in writing | Owner and accountant |
If someone says they cannot afford to pay, RG 96 says you may suggest they seek advice from a financial counsellor.1 Xero says you can charge interest or late fees only “if you include this in your original payment terms and your client agrees”.3 Check the GST on a write-off with your accountant. Rows marked “suggestion” in the template are suggestions, not rules.
Debtor days, before and after
Debtor days · orange: after the plan
Sample: $180,000 owed on $1,200,000 of revenue, then $120,000 owed on $1,250,000.
Illustrative figures, not client data.
Debtor days measure “the average number of days it takes your customers to pay their invoices”. Xero’s formula is trade debtors divided by annual revenue, times 365. Its example, $45,000 of debtors on $500,000 of revenue, gives 32.85 days.4 The sheet in the template uses the same formula.
Sample data, not a client’s. A business owed $180,000 on $1,200,000 of revenue has 54.75 debtor days. Six months later it is owed $120,000 on $1,250,000, which is 35.04 days. That is 19.71 days fewer and $60,000 less owed. Use the same period in both columns.
What it costs, in hours and in dollars
| Line | Measure | On the sample figures |
|---|---|---|
| Cash owed by customers | Dollars, one-off | $60,000 less owed (sample) |
| Debtor days | Days | 19.71 fewer (sample) |
| Staff time on chasing | Hours a week | Not measured. Count it for four weeks, before and after |
| Software running cost | Dollars a month | What your current plan already costs |
| Having it built | Dollars, one-off | Quoted after a Workflow Audit |
Keep hours and dollars apart. Hours are staff time. Dollars owed are cash, and releasing cash once is not profit. This post claims no time saving, because none has been measured.
A checklist before you switch it on
- Set terms. Every invoice needs a due date and written payment terms.
- Clean the contacts. Each customer needs a working email and a named person.
- Approve the wording. The owner reads stages 1 to 3 once, then leaves them.
- Name the approvers. Fill in the last column of the Stages sheet.
- Write the stops. Dispute, part payment and payment plan, each with a decider.
- Exclude the exceptions. Prepaid and cash-on-delivery customers sit outside the reminders.
- Test on one customer. Check a paid invoice sends nothing.
- Record debtor days first. Use the Debtor days sheet, then check again in six months.
Where a person stays in charge
Rules check
The day count, the stop rules and the three scheduled reminders, the same every time.
Claude reads
A customer's reply, and the one-line note beside an exception.
You decide
Every exception goes to a named person. Every call and letter is theirs.
I build workflows that read overdue invoices from Xero or MYOB through their APIs, and I connect anything with an API or an MCP connector. See n8n automation and the Xero MCP guide. Rules count the days and apply the stops. Claude reads a reply and writes one line. The reminders for stages 1 to 3 go out from your software in words the owner approved once. From day 14 a person sends everything.
A debtor chase is not a listed build. Start with a free fit check by email at the foot of this page. If one workflow is the problem, the next step is a Workflow Audit for A$990 (AUD, no GST charged). It is a 60-minute call, a read-only review of your systems and a written report, with a fixed quote for each of the top 3 things worth automating.6 This is the plan I would work through with you in the audit.
Questions
How often should I chase an overdue invoice?
The plan sends three reminders from your software, then a person steps in at 14, 30, 45 and 60 days. RG 96 recommends no more than three contacts a week, or 10 a month at most, when contact is made.
Do debt collection rules apply to business customers?
RG 96 is written mainly for individual debtors. It calls many of its principles relevant to small business debts, and this post treats its hours and limits as the standard to follow.
What stops a debtor chase?
A dispute, a part payment or a payment plan stops or changes it. A person decides what happens next.
What are debtor days?
The average number of days customers take to pay. Xero’s formula is trade debtors divided by annual revenue, times 365.
Can AI chase debtors?
Rules send the scheduled reminders. AI can read a reply and write a one-line note. A person makes every call and decides every exception.
Sources
- 1. ACCC and ASIC, “Debt collection guideline: for collectors and creditors (RG 96)”, issued 13 April 2021, read 31 October 2026: asic.gov.au/…/rg-96-debt-collection-guideline-for-collectors-and-creditors and the published PDF
- 2. MYOB Support, MYOB Business, “Send Smart Invoice Reminders”, read 31 October 2026: myob.com/au/support/myob-business/sales/online-invoicing/send-smart-invoice-reminders
- 3. Xero, “Chasing outstanding invoices” (Australia, published 11 May 2026), read 31 October 2026: xero.com/au/guides/chasing-outstanding-invoices
- 4. Xero, “What are trade debtors?” (Australian glossary, published 23 July 2026), read 31 October 2026: xero.com/au/glossary/trade-debtors
- 5. Federal Register of Legislation, “Spam Act 2003”, Schedule 1 (latest compilation, 10 March 2016), read 31 October 2026: legislation.gov.au/C2004A01214/2016-03-10/…/document_1
- 6. Works Better, “Pricing” and “Workflow Audit”: worksbetter.ai/pricing (Workflow Audit A$990; AUD, no GST charged) and worksbetter.ai/workflow-audit
Not sure which to fix first?
Get a free fit check by email and I will say whether it is worth automating. No call needed. The next step is a A$990 workflow audit: the top 3 things worth automating, with a fixed quote for each.
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