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How to automate invoice reminders in Xero and QuickBooks

If someone in your business only chases unpaid invoices when they get a spare hour, customers learn they can pay you last. The cheapest fix is to automate invoice reminders in the accounting software you already use. Xero and QuickBooks Online both send reminder emails on a schedule you set, and setting them up is a short job. This guide shows what the change is worth, how to set it up in each package, what to write, and what still needs a person.

What it’s worth: a worked example

Take a made-up firm, Example Building Services Ltd, with £1.8m of annual sales and 30-day terms. Chasing happens when the office manager has time, and customers pay, on average, 12 days after the due date.

Each day of sales is worth £1,800,000 ÷ 365 = about £4,932. So 12 days late means about £59,000 of cash sitting with customers (£4,932 × 12).

If a steady reminder routine brought that down to 6 days late, the firm would hold about £29,600 more cash (£4,932 × 6). That cash stays released for as long as the routine holds. That is an illustration, not a forecast.

There’s a time saving too. If the firm sends 400 invoices a year and each one gets three reminder emails written by hand at five minutes each, that’s 6,000 minutes, or 100 hours a year, spent typing emails a computer can send.

Before you switch reminders on

Reminders are only as good as the data underneath. Check these first:

  • An accounts email address on every customer record. If the contact is the engineer who signed the order, the reminder won’t reach the person who pays.
  • Invoices sent from the software. QuickBooks Online only sends reminders for invoices that have already been emailed from QuickBooks, are unpaid and have an email address on file (QuickBooks UK help). If you download invoices as PDFs and email them from Outlook, set up sending from the software first.
  • The right due date on each invoice. Reminders count from the due date. If customers are set to the default terms but you agreed 14 days with some, fix the contact settings. If nothing is agreed, UK rules give a default of 30 days (GOV.UK); our guide to payment terms wording covers what to put on quotes.
  • A way to pay in one click. Xero invoices can carry a Pay now button through providers such as Stripe and GoCardless (Xero UK). A reminder that links straight to payment removes one more excuse.
  • A list of customers to leave out. A customer in a dispute, on an agreed payment plan, or paying through a portal that ignores emails should be excluded, so they hear from a person instead.

How to automate invoice reminders in Xero

In Xero the setting is called Invoice Reminders. Xero’s help article How invoice reminders work has the full detail; menu names change from time to time, so check there if a screen looks different.

  1. Go to Business > Invoices and open Invoice Reminders, then tick the box to email customers about unpaid invoices. The settings stay greyed out until you do.
  2. Set each reminder as a number of days before or after the due date.
  3. Edit the wording of each reminder. Use the placeholders for invoice number, amount and due date, so every email carries the facts the customer’s accounts team needs.
  4. Set a minimum amount to skip very small balances.
  5. Include the link to the online invoice, so the customer can view it and pay without searching their inbox.
  6. Turn reminders off for any customer you’re dealing with in person: open the contact and switch invoice reminders off there. You can also switch them off for a single invoice.

If you’ve already set up same-day invoicing in Xero, reminders are the next step: the invoice goes out on time, and the follow-up happens without anyone remembering.

How to set up automatic reminders in QuickBooks Online

In QuickBooks Online the steps are, per the QuickBooks UK help article:

  1. Go to Settings > Account and settings, then the Sales tab.
  2. In the Reminders section, select edit and turn on Automatic invoice reminders.
  3. Set Reminder 1: the number of days and whether it’s before or after the due date. You can schedule reminders up to 90 days either side of the due date.
  4. Add a second and third reminder as needed.
  5. Edit the subject line (keep the word “reminder” in it) and the message. You can insert fields such as the invoice number and your company name, and attach a PDF copy of the invoice.
  6. Save. Invoices that have had a reminder show “(Reminded)” in the status column.

Two limits to know. The reminder wording is shared across reminders, so write it to work whether the email goes before or after the due date. And the help article doesn’t describe a way to switch reminders off for one customer, so for disputes and payment plans, agree with the customer in writing what happens next and keep an eye on those accounts by hand. The article also notes that QuickBooks Online Advanced users can build reminders with workflows instead.

A reminder schedule that fits a proper chase routine

Software sends emails; it doesn’t pick up the phone. A schedule we’d start with on 30-day terms:

  • 3 days before the due date: automatic email. A friendly heads-up with the invoice attached and the payment link.
  • 1 day after: automatic email. Says plainly that the invoice is now due and asks the customer to tell you if anything is stopping payment.
  • 2 days after: a person calls the accounts contact. This step catches the missing PO number or the invoice sitting with the wrong approver.
  • 7 days after: automatic email. Firmer, with the amount and the date it fell due.
  • 14 days after: a person calls the person who placed the order, not just accounts.

After that, it’s a conversation between owners, not another email. Our guide on how to chase late payments without damaging relationships covers those later steps.

What to write in each reminder

Before the due date

“Hello [name], a quick note that invoice [number] for [amount] is due on [date]. You can view and pay it here: [link]. If you need anything from us to get it approved, such as a PO number, just reply to this email. Thanks, [your name]”

Just after the due date

“Hello [name], invoice [number] for [amount] was due on [date] and we haven’t yet received payment. Could you let us know when it’s scheduled? If there’s a query on any part of it, tell us and we’ll look at it straight away. You can pay here: [link].”

Every email should carry the invoice number, amount and due date, ask a question that invites a reply, and go out from a monitored inbox, not a no-reply address. Firmness comes from the routine being consistent, not from the tone.

What automation won’t fix

Reminders speed up customers who were going to pay anyway but forgot or got distracted. They won’t fix an invoice that can’t be paid as sent, a job that’s in dispute, or a big project billed in one go at the end. For those, the fixes are upstream: capture the PO and approver at the quote, invoice on the day the work finishes, and use stage payments on longer jobs. In our Insight review, reminders are one fix among several.

Five things to do this week

  1. Run your aged debtors report and note the average days late. That’s your before figure.
  2. Check that every customer with an open invoice has an accounts email address.
  3. Switch on reminders in Xero or QuickBooks using the schedule above, and edit the wording.
  4. Exclude any customer in a dispute or on an agreed plan, and diarise a call instead.
  5. Put two weekly 15-minute slots in someone’s diary for the phone calls the software can’t make.

Compare the figure after two billing cycles. Our free Late Payment Kit has chase-email templates to adapt.

Find out what slow payment is costing you

Our free leak calculator takes four numbers and shows how much cash late payers and slow invoicing are holding in your business. If the figure is bigger than you’d like, book a free 30-minute call and we’ll look at where to start.