A businessman’s primary concern is to collect account and trade receivables from its customers. In the operation of a business, it is often difficult to make them pay and accomplish your task. So, you need to know a means to have it done. For this, you need to know how to write a collection letter in a proper way.
There are many types of collection letters, as will be named shortly. You must know that these are not just the types, but a series that must be maintained if the previous letter(s) does not work. To avoid complexities, we will put the details of the writing procedure of one type (the first type) only.
It is, therefore, essential that you learn how to write a collection letter.
Why Should You Write a Collection Letter?
The difficulty of the collection that the debtors face is because they make credit sales. This is not because they want to benefit customers (well that may be one of the reasons), but because they want to increase their sales volume. Under this system, a certain period is granted to customers until they pay in full. The unexpected, intentional/unintentional delay in payment compels the debtor to write a collection letter to remind him of what is due.
Types of Collection Letters:
The following types of collection letter can be written, all in order, to result in the collection from the recipient and, if required, other consequences:
- Initial Collection Letter of Overdue Payment 1 of 6 (sample)
- Reminder Collection Letter 2 of 6
- Appeal to a Customer’s Personal Interest for Payment of Due Collection Letter 3 of 6
- Offer Assistance to Customer Having Difficulty in Handling Overdue Bill Collection Letter 4 of 6
- Demand Payment Collection Letter 5 of 6
- Final and Initiation to Take Legal Action Collection Letter 6 of 6
- Medical Collection Letter
Essential Features of a Collection Letter
The following points must be a part of any collection letter:
- Two parties must be involved in the business of buying and selling.
- The main objective is to induce payment.
- The series of the letters start with a reminder letter.
- You must maintain goodwill as they might be customers that you wish to do future business with.
- Add the reference of the previous letter if you have written any.
- Such a letter should be sent through a registered post.
Steps to Write a Collection Letter:
Throughout writing the letter, you must maintain 2 things: you have to make them pay with your words, and you have to maintain the goodwill. Adhere to the following steps to write the proper collection reminder letter:
- Include the necessary details of name, account number, contact details, etc. before a friendly salutation.
- In the first statement, without any ado, state how much amount is due and the date from due. Don’t write something that looks like you are questioning the honesty or poking fun at the memory of the recipient.
- You can also add a summary of the client’s account following this, in the next paragraph, for a more definite direction.
- End by saying that you expect prompt payment; and if possible, attach a stamped payment envelope. If you can not or do not want to do so, instigate the recipient to contact so that you can discuss over the phone on the issue at hand.
- Give the details like the person responsible for the collection or the company details after signing the letter.
Tips to Remember:
There are plenty of things that you will need to remember while writing a collection letter. They include the following:
- Do not give any hint of the legal action that you might take against the recipient. This type of collection letter comes later in the process, not now.
- Do not contact or write a letter to the family members of the recipient or any employee of his company. Write it to the one who took the debt and so is supposed to pay it.
- Do not communicate the information of the person being in debt to a third party.
- Do not harass the recipient or use threatening or abusive language.
- The mode of communication should not make the recipient stressed or hurt. It should do only what it is meant to do: remind.
- Be firm and courteous at the same time.
- Be flexible and understand that mistakes can happen and someone can forget to pay. Accidents or mishaps may also delay paying. There is absolutely no need to bonkers for payment due. Keep your calm as you write, thisperson may serve as an important future client to you, you never know.
- Do not leave ambiguity as to the date of payment. Don’t write that it would be better if they paid on that date; use an original date.