Tuesday, 31 May 2022

Collection Letter

  

Collection Letter

By: Anjali Tiwari

 Introduction

The procedure of collecting payment on outstanding customer accounts is dreaded by many small business owners. In addition to the free collection letter templates, we've included best practises that you may use to reduce the possibility of having to do this on a regular basis.

Information to Include in Collection Letter

When writing a collection letter, you should strive to appear both professional and tough. You want to show your customer that you're serious about collecting payment while keeping the relationship intact.

·      Keep it short and to the point; do not use complicated language

·      Type the letter; do not handwrite it

·      Use company letterhead

·      Include a copy of the invoice(s) or a summarized statement if multiple outstanding invoices

·      Include a specific date the account should be made current (such as “payment should be made no later than April 17” as opposed to “payment should be made within seven business days”)

·      Include acceptable payment methods like check, credit card and debit card

·      Your contact information, including phone number, email address and mailing address

·      A postage-paid envelope so they can drop a check in the mail easily

 Dos and Don’ts of Writing a Collection Letter

At the end of the collection process, you want to accomplish two key objectives: get paid and retain a positive connection with the consumer. Here is a list of some of the do's and don'ts we propose when seeking to collect on a debt in order to accomplish both of these goals: 

Here is what is recommended in this situation:

·      Do keep it professional

·      Do assume that the customer will pay

·      Do attempt to call the customer before sending the first letter

·      Do send an email before you send the first letter

 

Here is what you don’t want to do in this situation:

·      Don’t use harsh words

·      Don’t harass customers

·      Don’t send text messages to customers

·      Don’t communicate via social media links

 

Types of Collection Letters

You will send your customer one of four different types of collection letters. It's important to remember that if your customer responds to your phone calls or one of your letters, there's no need to write another letter unless the client fails to pay. The first two collection letter forms are quite mild, whereas the last two use more harsh language.

(i) The First Collection Letter

Only mail the first collection letter after you've attempted to contact the customer by phone and email. You should send the first collection letter if the consumer has not made payment arrangements with you after you have contacted them by phone and email. This should be no later than 14 days after the invoice is due.

(ii) The Second Collection Letter

A phone call should be made before sending a second collection letter to see if the first letter was received and if the consumer would like to make payment arrangements. If you haven't been able to reach the consumer via phone, it's time to send the second collection letter.

The main difference between the first and second letters is that the first letter will include the fact that you attempted to contact the consumer. 

(iii) The Third Collection Letter

After you've sent the second collection letter, call the consumer to see if you can reach them. You must write a third collection letter if the customer has not made any attempt to communicate within a few weeks.

You'll include text, similar to the second letter, informing the customer that earlier attempts via letters and phone calls were ineffective, resulting in this third try. It's also a good idea to send this letter via certified mail. This will necessitate someone signing for the letter, and it will serve as verification that it was received. If you need to take legal action to recover this debt, you'll need this kind of documentation.

 (iv) The Fourth & Final Collection Letter

While exceptions may exist, by the fourth collection letter, it should be painfully obvious that your customer is either unwilling or unable to pay their debt. This letter will be the most assertive we've ever written, yet it will still be professional. This last collection letter, like the third, should be sent via certified mail.


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