For any business the primary goal is to make a profit but many businesses incur substantial losses because of outstanding account receivables owed by debtors. Some companies don’t even lay emphasis on collection of outstanding dues and lose track of how much money is owed to them. This can put a severe dent in their profitability. One of the ways to get rid of this problem is to hire a professional debt collection agency and send a collection letter or a series of them to the debtors.
A collection letter serves you two primary purposes – first it helps you in recovering delinquent past due accounts and settling old debts. Second they help in retaining the goodwill of your customer without getting into direct confrontation with them. You’ll need to make sure you write an effective collection letter to recover these outstanding receivables. Here we’ll discuss effective ways of writing collection letters.
Get Your Facts Straight – Your collection letter should clearly state all the facts. Make sure you gather all pertinent facts about the invoices, amount owed, due date of payment and the other terms of payment. Attaching copies of the invoices etc. would make your collection letter more effective.
See Sample Collection Letters – In case you are finding it difficult to draft a collection letter yourself you could see some collection letter samples which are readily available online on debt collection agency websites. Take note of the way these letters are written and customize one according to your need. In case you are required to send multiple collection letters you could create a template and customize each based on the need.
Be Assertive Not Aggressive – Be very careful about the language you use in writing your collection letter. You need to write your letter assertively stressing on the outstanding amount owed to you. Do not be aggressive and use emotional, inflammatory or threatening language.
Address It Properly – Make sure you address the collection letter properly to the intended person and stamp it confidential. Address it directly to the client writing his/her name instead of using terms like ‘Dear Customer’. This will prevent the letter falling into the hands of unintended person.
Keep the Tone of the First Letter Calm – Not all your debtors have skipped out paying on your bill out of choice. It may be due to financial constrains or a simple error of judgment in payment. In such cases you should write your first letter with respect to your client. Make sure you remind them of the amount owed and due date of payment.
Use Multiple Channels – It is advisable to deliver your letter via multiple channels. You shouldn’t rely only on regular mail for delivery of your collection letter. Also consider sending them via e-mail or fax and ask them to reply upon receipt of the letter.
Draft Your Final Letter with a Firm Tone – If a customer fails to respond to your collection letter and you are sure that customer just isn’t going to pay, it’s time to send the letter of ultimatum or a Final Demand. This letter should clearly state the action you will take if payment is not received. For example, “If this account is not paid by X date, I will be placing it with a debt collection agency and it may report to your credit report.”
Keeping these things in mind will help you write effective collection letters and recover delinquent past due accounts.
Summary: While writing an effective collection letter one needs to take note of the tone, use multiple channels for deliver, address it properly and stress on the action to be taken in case of default.