They say there is no business correspondence that requires a greater grasp of human psychology or a larger degree of diplomacy than writing a collection letter. This is why a person who works in the collection business should have excellent communication skills like writing in order to be efficient in collection. Also called a dunning letter, a collection letter is the most basic collection tool of an accounts receivable or credit professional used whenever a customer or client fails to make payments as agreed upon. How your letter is written can be just as vital as what you say.
Here are some guidelines in how to write a reminder collection letter.
- Verify all facts. To minimize confusion and possible delays, it would help to outline all the details related to the debt. Gather all the important data about the account and the client that you are trying to collect from. Among the basic information that you should have are the dates of service or purchase, the product or service purchased, the delivery receipt, total amount due, any partial payments, the amount outstanding, when the account was due and the payment terms agreed upon.
- Write a brief reminder letter. Write a short, one-page reminder letter stating the basic facts about the debt you wish to collect and identify the deadline for payment. Diffuse tension and avoid making accusations by acknowledging or apologizing and asking the recipient to disregard the letter if payment has already been sent. It would also be best to attach the original bill to the letter so the reader will have a reference as to what bill you are referring to and what due date is on the original bill.
- Send a clear message of desired action. Clarify what courses of action is expected of the recipient, which is to settle the account. Clearly state all details such as how much needs to be paid as well as a due date. Also, to make payment as convenient as possible, consider providing payment options. Outline the consequence of failure to pay in clear, non-legal language to make sure the reader gets the message.
- Open lines for communication. Aside from misplacing the invoice or having financial difficulties, consider that a possible reason why your customer failed to pay could be that they disagree or have problems with your invoice or the quality of the goods or service received. It is important therefore that you put your contact information and are consistently reachable should the client need to call, email or visit you for inquiries.
- Set clear and reasonable expectations. End your letter by thanking your customer in advance for attending to this matter promptly. It may also help to mention a benefit of settling the account like as preserving a good business relationship or maintaining an open account with your business. This way, you emphasize your expectation of payment while expressing your wish to maintain good relations.
In writing a reminder collection letter, use a tone that is firm, urgent and unapologetic. Strive to convey confidence and authority to ensure that the recipient takes it seriously. Keep in mind, however, that you are sending a reminder letter so do not nag the person. Consider offering to assist the person if he or she is having problems in meeting the agreement.
If you do not receive a response by the date specified, send a second letter referring to the previous letter that you sent and restate account and payment facts. Be more firm and authoritative and use an urgent tone. Make sure that you document the series of letters you send and keep a record of all collection efforts or partial payments. It would be best to send the letter through certified mail as this requires a signature of receipt.