Writing collection letters
C&C VIEWS - Ed F. Limtingco (The Freeman) - October 30, 2013 - 12:00am

Writing collection demand letters sent by either through mail or via electronic mail (email) is another strategy a collector may employ to have successful collection results. This kind of collection letters can be in itself personalized to a particular client that can be specific to the situation or can be a form letter that is more general. Whatever it may be, the collector must bear in mind the following to have a more effective letter that could yield a positive collection result:

First, collection letters must be brief. The message must be short, concise and simple in saying: that you want payment now. Any other additional message or information that tend to appease debtor or explain something rather than demand payment will lessen its effectiveness.

Second, leave debtor a way “out”. Always allow debtor to save “face” by offering client a plausible explanation. However, it is imperative that collection letters must be very precise.  One of the common mistakes I usually find on collection letters is the fact that it is not very precise on the fact whether the account is current or overdue. You must have a simple Accounts Receivable system wherein you can extract a report of ageing accounts and/or that the account is overdue, but can be updated as soon as payment is made.

Third, the collection demand letter must tell specific information / instruction. Specific information may include: what particular invoice number and for what, how much is the amount owing/ amount due and when it was supposed to be due. Specific instruction such as: how to make payment; where payment can be made.

Fourth, and most importantly, the demand letter must tell what you want the client to do. Do not just tell your client that to contact at the “soonest time possible” or “convenient time”. Always make it clear in your collection letters that you need them to call you on or before a certain day and time with confirmation of payment or verifiable proof of payment (i.e. for on-line payment).

In terms of tone, the tone of the letter must be business-like.  Use words in your client’s vocabulary. If you can, always avoid using collector’s jargons. Most especially avoid sarcasm as it alienates, destroys and impedes collection efforts.

Personally, I always believe that a well-crafted and intentioned collection letter will suffice to do its job- that is to demand payment now. In my experience,  a well written collection letter could lower or diminish resistance to pay through cooperation, desire of good credit record history, and fair play. 

Overall, collection letter is best for initial collection effort because of the following: straight forwardness, impersonality as sometimes familiarity is a drawback and collection letter is more treated with urgency as it’s always perceived as something formal and urgent. Collection letters sent by mail is less insistent, more polite vis-a-vis telephone call or personal presence of a collector; it does not interrupt but received with more seriousness. Likewise, gives time for response, as the client is under pressure to react immediately but was given enough time to reflect and do the right thing – to pay.

For comments, rejoinders and questions related to credit & collection, send email to  elimtingco@yahoo.com.

ACCOUNTS RECEIVABLE ALWAYS CLIENT COLLECTION DEMAND LETTER LETTERS PAYMENT
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