Learn To Write An Effective Debt Collection Letter
If you've decided to handle collections on your own rather than hiring a debt collection agency, you need to know how to use the debt collection letter as an effective collections tool. Spacing out each debt collection letter and putting increasing pressure in the wordage will help you achieve professional results.
The first step in successful collections letters is to send a gentle reminder. Rather than a simple "past due" notice, the first set of debt collection letters you send should be a personal letter addressing your client in pleasant terms.
If the letter is worded as a reminder it gives the client a chance to maintain their self-image, but be businesslike and include the date of the first invoice, the amount and when the first payment was due. This information needs to be correct or you can risk having disputes later on if things get more difficult.
Two reminder letters sent three weeks apart will often do the trick, but if not you need to send another set of letters that are more forceful. Demand full payment upon receipt of the missive, in the manner of a professional collection agency, and make the language of the letter active rather than passive.
In addition, it's a good idea to present a possible penalty to the debtor, such as late charge, refusing to front them any more products or services until the unpaid bill is taken care of, or reporting the debtor to the credit bureaus.
In the second debt collection letter you should also reference the date of the first, i.e. "To date I have received no response to my letter of August 12." Offer the debtor the possibility of working things out by suggesting they call you if there is a problem to work out a payment plan. If you've had any phone discussions about the problem, reference them in the letter as well: "In spite of our phone conversation on July 10 in which you promised to bring your account current, no payment has been received."
The third letter should be the one in which you take the kid gloves off. Add a late charge (you can always agree to take this off if the client calls you to work things out) and threaten to take legal action if the payment is not remitted within a set time period. Keep in mind that any debts which go beyond 6 months are statistically much harder to collect on, so you want to time the letters accordingly so that they receive the final letter about a month before the six month period is up.
A debt collection letter can be a powerful tool in the debt collection process if it's handled properly. Approach the process like a debt collection professional would and you will be surprised at how effective the results are. If you time it right and add increasing pressure in the language, the debt collection letter may suffice for recovery on the debt.
The first step in successful collections letters is to send a gentle reminder. Rather than a simple "past due" notice, the first set of debt collection letters you send should be a personal letter addressing your client in pleasant terms.
If the letter is worded as a reminder it gives the client a chance to maintain their self-image, but be businesslike and include the date of the first invoice, the amount and when the first payment was due. This information needs to be correct or you can risk having disputes later on if things get more difficult.
Two reminder letters sent three weeks apart will often do the trick, but if not you need to send another set of letters that are more forceful. Demand full payment upon receipt of the missive, in the manner of a professional collection agency, and make the language of the letter active rather than passive.
In addition, it's a good idea to present a possible penalty to the debtor, such as late charge, refusing to front them any more products or services until the unpaid bill is taken care of, or reporting the debtor to the credit bureaus.
In the second debt collection letter you should also reference the date of the first, i.e. "To date I have received no response to my letter of August 12." Offer the debtor the possibility of working things out by suggesting they call you if there is a problem to work out a payment plan. If you've had any phone discussions about the problem, reference them in the letter as well: "In spite of our phone conversation on July 10 in which you promised to bring your account current, no payment has been received."
The third letter should be the one in which you take the kid gloves off. Add a late charge (you can always agree to take this off if the client calls you to work things out) and threaten to take legal action if the payment is not remitted within a set time period. Keep in mind that any debts which go beyond 6 months are statistically much harder to collect on, so you want to time the letters accordingly so that they receive the final letter about a month before the six month period is up.
A debt collection letter can be a powerful tool in the debt collection process if it's handled properly. Approach the process like a debt collection professional would and you will be surprised at how effective the results are. If you time it right and add increasing pressure in the language, the debt collection letter may suffice for recovery on the debt.
About the Author:
David P. Montana has published extensively and served as a business advisor in debt collection agencies services for three decades. David offers additional beneficial tools and information about writing a debt collection letter.
You like it? Share it!
posted by SolveItQuick at
9:53 AM
0 Comments:
Post a Comment
<< Home