The 6 Essential Elements Of Debt Reminder Letters
Debt Collection Letters play an integral role in the debt recovery process. Fundamentally debt collection letters fall in to one of two categories: a) Reminder Letters; and b) Final Demand Letters.
With regards to Reminder Letters, to ensure recovery of your debt is fast and amicable, there are 6 strategic elements you must incorporate in your letter. These 6 key-components are so critical to your success that should you fail to utilize all 6 not only will your chances of recovery dramatically shrink, the chances of stirring up a bitter drawn-out battle will significantly increase.
As debt reminder letters are used shortly after an invoice passes its due date unpaid, their primary objectives are two-fold: 1. Recover the money owed; and 2. Preserve your customer relations.
With these twin objectives in mind let's now look at the 6 essential elements to weave in to your Reminder Letters.
6 Critical Components Of Debt Reminder Letters
1. Summary Of Account
In order to minimize confusion and delays it's critical that you commence your letter by summarizing all details associated with the overdue account. At the very least you should always include a description of goods or services rendered, how much is overdue, when the account became overdue and your payment terms.
2. Avoid Aggravation
Even though the account is overdue, at this point you want to avoid any finger-pointing that may upset your good customers. To this end you should side-step any potential upset by making a brief remark that presumes the debtor has simply overlooked this account.
3. Specify The Desired Action
Having effectively 'let them off the hook' you must now clearly state exactly what action they need to take... namely to settle the account. This must include how much needs to be paid as well as a due date. In addition, to facilitate rapid payment you should provide a range of payment options as well as provide your full contact details.
4. Invite Open Communication
Whilst overlooking an invoice is the most common cause for an account not being paid on time, there are 3 other main reasons why an account has not been paid on time. These three reasons are:
A) Financial difficulty;
B) They dispute the debt based on either the quality of goods or services received or on the amount invoiced; and
C) They have no moral conscience nor any intention to pay.
In the first two scenarios there exists a window of opportunity for you to recover your accounts. In order to recover these accounts quickly and amicably you must open respectful communication channels with a view to resolving these concerns. You don't need to write anything too fancy. A sentence along the lines of: "If a problem has arisen that we should be aware of, please call me immediately to discuss this." will suffice. Once again, give them a range of options as to how to get in touch with you or a nominated member of staff.
5. Pressume Compliance
To reinforce your expectation of payment you should round off your reminder letter by thanking your customer for attending to this matter in a timely manner. In addition you may also wish to touch on a benefit of settling the overdue account. Such a benefit may be to maintain credit with your business or to preserve your working relationship. Doing so will convey your desire to maintain a good relationship.
6. Sign The Letter Personally
It's good practice to sign off your reminder letters with an authentic signature. By doing so you'll demonstrate both a regard for the customer as well as the importance you place on payment.
Additional Pointers
When writing Reminder Letters it's important to be brief while at the same time being personable. Avoid adjectives and lengthy explanations. Use simple words, small sentences and short paragraphs. And write the letter as you would like to be spoken to.
If you prefer to take advantage of a free debt reminder letter template be sure you use a template that incorporates all six of these elements.
Finally, while many people recommend mailing a series of Reminder Letters over time with progressively increasing assertiveness, doing so actually sets you up to fail. It's a mathematical certainty that the more time you give people to pay the less money you'll actually recover.
To this end, if a debtor does not respond to your first Reminder Letter, give them a call. Should they then fail to settle the account or alternatively they default on a repayment plan then that's all the evidence you need that you're dealing with a career criminal. In this instance you should immediately send them a Final Demand Letter.
With regards to Reminder Letters, to ensure recovery of your debt is fast and amicable, there are 6 strategic elements you must incorporate in your letter. These 6 key-components are so critical to your success that should you fail to utilize all 6 not only will your chances of recovery dramatically shrink, the chances of stirring up a bitter drawn-out battle will significantly increase.
As debt reminder letters are used shortly after an invoice passes its due date unpaid, their primary objectives are two-fold: 1. Recover the money owed; and 2. Preserve your customer relations.
With these twin objectives in mind let's now look at the 6 essential elements to weave in to your Reminder Letters.
6 Critical Components Of Debt Reminder Letters
1. Summary Of Account
In order to minimize confusion and delays it's critical that you commence your letter by summarizing all details associated with the overdue account. At the very least you should always include a description of goods or services rendered, how much is overdue, when the account became overdue and your payment terms.
2. Avoid Aggravation
Even though the account is overdue, at this point you want to avoid any finger-pointing that may upset your good customers. To this end you should side-step any potential upset by making a brief remark that presumes the debtor has simply overlooked this account.
3. Specify The Desired Action
Having effectively 'let them off the hook' you must now clearly state exactly what action they need to take... namely to settle the account. This must include how much needs to be paid as well as a due date. In addition, to facilitate rapid payment you should provide a range of payment options as well as provide your full contact details.
4. Invite Open Communication
Whilst overlooking an invoice is the most common cause for an account not being paid on time, there are 3 other main reasons why an account has not been paid on time. These three reasons are:
A) Financial difficulty;
B) They dispute the debt based on either the quality of goods or services received or on the amount invoiced; and
C) They have no moral conscience nor any intention to pay.
In the first two scenarios there exists a window of opportunity for you to recover your accounts. In order to recover these accounts quickly and amicably you must open respectful communication channels with a view to resolving these concerns. You don't need to write anything too fancy. A sentence along the lines of: "If a problem has arisen that we should be aware of, please call me immediately to discuss this." will suffice. Once again, give them a range of options as to how to get in touch with you or a nominated member of staff.
5. Pressume Compliance
To reinforce your expectation of payment you should round off your reminder letter by thanking your customer for attending to this matter in a timely manner. In addition you may also wish to touch on a benefit of settling the overdue account. Such a benefit may be to maintain credit with your business or to preserve your working relationship. Doing so will convey your desire to maintain a good relationship.
6. Sign The Letter Personally
It's good practice to sign off your reminder letters with an authentic signature. By doing so you'll demonstrate both a regard for the customer as well as the importance you place on payment.
Additional Pointers
When writing Reminder Letters it's important to be brief while at the same time being personable. Avoid adjectives and lengthy explanations. Use simple words, small sentences and short paragraphs. And write the letter as you would like to be spoken to.
If you prefer to take advantage of a free debt reminder letter template be sure you use a template that incorporates all six of these elements.
Finally, while many people recommend mailing a series of Reminder Letters over time with progressively increasing assertiveness, doing so actually sets you up to fail. It's a mathematical certainty that the more time you give people to pay the less money you'll actually recover.
To this end, if a debtor does not respond to your first Reminder Letter, give them a call. Should they then fail to settle the account or alternatively they default on a repayment plan then that's all the evidence you need that you're dealing with a career criminal. In this instance you should immediately send them a Final Demand Letter.
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To see how all six critical components work together simply enroll in The Debt Doctor's free online Debt Collection video training tutorial. As a member you'll automatically receive a complimentary copy of The Debt Doctor's powerful Reminder Letter template which utilizes all 6 essential elements.
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