It's an unfortunate fact in the business world that some people fail to pay their bills in a timely manner, which necessitates a short course in writing collection letters for beginners. In some cases, sending them is the only chance you have of receiving the money you're owed.

Since it is possible that clients have neglected to pay their bills because of accidental oversight, it's important not to insult them in the first collection letters and forfeit any future business. However, it's also imperative to be persuasive enough that people know your company means business. Some techniques that can help you are:

1. Learning to phrase collection letters to say what you need to say in the right manner;

2. Determining what to do if your letters are met with no response;

3. Knowing when to stop trying to collect the debt on your own and, instead, turn to an outside agency.

Action Steps
The best contacts and resources to help you get it done

Learn how to phrase your collection letters effectively

No one likes getting collection letters, even if they know they are late on their debts. There are two goals you need to keep in mind when you send them out. These are: (a) making sure the recipient reads the letter and (b) encouraging him or her to act in a timely manner.

I recommend: Go to Dynamic Interface Systems' website and read the article on writing collection letters to get a good idea of the format and wording you should use. Then visit the Credit Guru's page to help you further refine your letters' style. Write your first letter with a conciliatory tone, minding your pleases and thank yous.

Decide how you will respond if your collection letters are ignored

In a perfect world, every client who receives collection letters from you will rush to pay you within the hour. However, this is reality, so you need to anticipate responses, or lack thereof, that do not quite fit the plan. That way you won't be caught off guard when they occur.

I recommend: Go to WriteExpress and read the article on collection letters. It details the series of follow-up letters you may have to write to get the job done. Then go to the National Federation of Independent Businesses' site to get more exact wording to use for these letters. There are a couple of examples you can use as templates.

Know when to turn to an agency for collection letters

If, after sending a client multiple collection letters, you still get no response or receive empty promises of payment, your choices are to either eat the debt or refer the matter to a professional collection agency or an attorney. The agency will often just continue to send letters, but it may have more clout than your company alone. For one thing, the agency can leave a negative mark on the person's credit file.

I recommend: Go to Credit-to-Cash Advisor and read the article on collection letters, paying special attention to the section on the "final demand letter," which you should send before taking the next step. Then read Power Agency's article on why collection agency services can benefit your small business.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Familiarize yourself with the Fair Debt Collection Practices Act so you don't overstep your legal bounds with your collection letters.

Companies, just like individuals, rely on the money they are owed to keep production going, and when owed money, businesses can use collection letters to help get that money. Collection letters information is fairly basic and straightforward, stating that the client needs to pay you and keep his or her account current. If you cannot properly implement this information in a letter, it isn't going to do you much good. To help with this, consider enlisting the aid of a collection letters provider to get you the money you are owed.

Whether you want to find collection letters and their templates online or in person, you have a lot of options available. Scan through a collection letters directory to find the best suited template. Most office stores will have collection letters, their templates and manuals to assist in the writing of collection letters. However, if you are looking for a sale, the Internet often has discounted prices.

1. Find and order collection letters online to save money.

2. Use programs to merge your past due accounts with your collections letters list.

3. Invest in collection letters accessories.

Action Steps
The best contacts and resources to help you get it done

Review collection letters information and find acceptable programs online

Using collection letters provider options online can help you make the most of your money, since businesses are so competitive on the Internet. If you need help writing your collection letters, look for template programs that can help you with the overall outline of your collection letters.

I recommend: WriteExpress offers Easy Letters software to help you not just with collection letters but also with a number of different business letters using templates. Business Letter Templates can also assist you with collection letters information. It provide tips to find collection letters and templates to make your bill collection efforts more effective.

Couple collection letters with mail merger programs

Mail merger programs can help you minimize the amount of time you spend doing paperwork. You can use the information you have in a preexisting database in order to automatically merge your collection letters list with collection letters templates. This can make the entire collection letters process easier.

I recommend: A wide variety of mail merger programs can be found through the Qarchive. If you are short on funds, the Free Downloads Center offers you some no-cost or low-cost mail merger solution programs.

Complete your collection letters package with accessories and equipment

Once you have your collection letters printed up, you will need to distribute them in a timely and professional manner. This will likely necessitate stamps, envelops and other mailing accessories.

I recommend: All for Mailers has a lot of great accessories and equipment for mailing collection letters, including printers and envelopes. For discounted accessories, consider Mail-Quip, which has new and used items for sale.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Try to take a positive stance with your collection letters. While it is true that these accounts are overdue and you do need to collect the money, clients who receive collection letters with a more positive tone may be more likely to pay you.

Businesses are required to adhere to all federal and state collection letters laws and regulations. It’s nearly impossible to own a business and never have to collect an overdue debt because some customers and clients will just simply not pay their debts. While debt collection is a necessary task to ensure the profitability of your company, there are laws that regulate just how aggressive you can be when attempting to collect debt from customers.

The first step in collecting debt legally is to send out collection letters. The basic purpose of debt collection letters is to remind debtors of their obligations. Collection letters can also serve as proof in court proceedings that companies took the necessary, legal steps to collect the debt. These letters should inform the customer that you have initiated the debt collection process and give the customer instructions on how to dispute the debt. To learn more about collection letters laws and regulations, you should:

1. Research debt collection laws and regulations.

2. Look for examples of appropriate wording for collection letters.

3. Consult with a collections professional on writing collection letters.

Action Steps
The best contacts and resources to help you get it done

Familiarize yourself with collection letters laws

State and federal laws prohibit businesses from engaging in certain practices when collecting debt. Collection letters laws and regulations such as the The Fair Debt Collection Practices Act regulations protect the rights of debtors and prohibit companies from using language that would be abusive or harassing.

I recommend: Learn more about collection letters by visiting Transworld Systems. You can also find out more about debt collection letters laws and regulations by visiting the National Business Association. To find out about the The Fair Debt Collection Practices Act and how it's enforced, see the Federal Trade Commission.

Be careful when choosing wording for collection letters

The words used in collection letters are very important and, if not chosen appropriately, can lead to a lawsuit. The letter cannot include any information that is deceptive, false or misleading in any way. Collection letters should include basic information about the debt owed: date of invoice, total amount due and due date.

I recommend: Read more about what can and can’t be said in collection letters by visiting Law.com. You can also check out the National Federation of Independent Business for sample collection letter text.

Seek professional advice on drafting collection letters

Collecting debts requires a large degree of diplomacy and isn't always an easy task. Attorneys and debt collection professionals can provide you with sample collection letters to ensure that you not only comply with debt collection laws, but also use words and a tone that will help you encourage, in a non-threatening manner, debtors to pay what they owe.

I recommend: You may consider contacting Attorney Collection Services for more information about debt collection. You may also check out The National List of Attorneys to obtain a listing of debt collection attorneys in your area.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  To retain customer goodwill and successfully collect debt, companies should consider keeping collection letters to one page, using short sentences and paragraphs with simple words and a non-threatening tone. The letter should also be specific in what is owed and how payment should be remitted while conveying a sense of urgency.

When it's time to get serious about getting payments a company needs to stay afloat, collections letters are a critical part of the process. These letters can inform those who owe about what is going with their debts, without a lot of in-house time and labor. Collection letters are often used in conjunction with other strategies. Knowing about some of the key terms around using collection letters will help a manager learn how to structure a comprehensive debt collection process.

Action Steps
The best contacts and resources to help you get it done

Sample collection letter or template

A collection letter sample or template is a basic collection letter document that users can customize for specific use. These will generally have an open name field for sending to more than one party.

I recommend: See examples of a sample cover letter at sites like Money at Home.

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act or FDCPA governs how parties can collect debts from other parties. This set of regulations is designed to protect the debtor, and those looking to collect money should know all about it.

I recommend: See more on the FDCPA at this Federal Trade Commission website.

Past due accounts

Past due accounts are simply records of money that has not been paid as scheduled by some outside party. Past due accounts will often be the tools managers use to collect debt. They may be held on a spreadsheet, database or other software.

I recommend: See more about past due accounts at Answers.com.

Mail merge or mail merger

A mail merge or mail merger program is when a user takes a certain collection of data and puts it into mailable form through a piece of software. The original software and the mailing program 'merge' the info.

I recommend: Take a look at more details about mail merge programs at this Indiana University site.

Final demand letter

The final demand letter is a formal debt collection letter that lays out all of the ps and qs of what is being requested to make things easier if the matter has to go to court.

I recommend: See more on the final demand letter at BizHelp.

Delinquent debt

Delinquent debt is the general term for debts that have 'aged' past when they would be considered on time, such as within a 30 day period. Collections managers work with delinquent debts in different ways according to their age and status. These are often kept in the record with modern technologies that can 'sort' debts to help collections parties optimize their efforts to get payments.

I recommend: See more on delinquent debt at Investors.com.