Collection Letters for Beginners

How to use collection letters to obtain money owed to your business

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.

 

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.
Try: 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.
Try: 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.
Try: 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.

 

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

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