Debt collection letters are actually very effective if done properly. 

We believe that the debt collection letter is a very important tool in your collections arsenal. We know, that when done right, sending these documents can be highly successful at getting your past due customer’s attention.

However, we’ve found businesses floundering when trying to figure out what to say and when to send the debt collection letter.

This article shares some of the best practices for collection letters that will keep businesses compliant while still being effective tools for debt collection. What six tips will help your business be successful in collecting on past due accounts?

Debt Collection Done Right: The Science and Art of Letter Writing

Consumers and B2B clients can fall behind on paying invoices for all kinds of reasons. For example, a consumer may need a payment plan because they’ve temporarily lost their job. Or, the client may have a hard time understanding the invoice. Both of these issues may be mitigated with a simple discussion. However, don’t allow much time to pass before notifying the customer that their invoice is past due. The longer you wait, the harder it will be to collect on the debt. Here are six best practices for debt collection letters:

  1. Debt collection timeline:
    Early intervention is crucial to collecting. Statistics show that the longer an account is past due, the less chance you have to collect. Make sure you send out your invoice and follow-up reminders in a timely fashion. Set specific timelines for your company and make sure your staff follows through on your billing and reminder plan.
  2. Check the facts before sending the letter:
    Before starting this process it is crucial that you double-check that you haven’t made a mistake. One error could put power in the hands of the customer and open things up for debate. A debate means a slowed down debt collection process.
  3. Use templates that are short and effective:
    This process will go much more quickly if all you need to do is fill in the blanks. If you have to craft a letter by hand, your frustration level will rise, which may lead to a costly mistake.
  4. On the first friendly reminder letter:
    Keep the tone light but direct. Always say something like, “If you have already sent your payment, please disregard this letter.” Also, say how much you appreciate the customer’s patronage. Be respectful and polite.
  5. Be specific about the terms:
    In your first letter, you should name the date of the purchase, what was purchased, and state your terms for payment.
  6. The final letter:
    The final letter you send should never threaten. Instead, state that it is the final notice before the account is turned over to a collection agency. If you state you will turn the account over to collections, always follow through.

Debt collection letters should always be respectful and concise.

As you can see, a lot goes into a well thought out debt collection letter strategy. If these sound like more steps than you have time for or would rather have a professional handle, contact Rocket Receivables. Our Stage One and Stage Two collection services use proven debt collection letters and debt collection strategies that can help you recoup your hard-earned revenue. Get started today.