Creating effective collection letters

Creating effective collection letters. 

Most businesses have created their collection letters from some template designed in the 1970’s & 1980’s.  Now is a good time to review those letters and bring them up to today’s standards. There are a lot of businesses out there that just use a stamp on the invoice stating it is past due. To actually get your customers attention, it is best to design letters that actually speak to them about the importance of staying current on their account. A well written letter can help you Collect the Debt & Keep the Customer.

To design an effective collection letter you should be specific, and to the point. First and foremost, treat your customer as you would like to be treated in this situation. Direct them to respond immediately and to notify you when the payment is issued. You can give them an e-mail address they can respond to, or a telephone number they can call.

It is best to design three or four letters that continue to progress in urgency of payment. It is important to stay in front of your customer and design policies that include letters and phone calls to your customer urging prompt payment of their account (see our Blog, The Squeaky Wheel gets the Grease). Your first letter should be a simple reminder that their account needs to be brought current. Your second letter should suggest that their credit with you is in jeopardy and that payment needs to made before any new services or new product orders will be delivered. The third letter should use all your leverage to turn up the pressure for payment. Such as, all future services or product orders will require payment up front and that their credit with you will no longer be accepted. You may advise them that a collection fee, and or interest will be added to the account pursuant to your credit policies that they agreed to (visit our blog on Increase your net return from collections).

A final demand letter should be sent advising your customer that they have 10 days to pay their account, otherwise it will be referred to a third party collection agency. You do not want to extend much time for this final demand as to get the customer to act quickly. Generally the account will be over 60 days past due at this point, and it is important to give the account to a collection agency before your customer disappears or goes out of business (see our  Blog, Timing is Everything).

Once you have your letter completed, read them out loud by yourself or to a co-worker and listen to what it sounds like, and the tone is portrays. This will be the true test to whether or not it will move your customer into paying their account with out alienating them. The language you use will determine how the customer takes your call to action.  

To add the final touch to an effective collection letter, you should personally sign it. That will show the customer that it is not some simple generic letter your computer system spits out. It shows that you took the time to personally review and sign the letter.

Back to PRP’s Blog

Sign up for Future Newsletters

 

Professional Recovery Personnel is a BBB Accredited Collection Agency in Champlin, MN
PRP's Debt Collection Blog
Free Collection Reports
Get Started with Our Debt Collection Services Today
Members of the Association of Credit and Collection Professionals
Testimonials
View More of our Satisfied Clients & Testimonials