Effective Collection Agency Letter Writing Guidelines For Your Business

A collection agency letter is sometimes necessary when you've sent statements, or made phone calls to your delinquent customers and they haven't responded. Also called a demand letter, this is a legal document that has to abide by federal laws, prohibiting harassment and abusive language.

Although no business owner looks forward to dealing with delinquent accounts, it is a very necessary part of your business operations.

While you can write them yourself, it is also one of the debt collection techniques used by a collection commercial debt professional.

Debt Recovery Letter Writing is Time-Consuming

If you decide to send them yourself, make sure to gather all the facts about your customer's account and they amount owed. Your demands should always be specific about the past due balance(s) owed, as well as when it was due.

Your first letter can be in the form of a reminder to pay the bill. Future letters should get more intensive and state potential consequences if payment is not received.

If you're sending a final debt collection letter, communicate exactly the penalties for not complying immediately with payment. An example might be: "If payment is not received by December 2nd, 2008, your account will be sent to commercial collection professionals."

Guidelines and Warnings

NOTE: Don't make empty threats; be prepared to follow through with your intentions to send the account to a collection agency. After your final letter, do not continue to send further demand letters. This could cause legal problems for your business.

• Be Proactive
  Send your first letter immediately after the original payment was due. Merely inquire if a problem exists. The customer may have forgotten, and this letter can be a friendly reminder.

• Increase Intensity
  If you haven't gotten a response from your first letter, increase the intensity of your message with a greater sense of urgency to receive payment.

• Comply with laws and regulations
  Federal guidelines, spelled out in the Fair Debt Collection Protection Act, stipulate what you can and cannot say in attempting to collect debt. Learn about FDCPA guidelines.

• Write Them a Thank You Notice
  After you've received payment, writing a simple note of thanks can go a long ways towards keeping positive customer relations and mending sour feelings. After all, you'd like to keep the customer....you just want to get paid!

• Send to a Collection Agency
  If, after a few attempts, you still haven't received payment, you should refer these clients to a business collection agency. At this point, its clear that more aggressive measures need to be taken.

  Sending debt collection letters can be very time-consuming and is a distraction from your core business. Using a third party professional can be more cost effective, more persuasive, and much more efficient.

Some Advice

Sample Collection Agency Letter

December 2, 2008

Valued Customer
123 Main St.
Anytown, CA 12345

Dear Sir/Madam
Re: Overdue Invoice #_______ in the amount of _________.

Thank you for your recent business. Our records indicate, however, that the above referenced invoice is currently overdue.

If there are any questions with this invoice, please feel free to contact us. If not, please remit payment to the following address.

Your Company
Your Receivables Address
Your City, State, and Zip

We thank you for your business and look forward to a continued relationship.

Sincerely,

Your Name & Title

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