Debt Recovery Letter Writing Guidelines To Help Your Business Recover Your Money

A debt recovery letter is not only a primary tool in the debt recovery process, in fact it is serves as legal proof for repeated, lawful and earnest attempts on your part to collect the due payment. So consider writing such letters as part of the recovery program itself. You should be careful to take this step cautiously.

Usually, a debt recovery letter should be sent immediately after the debtor passes the payment due date. There are also instances when it can be started after a few collection calls have been made. You should enact a plan to send a series of letters every 7 to 10 days. Repeated communication with the debtor shows your seriousness in attempting to collect the debt.

Once you have sent three to four consecutive debt recovery letters, it is time to seriously consider other methods of debt collection- namely outsourcing to a professional debt recovery agency. After a series of letters and phone calls with no payment, it is a clear indication that your customer is ignoring you.

Depending on your time and available resources, you might opt to send fewer letters spaced over a longer period of time. Our experience has shown that more communications with your customer can help get at the problem. But no business should let an account go much past 60 days with either no payment or payment arrangements being made. The longer the debt goes unpaid, the less likely you are to get paid at all.

The key, obviously, is to devise a plan that works for your organization and follow the plan consistently. Whether your plan includes writing up to 4 letters, or only 2 letters before turning them over, make sure you follow your plan. It will prove far more successful if you do so.

Writing a debt recovery letter isn’t difficult. The language used is very important, as well as following a consistent plan with all your delinquent customers. The following guidelines will help you to understand how to draft some of the initial letters.

• Letter 1: This is the first debt recovery letter with which you start approaching the debtor concerning his or her late payment. This usually contains the necessary information about the amount due, the time offered for clearing off the debt, the increasing interest rate (if any) and the details of the current account status of the debtor. Adopt a tone that is sympathetic, understanding, but firm and clear about your intentions to collect a debt. State your earnest desire to maintain good relations with the debtor, inquiring if there might be any problems causing the late payment, and invite your customer to contact you to discuss possible payment arrangements.

• Letter 2: In the second debt recovery letter you might consider increasing the tone of urgency slightly. Apart from repeating what you did in your previous letter, the second can be supported with a copy of original invoice or the due bill. You could inquire, again in a friendly manner, whether the debtor is facing any financial problems regarding making timely payments. In this connection you might also inform him about debt settlement services which are often used for resolving debt related situations.

• Letter 3: With the third debt recovery letter, it is time that you are persuasive and slightly aggressive in nature. You may cite the legal agreement or contract that the debtor has signed, where he/she has agreed to timely payment, while communicating your right to take legal steps if the said agreement is broken. In fact this should be the last letter which comes in the form of a request to the debtor. It should therefore be firm, but respectful, in making the debtor aware of the problems they are facing because of the non-payment.

  If you like, you might even offer a reduced total sum payment to clear the debt. After all, recovering some money is better than recovering none of it.

• Letter 4: Your final debt recovery letter is usually a complete formal letter devoid of any sympathy or friendliness. Here you should state in a matter of fact manner about your considerations regarding legal proceedings or the involvement of third party agencies in the recovery of debt. It would be best if you provided a deadline of a week to pay off the debt, after which you are free to take any legal step. Attach the copy of original in-voice as well as the original legal agreement paper.

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