Learn These Four Tips To Write A More Effective Demand Letter
If your business is responsible for its own in house debt collections, you already understand the need to send out demand letters to late-paying customers from time to time.
Many business owners would rather use the “gentle” approach by first sending a friendly reminder. The idea is this may serve to help “jog” the customer’s memory of the past due bill.
While these can have varying degrees of success, they can still be improved upon by learning a few tips to help you write a more effective demand letter. This will encourage your customers to pay you sooner, rather than later.
1. Careful Professional Wording
Your demand letter should never contain any kind of threatening language or terms that can imply threats. People can become very defensive if they feel they are being attacked, whether it’s rightful or not. This defensiveness can often become retaliation and prompt them to become even more stubborn about not paying your unpaid bills.
Your demand or collection letters should stay on point, and clearly communicate that the customer owes an unpaid debt, and encourage them to pay. This is often incentive enough to get your customer to pay.
2. Be Exact
Your collection letter should state the exact amount the customer owes and when the payment was due. You may also want to mention the services or goods provided as a reminder, although this isn’t always necessary. Where possible, try to keep your letters brief and to the point.
3. Payment Settlements/Arrangements
If you notice that some customers are avoiding contact, it is possible to introduce the concept of entering into a payment plan arrangement. You’re effectively asking the customer to pay even a small portion of their unpaid debt to help reduce the amount they owe over time.
They could become more cooperative after being offered payment arrangements, because smaller payments are less financially stressful.
4. Late Fees
Mentioning adding late fees as additional charges can serve as another incentive for some to pay. If the account continues to remain delinquent, include language that late fees will be added. When confronted with additional fees on top of the delinquent bill, some customers will come up with the money to pay the bill.
By receiving smaller payments over time to your business, you can increase the cash flow by following these suggestions. At the same time, you’re encouraging your delinquent customers to pay their past due bills.
If you’re handling your own debt collections and writing your own demand letters, you cannot imply that a debt collection agency is involved in the collecting.
You should also be careful not to use wording that can imply a threat of any form, nor can you use any form of deception in your letters. This means you may not imply that the customer could be facing legal action or that you’re working with a government department to recover debt. You’re also not allowed to imply the threat of garnishing a customer’s wages to recover debt.
It’s also a violation of federal statutes to try to make your demand letter look like it’s been written and sent by a state or federal agency or from a court.
Use a professional tone in your writing, using your own regular business stationary. Generally, you should send two demand letters, spaced about 30 days apart. If these aren’t proving to be successful, perhaps it may be time to think of alternative debt collection methods, including hiring outside collection agencies to help you with your collections.
David P. Montana has been a prominent business specialist, business specialist and author with regard to debt collection agency expertise for thirty years. He offers further very important strategies and answers about Creating an effective demand letter.
Processing your request, Please wait....
