Being a business owner is hard enough without clients who fail to pay—on time or at all. Delinquent accounts hurt your business, cause delays in your bill payment schedule and have an impact on your long-term growth.
For any business the main objective is to make a profit, of course. Usually most transactions go smoothly, with clients promptly making payments. However, there are some instances when clients fail to pay your invoice at the completion of the transaction. One of the ways to get fix this problem is to send a collection letter to your debtors.
As a fact you are especially aware of as business owner; people do not like to pay… so sometimes they need a little nudge to do what they should. Collection letters serve dual purposes – first it helps remedy past due accounts and second they do the least amount of harm to help maintain a good relationship with your customers without having to directly confront them. The demand letter is often the first time that client will realize that you are serious about collecting the money that they owe you. Here we’ll discuss what you should include when writing a collection letter.
To begin with, when writing a demand letter to a client, always type the letter and use letter head if possible. Professionalism goes a long way in conveying the seriousness of your demand to a client.
Include the following five sections in your demand letter:
1. What You Want
Lay out what you want in the letter. If you are demanding money, demand a specific amount of money and the reasons supporting why you are entitled to receive this amount. If you want the other party to do something (such as return property), be sure that you list exactly want you want to happen (eg, return the work truck to the main office).
2. What Happened
The first thing that you should do when starting a demand letter is writing detailed explanation of what transpired including how much is owed and when it was due. Be sure to be accurate yet concise. Keep in mind when you write this portion of the letter that if this matter should before a judge, this letter can be introduced as evidence. So keep it polite. Also it’s advisable to include a note referencing previous attempts to collect the debt.
3. How to Respond
Indicate how the client can respond. Is the client to call your office to arrange payment? Mail a check? Be detailed in how you want the client to reply to the letter to settle the issue.
4. A Due Date
It is important to use an actual date, not “in the next 7 business days” as this be interpreted differently depending on when the letter was received.
5. Your Contact Information
Include address, phone, and email.
When you finish writing these five sections, read it and read it again! Go over it thoroughly and get someone else to read it if you can. Confirm that the letter is accurate, polite in tone and free of any grammar or spelling errors. Furthermore, making your payment request letter clear, informative and with an obvious call to action is what is going to get you the best results. Now that you have taken care of writing collection letters to clients, you can enjoy some free time – but wait a minute, you’re a business owner, you don’t have free time! Back to work!