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Business Communication: Collection Letters
When your customers fail to pay their bills on time, you

must try to collect. If you follow conventional business
practice, you are likely to use letters in your efforts. You
could use other waysfor example, telephone calls or
personal visits' But letters are the, most common.
The point of the collection letter is always to collect the
money that is owed. A new type of collection letter is sent
each time you escalate your demand for payment. Below
are examples of several types of collection letters that may
help you to collect your money.
The Reminder Collection Letter
The first collection letter should only be a friendly
reminder. Assume that the customer has forgotten to pay
and courteously invite him/her to pay promptly. Most
people will make a payment after a couple of reminders. If
there is no response to these reminders, you should
assume that the customer is not paying because of
financial, medical, or other personal difficulties.
Suggestions for a typical format:
Send a copy of the original bill.
Stamp on it Reminder or Past Due and highlight the
amount past due.
Include a short statement indicating the amount due, the
due date, late charges (if any), and the account number.
Make sure the address where the customer should send
payment is plainly indicated. Including a pre-addressed
envelope for payment (with or without postage) is also
helpful.
If the customer has not even made a partial payment after
a couple of gentle Reminder Collection Letters, you can
send a final reminder collection letter to ask why the
customer is not paying.
Ex.
Dear Mr. Athavale,

According to our records, your current balance due is
$473.25. Of this amount, $215.38 is more than 30
days past due. As you know, our normal terms require
payment within 30 days after the invoice is sent to
you.
Since you have established an excellent credit rating
with us in the past, we are surprised to see a problem
arise at this time. If there is some error, or you are
unable to pay the amount due immediately, please

contact me so that we can correct the situation or
make suitable arrangements for prompt payment of
this obligation.
Thank you for your attention to this request.
Very truly yours,
Jim Madison
The Inquiry Collection Letter
Before you employ any harsher means, try to discover if
the customer has extraordinary circumstances that are
preventing him/her from making any payment. You can
help maintain a good relationship with the customer and
go a long way toward collecting your debt if you are
sensitive to any potential problems. The Inquiry
Collection Letter demonstrates your willingness to help
the customer solve his/her current financial difficulty by
offering new terms. If you are willing to accept a partial
payment now with regular payments after that, most
people in financial difficulty will be grateful for this
option and agree.
Ex.
Dear Mr. Athavale,

We have not received any response from our
statements of the last two months nor to our letter of
September 15. Your entire account is now 45 days
overdue, and you owe us a total of $473.25.
If there is some reason why this payment cannot be
made immediately, please contact us so that we can
make arrangements that will be mutually agreeable.
Perhaps we can work out a payment schedule that
would be realistic for your present circumstances.
Naturally, we do not want to endanger your credit
rating or destroy the good relationship that we have
maintained in the past. Therefore, would you please
take care of this obligation immediately so that we
will not have to file an unfavorable report with the
credit bureau or resort to the use of a collection
agency or an attorney.We have enclosed a selfaddressed envelope for your convenience. Please
return it as soon as possible with your check for the
balance owed.
Very truly yours,
Jim Karporia
The Appeal Collection Letter
If the customer fails to respond to any of the Reminder
Collection Letters or to the Inquiry Collection Letters, you
must take a more aggressive approach. Because the
customer has not responded to date, you should assume
that he/she will probably not respond to any further
demands for payment. This is why many organizations at
this point turn their debtors over to a collection agency. If
you do choose to continue the collection process yourself,
there are two basic approaches you can take:
Positive appeal approach: Try to appeal to the customer's
sense of fairness, personal pride, or his/her desire to
maintain a good credit standing and its connected
privileges.
Negative appeal approach: If the positive approach is
ignored, inform the customer that continued nonpayment
could result in various penalties.
Ex.
Dear Mr. Athavale,

We still have no response from our statements of the
past three months nor from the letters that we sent
you on September 15 and October 15.
Your entire account is now seriously past due: It is
obvious that our efforts to clear the account on a
mutually agreeable basis have had no impact. Unless
we receive payment from you within seven days, or
can work out a mutually agreeable arrangement to
discharge this obligation, we will have to report the
matter to the retail credit bureau.
Subsequently, the account will be turned over to a
collection agency or to our attorneys for further
action. Since this is a costly procedure for both of us,
and will cause serious damage to your credit rating, I
would suggest that you call immediately so that we
can clear the matter at once without resorting to such
procedures.
Very truly yours,
Jim Karporia
Appeal to self-interest
[Letter Date]
{SUBJECT}
Dear [Recipients Name],
Your account balance shown in our books is $58 outstanding and past due date. A late fee of $15 will have
to be added to it and appear on the next statement sent to you. You are requested to check your books to make
sure there are not any discrepancies in our books.
As per the requirement of State law, our organization has to make you aware that a bleak credit record might be
given to the credit reporting agency to deal with if the credit responsibilities are not taken care of.
this reminder is to be ignored if the payment has already been sent. we appreciate your taking out time for this
matter
Sincerely,
[Senders Name]
[Senders Title] -Optional Appeal to fear (legal action or liable action)
March 15, 2006
Subject: Outstanding payment.
Dear Sirs,
Account of Director
We have repeatedly an unsuccessfully brought the matter of your long outstanding account of Tk. 10 lack to
your attention. But we are disappointment we have had no co-operation from you with in this respect.
It is not our desire or custom to be other than considerate to our customers. But because of your noncooperation unfortunately legal action is now our only re-course.
Unless we received payment in full from you by April 15, 2006 we shall be forced to turn the matter over to our
lower.
Yours truly,
[Senders Name]
[Senders Title]

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Business Communication: Collection Letters

When your customers fail to pay their bills on time, you

Dear Mr. Athavale,

unable to pay the amount due immediately, please

Dear Mr. Athavale,

Dear Mr. Athavale,

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