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How to Write a Collection Letter

By Stacie Heaps
Professional Writer and Editor

  1. Consider offering a discount for early payment on products or services. In this type of letter, you can remind or notify a customer that if you receive payment within a certain period, you will give him or her a discount on the purchase. Be specific about the conditions for the discount.

  2. Gather all the facts about your customer's account and to encourage your customer to pay the money owed. Always be specific about how much the customer owes and about when the money was due to avoid future misunderstandings.

  3. Offer assistance to a customer having difficulty paying an overdue bill. In fact, often it is the only way to collect payment. Use a sincere tone, and gently persuade the customer to contact you to talk about the problem. When discussing new terms, be sure that any new arrangement is one that the customer can handle and that you can feel comfortable about.

  4. Take a firmer stand in your next letter if after writing one or more collection letters you have received no response from the customer (even after suggesting an alternative payment plan or other options). Unlike earlier letters, this one should carry a demanding rather than a requesting tone. Although this letter is less friendly than other letters, it should still make it easy for the customer to respond.

  5. Let the customer know exactly what the penalty will be in the final letter unless he or she responds immediately with the payment. Don't make an empty threat, and don't send another letter asking for payment. You must be prepared to follow through with your claim.

  6. If you must cancel or withdraw a customer's credit account, explain clearly your reasons for doing so. Be sure to use a courteous tone when writing this letter, as you may want to maintain this customer's business, even if you must ask for cash payments from now on.

  7. If you receive a collection letter and plan to pay your overdue bill, it is a good idea to write a letter reassuring the creditor of that fact. Use simple language to clearly state your intent, and refrain from making promises that you are not sure you can keep. If necessary, you may want to consider outlining your proposed payment plan in your letter or asking about an alternative payment plan.

  8. Though it is usually not necessary to send a letter acknowledging payment of an overdue balance, you may wish to do so if you feel it is important to clear the slate or ease the customer's mind, or if the customer requests it.

  9. If you have sent a collection letter by mistake, you should apologize for your error and acknowledge any inconvenience you may have caused. You should also state the current condition of the customer's account.

  10. When requesting payment of a personal loan—because the person who borrowed the money from you is most likely a friend or family member—your letter should communicate very little pressure. Don't hesitate to make the message as personal and warm as possible.

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