4 Tips To Writing A Better Demand Letter That Gets Results
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by: DavidP.Montana
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If you are handling your own debt collections in house, then you already recognize the need to periodically send demand letters to delinquent customers.
Most business owners opt for the gentle option of sending a friendly reminder notice to act as their collection letter, hoping that payment has simply slipped the customers mind temporarily.
While these can and do work, there are some tips that might help you to write a demand letter than can encourage customers to pay sooner rather than later.
1. Wording That Is Professional
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 its rightful or not. This defensiveness can often become retaliation and prompt them to become even more stubborn about not paying your unpaid bills.
Always keep your collection letters professionally worded so that your customer is reminded of their unpaid debt and encouraged to pay. The gentle encouragement is usually enough to reassure your customers that theyre not being attacked and many will find a way to pay their debt.
2. Exactness is Key
Demand letters should clearly state the exact amount that is late and past due, as well as when payment was due. It can be good to also remind them of the products or services originally purchased. These letters should be succinct and brief.
3. Payment Arrangements
If you notice that some customers are avoiding contact, it is possible to introduce the concept of entering into a payment plan arrangement. Youre 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. Penalty Fees
Mentioning the possibility of late fees or penalties might be a further incentive for some customers to pay. Your demand letters could mention tacking on additional late fees if the account continues to remain delinquent. Faced with the possibilities of still more fees, some customers will find the money needed to pay the debt.
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 youre dealing with your debt collection procedures in-house and writing your demand letters yourself, you must not 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 youre working with a government department to recover debt. Youre also not allowed to imply the threat of garnishing a customers wages to recover debt.
It is also a federal violation to make your demand letters appear to look as if they came from any federal or state agency, or from a court.
Use your own regular business stationary and keep your writing tone professional and encouraging. As a general rule, send two letters approximately 30 days apart. If youre still not meeting with any success, then it may be time to consider alternative methods of debt collection, which may include appointing an agency to assist your collection methods.
About the Author
David P. Montana has been a prominent industry expert, business advisor and author in collection agencies services for thirty years. He offers additional helpful tips and resources on writing an effective demand letter.
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