Collection Letters

Duties of a “credit man”

 Chief Duty-either extending or refusing the grant of credit

Fatherly adviser or Counselor

 Always ready and be able to help those who are in financial difficulties to find ways and means
by which they could bail themselves out of their predicament.
Fundamental Principles
Letters addressed to them must devoid of any offensive, vulgar, profane
and insulting language.
Bad speech habits, sarcastic words, and similar words whether spoken
or written should be consigned to the garbage cans.
Collections letters should moreover be specific ad as short as possible.
Collections letters should use dated action.
Collections letters should follow a definite pattern.
Importance of Collection Letters
“The sale never becomes complete until and unless the account is paid”

 To collect the money due to the company.

To keep and retain the goodwill of the customer.

Qualities of a “Good Collection Letter”
 It should be short and direct.
 It should use dated action.
 It should be written from the customer’s viewpoint.
 It should not provide any cause or occasion to arouse the anger and bitterness of
the customer.
 It should be revised periodically.
 It should have a humanistic approach.
 It should follow a definite pattern.
 It should be written in such a way as to make it appear as if it were the last to be
sent to the debtor.
Types of Collection Letters
 Reminder Letter
 Follow-Up Letter
 Discussion Letter
 Appeal Letter
 Demand Letter
Reminder Letter
Dear _____________

When an account becomes overdue, as a company policy, we feel we owe our

customer to remind him of such a circumstance since we honestly feel that such is
due to oversight.
We are thereby enclosing a statement showing your overdue account. We feel
that with this receipt, you will lose no time sending to us a remittance covering the
said amount.
Very Truly Yours,
________________
Sending Past Due Notices
Dear Sir:
ARE YOU AWARE

That your payment is still past due? If you have overlooked it in the rush of other activities, may we
request that you send it now?
We shall sincerely appreciate your immediate action.
Very Truly Yours,
_______________
Account No.__________
Date Due____________
Amount Due__________
Late Charges__________
Total Amount Due______
(Notice: Return this slip with your payment)
Messrs._________________
Follow-Up Letter
Dear Customer:
Going over our records, we feel sorry to say that you have not responded to previous notices
regarding your past due payment on your account. As such, your payment is considerably past due!
We will appreciate it deeply if you forward your payment now or call on us as soon to discuss the
matter.
Please help us and yourself to avoid special handling of the account. Working together, we are sure
we can solve the problem.
Very Truly Yours:
________________________
Account No.________________
Date Due___________________
Amount of payment__________
Late Charges________________
Total Amount Due____________

Messrs.____________________
Discussion Letter
Sir:
With all candor and honesty, we are all at loss to understand the reason behind
your continued silence.
Since it is our earnest desire to help our customers solve their problems, why
don’t we discuss the matter together? Perhaps, that could be one way by which we
could thresh out the matter to our mutual satisfaction and benefit.
Shall you not give this matter a chance to be solved?
Very Truly Yours,
__________________
Appeal Letter
Dear _____________
Have you considered for a while what your friends and others in the
community would think about you if you persistently and stubbornly refuse to settle
your obligations? Indeed, the consequences would be tremendous as they would be
disastrous. These are the things that we do not want to happen. Neither would you.
Nowadays, nothing could be kept secret and away from circulation. Almost
anything could spread easily far and wide! So, why take a chance?
Very Truly Yours,
__________________
Appeal Letter (Business Company)
___________________________
___________________________

Sir:
You probably didn’t realize that normally, it takes a business company long
years to build a reputable name. However, it could be lost in a moment’s indiscretion
or utter neglect.
May we thus appeal to your sense of cooperation to settle your obligations
with us and thus maintain our good business relations?

The Credit Department

Demand Letter
Dear ______________
It is rather unfortunate that, through your indifference and lack of cooperation, we find it
necessary to take certain steps to protect our interest. However, we are giving you one last chance to
pay which you should not default, otherwise, you will made to bear the serious consequences of your
actions which you will surely regret later on.
In the event you fail to pay your obligations within a week from receipt of this letter, we will be
forced to bring this case to court since friendly requests bring neither payments nor explanations from
you.
Doubtlessly, you need not to be told that, in such a case, you will have to pay the amount owed
in the company plus legal fees, interest charges and liquidated damages.
We cannot wait more than a week to hear from you.
Very Truly Yours,
________________________
Demand Letter
Sir:
Your outstanding obligation with us is long overdue.
In spite of our repeated requests for immediate payment, you have turned a deaf ear on all
such requests. You have, and sad to say, unnecessarily taxed our patience to the limit. We have no
other recourse but protect our interests.
However, before we take the necessary action that would cause you embarrassments, regret
and expenses, we are giving you a last chance to settle the said obligations. We know you value your
reputations. But you have to let us know immediately, by phone or telegram, or letter before we turn
this matter to our lawyer for necessary court action before the end of the week.
May we hear from you immediately?
Very Truly Yours,
________________________
Writing-Off Bad Debts
 The debtor-customer has become declared insolvent.
 In spite of diligent efforts as well as exhaustive remedies, the customer has
stubbornly refused to send any reply or action to settle his obligations.
 The inability to locate the whereabouts of the debtor-customer notwithstanding
diligent efforts and the use of means at the command of the creditor company.
 The business has ceased operations for several years.
 The untimely demise of the customer leaving obligations behind which the heirs
could not or have stubbornly refused to honor and settle.