Wednesday, February 21, 2018

4 Tips To Writing A Better Demand Letter That Gets Results

March 30, 2011 by  
Filed under Finance

If your business is handling its own debt collection methods internally, then you already know the need to send out demand letters to non-paying clients that arise from time to time.

Many business owners would rather use the “gentle” approach by first sending a friendly reminder. The idea is this may serve to help “jog” the customer’s memory of the past due bill.

While these can have varying degrees of success, they can still be improved upon by learning a few tips to help you write a more effective demand letter. This will encourage your customers to pay you sooner, rather than later.

1. Wording That Is Professional

Your demand letters should never contain any harassing, threatening or abusive language. Nor should it even imply threats. Some customers might become defensive if they perceive they’re being threatened. Whether or not you meant to threaten, if interpreted as such, it can result in possible legal retaliation. At the very least, it will not put them in the mood to want to pay you.

Your demand or collection letters should stay on point, and clearly communicate that the customer owes an unpaid debt, and encourage them to pay. This is often incentive enough to get your customer to pay.

2. Exactness is Key

The demand letter should state the exact amount that is past due, and when payment was due. You can also remind them of the services or products purchased. Keep your letters to the point and succinct.

3. Payment Settlements/Arrangements

Some customers may avoid all contact with you, possibly out of embarrassment to admit they’re going through financial straits. A payment plan offered to them might be more financially feasible, with smaller payments.

They might be more cooperative after being offered a payment settlement plan, as these smaller payments are less overwhelming.

4. Late 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.

These are just suggestions to help you encourage your customers to pay their unpaid debts and keep cash flowing into your business at the same time.

If you’re writing your own demand letters and handling your own collections internally, you cannot in any way imply that an outside collection agency is involved in your 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 you’re working with a government department to recover debt. You’re also not allowed to imply the threat of garnishing a customer’s wages to recover debt.

It also violates federal statutes to make your demand letters look “official”, and like they’ve been written by any federal or state agency, or from a court.

Use a professional tone in your writing, using your own regular business stationary. Generally, you should send two demand letters, spaced about 30 days apart. If these aren’t proving to be successful, perhaps it may be time to think of alternative debt collection methods, including hiring outside collection agencies to help you with your collections.

David P. Montana has been a leading business veteran, business specialist and publisher about debt collection agencies expertise for 30 years. He offers additional important tips and knowledge about Writing an effective demand letter.

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