Debt collection letters--an overview
"Debt collection letter" in the singular may be an oxymoron, since unfortunately, one is rarely enough. You should have a series of letters to send to deadbeat clients, each one becoming a little more insistent. Here are some ideas for a five-letter series.
Don't make your first letter look like a collection letter at all. Make it a friendly note. You're more likely to get money from someone who thinks of you as a partner than a dun.
If that first letter doesn't get a response--and usually it won't--send another the next week that's more urgent and directly asks for the money. Express your concern that you have not been able to contact the client. Ask if he or she is all right, and if he or she is having any trouble paying. The next week, if you still have not gotten a response, send a letter referring to the payment terms in the agreement you and the client originally made (you did have some kind of written agreement, even if it was just on the back of your invoice, right?). Mention the effect this nonpayment is having on your cash flow, and that your business's cash flow is just as important as theirs.
Still no response by the next week? State plainly that you are asking for the money for the final time before referring it to collections. Include a copy of the entire agreement between you and the client.
If you still have not heard back from the client, and are confident that you do not simply have a problem with their contact information, call a collection agency-in fact, you may have wanted to have gotten a collection agency from step one (more on that below).
More Tips for Successful Debt Collections
Don't wait to start asking for your money.
If it's been a week since the payment deadline passed, it's been a week too long. Send out that first "reminder" letter today. Don't hesitate to send these letters as little as a week apart from each other. The longer your bill goes unpaid, the less likely it is you will ever see that money again. If you've been sending email, try sending paper.
For whatever reason, there are people who take a paper letter more seriously. There's also the real chance that your emails really are not getting through reliably, or are ending up at the bottom of an overflowing Inbox.
If you do send email, make sure it's digitally signed. A digital signature proves that you sent the email to the specific recipient. In fact, you might want to make sure all your emails to clients and prospects are digitally signed, to have solid documentation of everything you said, and everything they owe.
Unlike with regular emails, the date, time, "to" and "from" fields can't be forged, so the email has legal standing, even more than certified mail. While web-based email programs cannot send digitally signed email, there are third-party services that will let you send hundreds of digitally signed emails from a desktop email program for only a few dollars a month.
Follow up your debt collection letter with a telephone call. As any collection agency will tell you, telephone calls are useful if your debtor has ignored the collection letters. But with caller ID, Caller Blocking and voice mail - if people don't want to take your calls it is hard to reach them. This technique could be especially effective in the case of someone with whom you know will answer their own phone.
Of course, your writing skills won't go to waste: you need to make sure you have scripted what you want to say. You should take the same attitude and touch on the same points as your letter. Whatever you do, don't let yourself get sidetracked, and don't be embarrassed. They're the ones who are putting you out.
Don't know your deadbeat's telephone number? Try looking up the "Whois" record of the business's website, which usually has the owner's telephone number.
Does all this sound like too much work? If you'd rather be writing proposals than collection letters, there are small business collection agencies that will take on debts for as little as $20 each. After all, your client had enough sense to go to you rather than doing your specialty themselves. Shouldn't you have as much sense when it comes to your debt collection letters?
Steve Austin is a regular contributor to Let No Debt Remain Outstanding (http://www.let-no-debt-remain-outstanding.com/ ), a website with articles on choosing a collection agency, along with recommended the best collection agencies.
Before you start a business we encourage you to prepare... Read More
You need to be visible to attract customers, right? But... Read More
What is the satisfaction & expectation review of the business... Read More
Pardon my enthusiasm, but a large part of your small... Read More
Q: I have outgrown my home office and need to... Read More
Get maximum results with minimum effort. Sounds great doesn't it?... Read More
Have you ever heard the phrase, 'PREPONDERANCE OF PROOF'?I recently... Read More
The choice of financing is an important determinant of whether... Read More
Why should you describe your business to others in 5... Read More
If you want to start a business in 2005, and... Read More
Back when I owned an inventory-based business, one of my... Read More
Just when the entire state was kissing Wichita goodbye, economically... Read More
One thing I have noticed in my travels to different... Read More
Traditional advertising methods are still being used for almost 90%... Read More
Did you know that satisfaction is the number one emotion... Read More
Data. Most people think it is a term relegated to... Read More
Franchising is the fastest way to build small businesses, provide... Read More
Small businesses need Public Relations, possibly more than large corporations,... Read More
If you are a non-operator owner of many work trucks,... Read More
Q. I am a former pastor who left the ministry... Read More
Remember the cleaning business is all about time ratio to... Read More
There are countless ways to save your business money. Unfortunately,... Read More
Articles abound advising the business community how to properly screen... Read More
Fuel prices these days are quite high and they take... Read More
Would you rather have one good client paying you five... Read More
prefab living room additions guest bathroom remodel ...If you don't know what a Virtual Assistant (or VA)... Read More
There is significant competition in auto detailing and car washing.... Read More
Are you a small business owner who wants to expand... Read More
Having their own business is something many millions of people... Read More
Office support services can range from basic data entry to... Read More
We're birds of a feather, public relations and small business.... Read More
Everything starts with a business plan: If you don't have... Read More
As an entrepreneur you can learn a lot by following... Read More
A suggestion box is a really good idea for your... Read More
Many have not experienced a fire up close. One year... Read More
Cash is King... That is what everyone tells us and... Read More
Experts urge small business owners to "brand" their business ?... Read More
What is a Virtual Assistant?? A Virtual Assistant is that... Read More
Most smart entrepreneurs and all large corporations have Employee Relations... Read More
$37.4 million funded from venture capital today. $86.4 million funded... Read More
Traditional advertising methods are still being used for almost 90%... Read More
When pressure washing heavy equipment each piece of equipment has... Read More
Cash is King?That is what everyone tells us and it... Read More
The Workers' Compensation situation in this country is unbelievable. Why,... Read More
Marketing is one of the four corner-posts of a solid... Read More
As small business managers, we juggle limited resources in a... Read More
You have spent considerable time pulling your business plan together,... Read More
If you own a mobile service or home based franchise... Read More
If an organization lacks a mission statement, it is worthwhile... Read More
The difference between rates and wages is not always clear... Read More
Small Business Small Business |