Small Business Debt Collection Letter Writing
by Joel Walsh
Published on this site: August 17th, 2005 - See
more articles from this month
Writing a debt collection letter is one of the most important
skills of any small business owner. Do you have what it takes
to get the money you've earned?
I have a confession: I'm a business writer who's let clients
get away with not paying me - a huge sign of failure of my
writing abilities. You see, I never learned one of the most
important writing skills for any self-employed person or small
business owner: how to write a debt collection letter.
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you and the client originally made (you did have some kind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
Tip: 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.
Tip: 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.
Tip: 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?
Joel Walsh is a regular contributor collection-agency-information.com
Read all his articles on small business debt collection:
http://collection-agency-information.com
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