A publication for Credit and Finance Professionals
Thoughts on Collection Letters
The process of collecting delinquent dollars demands the constant and effective use of written correspondence in order to facilitate the success of the endeavor. As a collection tool the letter can serve as a powerful recovery coefficient (if used correctly). Drafted and sent to a debtor in a proper and expedient manner can be the difference in having your letter act as a positive utility opposed to it being futile.
The Constructive Aspects of the debtor letter are numerous but also common sense. The debtor letter should never stand alone but should always be a reinforcement tool, vis-à-vis the effective follow up to a telephone contact. This is important because a letter by itself is easy to ignore and will seldom (if ever) provide impetus for payment on the debt. What it should do is simple: It should be a reminder of the phone conversation and that the recipient needs to respond by a certain date, it should concisely state the specifics of the debt being pursued, it should be sent via fax or e-mail immediately after the telephone effort as well as sent as a hard copy for irrefutable evidence of contact details.
Unconstructive Implementation obviously makes the letter fruitless. The letter becomes ineffectual when it is sent to a non-descript entity (i.e. a company’s A/P Dept.) rather than to a specific recipient who is in the proper position to deal with the debt in question. When sent to an indistinct department, such as Accounts Payable, it will likely result in your letter being assigned less priority. If you are going to be an effective and time-conscious collector, when you write a letter make sure it is to someone specific. The basic novelty of the letter is often overlooked when numerous voice messages are left without the leverage of a letter to diversify and augment the contact effort. The letter provides another means of contacting an individual and it also provides hard evidence for your efforts.
Suggestions are to write letters more often. Frequency is an effective way to keep your claim in the front of a debtor’s A/P priorities (suggested interval of 2 weeks per letter). Make sure you employ modern technology to accelerate contact; E-mail and fax are great precursors to the hard copy you are sending them for their archives (the ‘read receipt’ and ‘urgency’ options are great facilitative functions). Letters must always be used, especially if there is a dispute, settlement and/or terms that may be amended. When brief and to the point, the letter successfully takes the debtor’s emotions out of your way so you can precisely outline the claim. Intricacies of a conversation can be misconstrued or denied by a debtor; a reliable letter circumvents any possible denunciation of the facts.
*When dealing with difficult or quarrelsome individuals, the letter is the superlative means of resetting the table after an abrasive conversation.
*It is always most productive if you can have a debtor write you. They will establish in an exacting way what their position is with regards to the debt in question. Especially if the individual has a penchant for being elusive or truculent, their composition counter-intuitively limits their escapist capabilities. It shifts the time burden onto them (saves time for you).
**Never write a dunning letter if the contractual obligations on the part of your company are not completely understood. In this case the claim should be given proper care and the letter should be drafted with the assistance of a qualified third party (and possibly an attorney).
