business corespondence

Collection Letter

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usinesses would not run if everybody had money for everything that she/he desired to have. It is only because of money being available with someone that there are people who fulfill their dreams. A Creditor may be a person or an institution or a bank that offers the facility of giving money as loan to be paid back with interest. A Debtor on the contrary is a person or an organization that takes the money for its business or any other requirement.

A creditor usually writes a Collection Letter to her/his debtor. This letter is written when a payment is either due or overdue. It could also be just a simple reminder Collection Letter for the debtor.

The intent of a collection letter is to prod you into paying the amount you owe a creditor. Typically, customers who owe money receive one letter after another. The tone of the letters gets more direct with each letter, according to the Business Dictionary. The letters are trying to strike the right balance between achieving the goal of getting you to pay what you owe and keeping you as a future customer.

There maybe several good reason why a customer fails to pay on time. there is of course always the customer only read to invent excuse and who needs to be watched. each case must be treated well, the style and tone of any letters sent depending on such factors as age of debts, whether the late payment is habitual, and how important the customer is. your letter must be polite for example by inserting the word "with regret".

The Goal : Creditors send collection letters with the presumption that the customer will pay. Creditors often include a self-addressed, stamped envelope to make it easier for customers to send in the payment.

Effective Letters : To make it easier for you, collection letters should get to the point quickly and should be easy to read, according to the Entrepreneur website. The first sentence you read should explain the letter's purpose. The next sentence should expand on the reason for the letter. Then, there may be a suggestion about how you can solve the problem. The letter should end by thanking you for your attention to the matter.

Errors : If you receive a collection letter in error, you should respond back in writing about what the error was. You may have received the letter by mistake, or you may be a victim of identity theft. The creditor also may have incorrectly tallied the amount that you owe.

Sometimes a customer will voluntarily explain his difficulties and ask to postpone payment. the following is recommended plan for such a letter:

·         refer to the account that cannot be paid immediately

·         regret inability to pay, giving reasons

·         suggest extension of period for payment

·         hope suggestion will be accepted

Letter requesting payment of overdue accounts are termed “collection letters”. They have a two fold aim :

·         to persuade the customers to settle his account

·         to retain his custom and good will

Therefore the need to write with tact and restraint since it is easy to give offence and it may be that the writer himself is in fault, as where a payment received has not been recorded or the services given is not satisfactory. a customer whose account is slightly overdue would understandably be offended to received a personal letter reminding him of this. that is why the first two reminders usually take the form of end -of- the month statement of account.

There may be circumstances where an individual letter rather than a form letter is more appropriate. It should then be addressed to a senior official and marked “Confidential”. The need for a cautious approach is always necessary since the customer may not  be in fault.

If a replay to the first application is not received, a second letter as a reminder can be sent but still must be polite and should be sent after about ten days. Nothing must be said to cause annoyance or ill will. You want your customer’s cooperation and won’t get  it by annoying him.

Typed and addresses to a senior official under “Confidential” cover, the letter should be planned as follows :

·         Refer to previous application

·         Assume that something unusual accounts for the delay in payment

·         Suggest that an explanation would be welcome

·         Ask for a payment to be sent

If payment is still not made and if no explanation has been received, a third letter becomes necessary. The writer will show that he intends to take steps becomes necessary. The writer will show he intends to take steps to enforce payment. The steps he will take depend upon individual circumstance. The following is suitable plan for his letter :

·         Review earlier efforts to collect payment

·         Give a final opportunity to pay by fixing a reasonable deadline

·         State that you wish to be fair and reasonable.

The Rules Of Collection Letter :

• A Collection Letter should be written well before the payment due date so that it gives enough time to the debtor to arrange for the funds
• It should be short and brief
• The letter should only talk about the current payment due or about any pending payments only
• Even though the creditor writes this letter, the tone of the letter should not be rude or insulting or humiliating or threatening. The creditor must not forget that the debtor has taken money under some compulsions
• The language of the Collection Letter should be simple and easily understandable
• It should clearly give the deadline by when the payment needs to be made
• The letter must also have the date when the letter has been written to be able to track it later
• Since it is a Collection Letter and it has a loan reference attached to it, the reference number should also be mentioned in the letter to track the payment history of that particular loan
• A Collection Letter is purely an official letter so it should always be typed
• There should not be any grammatical or punctuation errors
• Any repercussions for non payment should also be mentioned in the letter to ensure transparency of communication

First Application for Payment (to a regular payer) :

 

DANAMON BANK

Jalan SA Tirtayasa No. 5

Serang – Banten

4^th June 2013

Mrs. Sandra Agustina

Jalan Teratai No. 10

Serang

Dear Sir,

As you are usually very prompt in settling your accounts, we wonder whether there is any special reason why we have not received payment of the above account, it has already been a month overdue.

We think you may not have received the statement of account we sent you on 30^th May 2013 showing the balance of Rp. 9.000.000 as then owing. We enclose a copy and hope it may have your early attention.

Yours faithfully,

M. Edwin

Finance Consultant

Second Application for Payment :

 

DANAMON BANK

Jalan SA Tirtayasa No. 5

Serang – Banten

11^th June 2013

Mrs. Sandra Agustina

Jalan Teratai No. 10

Serang

Dear Sir,

We do not appear to have received any reply to our two previous request of 4^th June 2013 for payment of the sum of Rp. 9.000.000 that still owes on your account.

It is with the utmost regret that we have now reached the stage when we must press for immediate payment. We have no wish to be unreasonable, but failing payment by 18^th June 2013,I am afraid you will leave us no choice but to place the matter in other hands, but we sincerely hope this will not become necessary.

Yours faithfully,

M. Edwin

Finance Consultant

Final Collection Letter :

 

                                            DANAMON BANK

Jalan SA Tirtayasa No. 5

Serang – Banten

1^st July 2013

Mrs. Sandra Agustina

Jalan Teratai No. 10

Serang

Dear Sir,

We are surprised and very much regret that we have received no replay to the further letter we sent you on 11^th June 2013 regarding the long overdue payment of Rp. 9.000.000 on your account.

Our relation in the past has always been good. Even so, we can not allow the amount to remain unpaid indefinitely, and as we have received no replies to any of our several request for payment, we are now reluctantly compelled to have recourse to see to law, unless the amount due is paid or you give an explanation received by the end of this month.

Yours faithfully,

M. Edwin

Finance Consultant

Example Collection letter :

 

PT. NUSANTARA JAYA

Jalan Anggrek No. 88

JAKARTA

30 May 2013

John Wilson

Jalan Mega Block No. 12

JAKARTA

Dear Sir,

ACCOUNT NUMBER FT384738

According to our records the amount shown on our statement dated 25 May 2013 has not been paid. The amount owing is $4,522.50.

If payment has already been made by the time you receive this letter please accept my apologies for troubling you. However, if payment has been overlooked I hope you will settle this account as soon as possible.

Yours faithfully,

Goerge S.

Account Manager

Example Collection letter :

 

PT. KRAKATAU STEEL

jalan garuda  No. 9

                                                                                           JAKARTA              

1^st June 2013

Tania Harahap

Jalan Nusa Indah No. 10

Jakarta

Dear Sir,

Our records show that your current balance with us is $0.00, of which $0.00 is now past due. We hope this is merely an oversight on your part. If you haven't already sent a payment for the past due amount to us, please do so today.

If a problem has arisen that we should be aware of, please call us immediately to discuss it. We value your business, and we'd like for you to resolve this issue as quickly as possible.

Yours sincerely,

Frank Smith

Account Manager