Most accounts receivable professionals barely have time to make all the phone calls necessary and send out every email, let alone make an individualized collection letter for every step of the collections process. However, following up every few weeks with a personalized letter requesting action from a non-paying customer truly helps to collect payment on time. Since every subsequent collection letter should change in tone and consequences of non-payment, we’ve created ready-to-use collection letter templates. Read on below to find out what every letter should say in order to collect payment as soon as possible.
THE FIRST COLLECTION LETTER
Just because this is the first collection letter, this doesn’t mean this is your first point on contact with the customer. By now you have sent the invoice, sent due date reminders and let them know when the invoice has gone past due. The first collection letter should be sent out to the non-paying customer as soon as the invoice has gone past due.
Since this is only the first letter, it is important to keep the tone friendly, informative and professional. There are many reasons why the customer has not paid on time, such as never receiving the invoice or missing something important on the invoice. By giving them a chance for explanation before getting upset and pushy, you are able to keep a great customer-vendor relationship.
This first collection letter should contain the following information:
Days past due
Note previous attempts to collect
Summary of account
Instructions- what would you like them to do next?
Due date for payment- it is important to use an actually date, not “in the next 7 business days” as this can be vauge
Your contact information
FIRST COLLECTION LETTER TEMPLATE
This is just a friendly reminder that your account is past due. According to our records your balance of $ is currently . We have emailed a detailed copy of your account statements. In the event you have not received these messages and documents, we have provided a summary of your account below.
We would much appreciate if you could let us know the status of this payment. Please contact us or send your payment of $[Insert Amount] to the address below by April 16, 2015 if you have not already done so.
If there is some error or you are unable to pay at this time, please contact me at so we can correct any errors or arrange for another payment plan. Thank you for your prompt response to this request and for your continued business.
THE SECOND COLLECTION LETTER
The second collection letter can be a tough balancing act. While your tone needs to become more assertive since the first letter seems to have gone ignored, you still need to remain friendly towards to customer. Finding the gray area between assertive and friendly is always difficult.
The time to send the second collection letter is either two weeks after the first collection letter has gone ignored, or after a promise to pay from the first letter has gone past due.
The second collection letter should include:
Mention of all previous attempts to collect, including the first collection letter
Original invoice due date
Days past due
Invoice number and amount
Instruction- what should they do next?
Offer help to work on the payment terms
Hint at the impact non-payment could have on their credit terms/ratings
Your contact information
SECOND COLLECTION LETTER TEMPLATE
At this time we have not yet received a payment in regards to nor have we gotten a response to the letter sent on . Your accounts is now days past due and you owe a total of .
As a valued customer, we would like to help you quickly remit payment to avoid any actions that could damage your credit rating or future credit limits with our company. If there is any reason you are unable to pay in full, please contact me at and I would be happy to talk about arranging a payment schedule that is mutually agreeable.
Please get in touch with me immediately if you would like to work out a payment schedule, otherwise please submit your payment of by . We can accept your credit card information over the phone, through our online payment portal, or I have enclosed a self-addressed envelope for your convenience should you choose to send a check in the mail.
Thank you in advance for your prompt response to this letter and for your continued business.
THE THIRD COLLECTION LETTER
At this point, you have now sent multiple letters and made multiple attempts to collect. For every week that an invoice goes unpaid, the likelihood of not collecting on the full amount increases. For this reason, the tone of this letter will be very different than the rest. You will be notifying the customer that if they do not pay immediately, you will be forced to refer their account to a collections agency or involve a lawyer.
Although the third collection letter can be quite frustrating, it is important to continue to remain professional. By simply stating the facts and what the impending consequences
The third collection letter should include the following information:
Mention of all previous attempts to collect
Invoice number and amount
Original invoice due date
Current days past due
Instructions on what they should do next
A warning of the impending consequences
Your contact information and final request to contact you
THIRD COLLECTION LETTER TEMPLATE
At this time we still have not heard from you in regards to invoice which was due on nor have we gotten a response to the letter sent on , the letter sent on , or our numerous attempts to call and email you. Your accounts is now days past due and you owe a total of $.
I regret to inform you that unless we receive payment in full by or work out an agreed upon payment plan by this date, we will have to turn your invoice over to a collection agency and/or our attorney.
I hope to hear from you before this action must be taken to avoid damage to your credit rating or our future business relationship. Please contact me immediately at so we can get this matter settled.
THE FINAL COLLECTION LETTER & NOTICE OF LEGAL ACTION
With this final collection letter, you have now done everything you can and are simply letting the customer know that the matter is no longer in your hands. Although it is not mandatory to let the customer know that their account has gone into collections or turned over to a lawyer, it can help to keep the relationship in good standing and make a smooth transition. This also gives you a last final attempt to collect, and when lawyers are involved, people usually start to hustle.
This letter is significantly shorter than the others because it is simply a notification letter. It will serve as proof of the multiple times the customer was contacted, the invoice in question and the amount that is due. Remember: even as the final notice, you still must remain professional.
FINAL COLLECTION LETTER & NOTICE OF LEGAL ACTION TEMPLATE
At this time we still have not heard from you in regards to invoice for $ which was due on . Nor have we gotten a response to numerous phone calls, emails, or the letters sent on , , or .
Because we have failed in our attempt to work this out with you directly, I regret to inform you that we have reported this issue to the credit bureau and turned this invoice over to a collection agency who will be in contact with you in regard to the payment of this invoice.
THE ROI OF ACCOUNTS RECEIVABLE SOFTWARE
Are you struggling with getting customers to pay on-time? Download this whitepaper analyzing the most important capabilities when researching credit & collections software and how quickly you can see a return on your investment.
An acquisition can pose a significant challenge to a month-end close schedule. After an acquisition is closed, there is usually a lot of pressure to see what the results look like. Management, investors, creditors and other stakeholders want to know how an acquisition is working. Delays in closing, even if there are good reasons, are […]
We’re all human. We strive for perfection. We try to minimize conflict. And inevitably we sometimes fall short. (And by the way, for any readers that are not human, we’ll spare you the embarrassing CAPTCHA check. Just jack up the “irony” setting on your language-recognition software and follow along as best you can.) In business, […]
WHAT WE DO
Anytime Collect is a leading CLOUD-BASED accounts receivable software. Made specifically for businesses selling on credit terms, Anytime Collect AUTOMATES invoice dispute management, cash forecasting, customer communications, invoice presentment, online bill pay and credit management. The entire collections process becomes QUICKER AND EASIER.
This website stores cookies on your computer. These cookies are used to collect information about how you interact with our website and allow us to remember you. We use this information in order to improve and customize your browsing experience and for analytics and metrics about our visitors both on this website and other media. Find out more.