When it comes to managing accounts receivable, communication with your customers is of critical importance and a collection letter is a major part of this communication strategy. The first collection letter should be sent to your customer as soon as the invoice in question has gone past due. As time goes on and invoices continue to go unpaid, your collection letters will change – you don’t want to send the same message to a customer who is 10 days past due as you would to someone who is 90 days past due – so it’s important to set the tone and timing of your collection letter carefully. In this blog series we’ll walk through the various stages of the collection process and provide a sample collection letter for each step.
First Collection Letter- Past Due Notification
Remember- this is not your first attempt to contact the customer about the invoice in question. Earlier attempts would have been via phone and email, reminding the customer about an upcoming due date and notifying them the day the invoice became past due. This collection letter should be sent as soon as the payment goes past due. This first collection letter should include important points, such as:
- Days past due
- Amount 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
Dig Deeper: How to Develop Killer A/R Collection Letters, Call Scripts, and Email Templates
First Collection Letter Sample:
Dear Mr. Smith,
This is just a friendly reminder that your account is past due. According to our records your balance of $573.25 is currently X days past due. 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.
- Invoice number: 12345
- Invoice Date: 08/15/16
- Amount: $573.25
- Due Date: 10/15/16
- Days past due: 03
We would much appreciate if you could let us know the status of this payment. Please contact us or send your payment of $573.25 to the address below by April 16, 2015 if you have not already done so.
ATTN: Accounting Dept.
111 Main Street
If there is some error or you are unable to pay at this time, please contact me at 440-222-2324 x123 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.
As you can see, this letter is written with the intent to get paid, but not at the expense of the customer relationship. Invoices go past due for many reasons, so you don’t want to jump to conclusions and start off with a harsh letter that may damage the relationship.
If the invoice continues to go unpaid, a collector should try again to call the customer and a second collection letter should be sent. The second letter will increase the pressure but must remain professional, a tough balancing act.
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