Writing a Debt Collection Letter

The first step that most businesses take in attempting to collect an unpaid debt is to send a letter to the individual or business who owes the money, or a series of debt collection letters. However, there are certain factors that will make for a more effective, and ultimately more successful debt collection letter, including quick, frequent contact, formal requests for payment of the debt, and warning of repercussions if payment is not received.

Make Quick, Frequent Contact with the Debtor

All of your invoices or statements of account should contain a certain due date by which payment is expected. If payment is not received by that date, then you should immediately send a follow-up statement or letter indicating that payment has not been received. By instigating quick, frequent contact with the debtor, you will have a better chance of collecting the debt. You may also want to try some different tactics for contacting the debtor regarding the lack of payment. You can call the debtor to discuss payments, send an e-mail to follow up with the debtor, or stick to the traditional paper invoice or payment reminder, whichever you believe is more effective.

Make a Formal Request for Payment

While your first contact with a debtor regarding an unpaid debt might take a friendly tone, assuming that the invoice has just been overlooked, later contact with the debtor should take a more formal approach to payment. At this stage of the collection process, you should focus on drafting a formal letter that refers to the specifics of the situation, i.e. the request for your product or services, the terms of any contract or agreement with the debtor, and the outstanding amount of debt owed. There are, however, federal laws, such as the Fair Debt Collection Practices Act, that prohibit any creditor (which may or may not include your business) from harassing a debtor regarding a debt, or using abusive language. Therefore, although your formal demand for payment should be in writing and take a stern tone, you should avoid any threats or abusive words that might be in violation of the law.

Warn the Debtor of Repercussions if Payment is Not Received

As a business owner, you should be well-aware of your legal options to pursue an unpaid debt, should your debt collection letters fail to bring about payment. Therefore, you are free to set forth those potential consequences for the debtor if the debt remains unpaid. You should be sure to tell the debtor that you intend to refer the debt to a collection agency if payment does not occur by a certain date, and/or that you intend to retain an attorney to take further legal action against the debtor.

Consult an Attorney for Assistance in Collecting an Unpaid Debt

If you are having difficult collecting an unpaid debt, you can always turn to an attorney for assistance. An experienced debt collections attorney will be able to provide you with an explanation of all available options for collecting a debt, and help you choose the most effective strategy for your situation.