How to Write a Debt Collection Letter

How to Write a Debt Collection Letter

When someone owes you money, it is important to recover it as soon as possible. Any delays may make it harder to perform debt recovery and make it more difficult to get your money back.

At the very beginning of every debt collection process is the part where the debtor is contacted. This can be done in many ways, but the best way to do this is with a debt collection letter.

A letter is always a good start, as you will be able to let your debtor know that payment is due in a clear and professional manner. Whilst it may be tempting to make phone calls or even visit the debtor, it is easier and safer to send a letter instead.

Contacting the debtor this way ensures that there is a record of the communication, which is useful if the matter needs to be escalated. If the letter is ignored, then you will have written evidence that you have attempted to prompt the debtor to pay in the proper manner. This is useful if debt collection agencies become involved, or if you take legal action against the debtor.

For a business, sending a debt collection letter can be very useful, as you will be able to include all documents relating to the debt along with it. This could be documents such as details on payment plans, invoices, payment terms or even receipts. Credit controllers in your business will be able to do this themselves, and at little cost to the company.

Sending a letter can also be done regardless of whether your debtor is a business registered in England or anywhere else in the world.

Writing a debt collection letter is important and each one must be worded in the proper manner. We asked our debt recovery experts what the best way to write a letter like this was.

Debt Collection Letter Template – Wording and Important Points

To make sure that the letter is as effective as it can be, you need to ensure that it is worded and structured in the proper manner. As well as this, it must be sent out at the appropriate time with enough time for the debtor to respond. Many people make the mistake of sending either too many or too few letters, and this can lead to problems down the line.

Firstly, there are a few key points you need to consider or include within the letter:

Contact Details

Making sure that you are speaking to the right person is critical to success. You should only send a letter to the person that owes you money, as opposed to anyone else. Ensuring that you have the correct address to send the letter to is also important, as otherwise, it will be a waste of time and money.

Make the Letter Clear and Professional

You should always write a debt collection letter in a professional and clear manner. As frustrating as it is to have not been paid for goods or services, you must never be argumentative or hostile in any communication. This may give the debtor grounds to withhold payment, as well as potentially landing you in trouble.

In your text, you should include the full amount that is overdue, as well as the original due date. If you have payment terms, there may be a section in them that covers what happens if a payment is missed. If this is the case, you should include information on this as well.

You should also include instructions on how to make a payment, including website links, addresses, bank payment information or even the phone number of your accounts team.

Important Documents

If you have any accompanying documents that would be useful to include within the letter, you should gather them and send them. Examples of this could include invoices, receipts or payment terms.