Bill Collection

Note: Since these letters are so short, two of them (an urgent notice and an ultimatum) must be done to count for one Business Letter in the Packet.

Laws and Stuff:  In collection messages, there are certain statutes that must be followed, according to The Fair Debt Collection Practices Act of 1978.  Do not do any of the following things in your letters:

Ways to go about it:

Steps:

#1  Notification Letter: (not an option for the BLP)

When to Send: a few days after the due date

What it is: usually a computerized statement which clearly tells the reader the amount due, date due, and penalties for late payment.  This letter indicates that the creditor believes everything will go according to plan.

Tone: Not too serious.  The writer usually believes that the customer has every intention of paying for the bill.

Example:

   Our records indicate that your September payment is more than a week overdue.  If you

   have already mailed your check for $263.78, we thank you.  If not, please send it in

   quickly.

#2  Inquiry:

When to Send: After the point where it seems that the non-payment is more than an oversight.

What it is: A note that assumes that something has gone wrong and avoids the suggestion of customer dissatisfaction.  Instead, it emphasizes the reader's responsibility to communicate with the creditor.

Tone: Personalized, non-accusatory, helpful and concerned.

Example:

   According to our records, we have not received your September payment of $263.78.

   Because this payment is four weeks overdue, we are quite concerned.  You have an     

   excellent credit history with our company, so we must conclude that there is a problem.

   Please contact us at (800) 555-3434 to discuss this payment, or send us your check

   for $263.78 right away.  We   want to help you correct this situation as quickly as

   possible.

End With: Writer's name and phone number to help motivate response.

 

#3 Urgent Notice:

When to Send: after the inquiry has not accomplished the desired response.

What it is: a note that conveys urgency of the situation.  It conveys the desire to collect the payment immediately and shows that the creditor is willing to take additional steps, but avoids over threats.  There is still an opportunity to settle the debt without losing face.

Tone: serious, but willing to "make things right", disappointment, surprise, etc.

Start With: a signature at the top from a high ranking person in the company or some other attention getting device.

In the Middle: remind the audience of the order.  You may want to talk in a personal tone to get the reader to respond.

At the end: specify the action that the reader must take.  Give an alternate plan if needed.

Example:

 

I was very surprised this morning when your file reached my desk with a big tag marked OVERDUE.  Usually, I receive customer files only when a serious problem has cropped up. 

Opening your file, I found the following facts: your order for seven cases of "Grandma's Special Brew" was shipped six months ago.  However, we still haven't received your payment of $456.78.  You're in business, too.  You must realize that this debt needs to be paid immediately.  If you had a customer this far behind in payment, you'd also be as concerned as we are.

Please see that a check for $456.78 is mailed to us at once.  If you need to work out an alternative plan, call me now at (410) 203-7658.

Sincerely,

C. McMullin

Vice President

 

#4  Ultimatum:

When to Send: When all else has failed and you think there is no other way to get the reader's attention.  However, your company must be prepared to follow through, should action not be taken and also you should be completely backed up by company policy, not operating on a vigilante status.

What it is: a consequence heavy letter that tells the reader exactly what to expect should the debt not be paid.  There is no more interest in why the person is not paying, only interest in collecting the bill. 

Tone: no longer do you need to write in a concerned, personal tone.  Now you can take a harsher tone, but you still must avoid harassment.  You are in the position of "justified authority" now.

Start With: specifics of the order: when it was placed, mailing date, payment due date, and current situation.

In the Middle: specifics of the collection process: when reminders were sent out, any action discussed in these reminders, stress the point that the customer did nothing with these notes.

At the End: consequences already taken and those that will be enacted should the payment not come.  End with the good consequences that will happen if the customer will pay the bill.

Example:

On September 18, 2000, you placed a catalog order for seven cases of "Grandma's Special Brew," and you applied for a credit account with us.  We approved your application, and on September 21 we mailed your order with an enclosed invoice for $456.78.  According to our credit application, which you signed, payment is due within one calendar month after an order is placed.  As of December 21, your payment is significantly overdue.

Grandma's Brews INC. sent you reminders on October 20 and again on November 20.  In  both these letters, we asked you to contact us to discuss your payment.  We also asked you to make a partial payment as a show of your good faith.  You did neither.

Grandma's Brews INC. has already canceled your credit privileges and will turn your account over to a collection agency if we do not receive your payment for $456.78 by January 20.  To reinstate your account and to avoid the problems associated with a bad credit rating, mail your check immediately.

 

C. McMullin

Vice President

 

Go back to Assignment #5