Hello sarahre~
Hopefully, you?ve already been sending monthly statements, in addition
to collection letters. Experts say that a handwritten note on such a
statement, asking for a past due amount, is far more effective than a
?past due? stamp or a computer-generated message. Also, make sure you
keep good records, including a log of when you?ve called and how the
customer has responded.
When writing letters or notes, bear these things in mind:
* Keep the tone professional. Don?t be angry. Keep your customer?s goodwill intact.
* Address collection letters directly to the person who owes the debt,
or who is in charge of paying accounts.
* Make each letter a little stronger.
* Ask for payment without apologizing.
* Mention the customer?s credit rating, and let him know that if he
doesn?t pay, you?ll be forced to report the bad debt. Do bear in mind
that you should never threaten anything (whether it?s a lawsuit,
hiring a collection agency, etc.) unless you intend to go through with
it.
* All collection letters and statements should include the date, the
name and address of the debtor, a description of the services or
merchandise he?s being billed for, and the total amount due.
* It?s also wise to stamp the outer envelope with ?Address Correction
Requested; return postage guaranteed? this way, if the customer moves,
he?ll still get the letter, and you will be notified of his new
address.
Here are some good examples of debt collection letters, based upon
those in the book ?A Lifetime Encyclopedia of Letters? (listed at
Amazon, here: http://www.amazon.com/exec/obidos/tg/detail/-/0135295467/qid=1091718891/sr=1-1/ref=sr_1_1/002-6554234-8134459?v=glance&s=books
)
#1:
Mr. XYZ:
In reviewing our records, I find that your account is more than XXX
days past due in the amount of $XXX for a statement dated XX/XX/2004.
Our terms clearly state that all accounts are due and payable upon
receipt of our statement.
Please forward payment immediately.
Thank you,
XXX
#2:
Sending another notice about your unpaid account upsets us greatly
Your credit was accepted because you had proved you were a trustworthy
customer.
Your trust with us can still be kept by paying the full amount of
$XXX. Pay today and avoid jeopardizing your credit reputation.
Thank you,
XXX
#3:
We are in business to serve our customers and cannot afford to spend
too much time trying to collect the $XXX you owe us. One week from the
above date, we will turn your account over to our lawyers, and report
this debt to the credit bureau.
We hope you prefer to make your payment to us before this time.
This is the last request we will make without taking legal action.
Sincerely,
XXX
Phone calls may work if you?re firm, but you might also try making a
personal visit to the place of his business. Discuss the reasons he
hasn?t paid. (If he orders you off the property, you must leave,
however.)
If none of the above works within a reasonable amount of time, your
next step is to send a certified letter, noting that past attempts to
collect the debt have been unsuccessful, and demanding prompt payment
of the entire amount.
If the letter is rejected by the customer (they refuse to sign for it,
and the post office returns it to you), or the customer ignores it by
not paying the debt, you *could* hire a collection agency--although if
this is the only debt you need to collect on, it could be cost
prohibitive. When exploring this option, make sure you ask for
references, and call them. Investigate what procedures the company
uses to collect debt; are they fair and legal? Find out if the company
holds membership in state or national trade association (like ACA).
Probably a more viable next step is to take legal action. You?ll have
to check your state laws about small claims court limitations, but
hopefully the amount due is under your state limit. File small claims
paperwork, and take the customer to court, being sure to bring your
original invoice, copies of statements and letters, and your phone
call log. If you prefer, you can have a lawyer handle the
case--although again, it may be cost prohibitive.
One final thought: You?ll need all that documentation (invoices,
statements, letters, call logs, etc.) if you end up needing to write
off the amount as a bad debt on your tax return.
To read up more about collecting debt, check out the following articles:
* ?How To Collect Payments,? Entrepreneur (found for a limited time in
this Google cache): ://www.google.com/search?q=cache:RYtUYFycqC8J:www.entrepreneur.com/article/print/0,2361,279117,00.html+%22how+to+collect%22+debt&hl=en&ie=UTF-8
* ?How To Collect Your Money,? More Business,
http://www.morebusiness.com/running_your_business/financing/d983746676.brc
* ?Make Your Clients Pay Up,? CNN Money:
http://money.cnn.com/1998/07/21/smbusiness/q_collectors/
?How to Collect Debts other people owe you,? Nav60:
http://www.nav60.com/home_business_ideas/hbi2/hbi13.htm
Regards,
Kriswrite
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