If you’re like most business owners, then you probably dread the thought of debt collection letters. It’s not an easy process, but it’s a necessary one if you want to get paid for the services or products you’ve provided. 

Over the last couple of years, cash flow has been a growing problem for business owners. Around 85 percent in one survey said it was a chief concern. In this article, we’ll discuss what to say in your debt collection letters so that you can get the best results possible. We’ll also provide some tips on how to recover debt effectively. 

Address the Letter to the Right Party

It is important to be clear about who the debt is owed to and how much is owed. The more specific this information is, the easier it will be for the person to understand their debt and take action to pay it off.

In some cases, debt collection laws may require that you address the letter in a certain way and provide other identifiers to remove doubts or confusion. Clarity is key. Otherwise, you could inadvertently give the addressee a loophole that allows them to legally delay payment.

Include Your Name and Address at the Top

It is also important to include your contact information in debt collection letters so that they can reach out to you if they have any questions or need assistance with paying their debt. We recommend placing this at the top of the letter for easier reference. Some debt collection laws require that debt collectors include this information in their initial correspondence with consumers anyway.

Clarify the Amount Owed

When you’re owed money, it’s important to be clear about the amount. This way, you can avoid any confusion or misunderstanding down the road. The last thing you want is for the person who owes you money to think they only owe a portion of what they actually do.

Be sure to include the following in your communication:

• The total amount that’s owed
• The date that the payment is/was due
• Any late fees or interest that will accrue if payment isn’t received by the due date

By being clear and concise about what’s owed, you can help avoid any potential problems before they arise.

Use Positive Language

This means avoiding any threats or aggression. Instead, focus on the positive aspects of what will happen if the debt is paid off. For example, you can mention how happy you will be to receive the payment and how thankful the person will be for taking care of their obligations.

If you do have to get aggressive, keep the language professional. One way to be assertive without sounding unprofessional is to keep the focus on facts. Remind the individual or company what they are paying for and the obligations they agreed to when they decided to enter into the transaction.

Outline What Will Happen If Payment Is Not Received

This is where you talk about the next steps. If you charge late fees, then a healthy reminder about the accrual will help. To maintain the tone of friendly professionalism, you also might consider offering flexible payment options in case the customer or client doesn’t have the funds available to pay everything at once.

This shows that you understand their financial situation and would like to continue working with them. Offering payment plans can help build goodwill between you and the debtor, which can make it more likely that they’ll be willing to work with you in the future.

Just make sure that offering a payment plan is something you can afford as a company. You don’t want to put yourself in a worse financial situation.

Additional Tips for Writing Debt Collection Letters

Before wrapping up, there are a few more things to note. Make sure to go down the list and check off each before concluding if you decide to handle this on your own.

• Go back through the points above one more time
• Stay within federal guidelines of the Fair Debt Collection Practices Act by making sure the language adheres to it
• Keep a copy of the debt collection letters for your records to show first, second, and subsequent attempts to collect what you’re rightfully owed
• Send the debt collection letters by certified mail so that you have proof of when it was sent and received

Many business owners find this aspect of their business to be cumbersome. If you’re in that camp, you’re not alone. You have other obligations, and being a debt collector probably isn’t the best use of your time.If you have any questions about debt recovery or need assistance, Southwest Recovery Services is here to help. With proven experience and a comprehensive approach to debt collection, we’ve been getting businesses paid quickly for many years. Contact us today to get started.