What Should You Do When All Your Collection Attempts Fail?
You’ve tried everything, but nothing has worked. Your delinquent business customer has simply ignored all your attempts to collect the balance due on their account. What should you do?
At this point, you’re probably considering two options:
- Filing a lawsuit to recover the balance due
- Letting the matter drop, and taking the loss
At times, the second option may be tempting. But, if you’d rather avoid court yet aren’t ready to give up on collecting the monies owed you, there IS a third option: sending your customer an effectively written Final Demand Letter. While this letter could actually be required by the court if you should later decide to pursue the matter legally, the good news is that you don’t have to go to court to use it to your advantage.
The courts are simply one way of collecting a debt. But, it’s not necessarily the only way. A well-worded Final Demand Letter is an alternative that can be very effective in convincing your delinquent customer to pay up. In fact, when skillfully handled, this letter can be so effective that it may actually help you avoid filing a lawsuit, with the additional benefit of not making you have to forfeit the monies owed you to do it.
What Exactly Is a Final Demand Letter?
Simply put, a Final Demand Letter is an effectively worded demand for payment. It’s your way of telling your customer, in no uncertain terms, that a specific sum of money is rightfully owing and that neither you nor their debt will be going away anytime soon.
This letter sets the stage for any further action that may be needed later — whether legal or otherwise. But, it also lets your delinquent customer know that expense and inconvenience are in their immediate future if they choose to ignore your demand for payment. By informing your client of exactly what you intend to do if payment isn’t received by a specific date — i.e. file a lawsuit or place the account for collection — you give that client a sobering dose of reality. The client must now make a decision: Meet their company’s obligation or face the consequences.
When Is a Final Demand Letter Needed?
The sooner you take advantage of the leverage a letter demanding payment can provide, the more likely it is to get results. Therefore, as soon as you realize that negotiating through early collection attempts isn’t working or that your requests for payment are falling on deaf ears, that’s the time to act. The reason is simple: Every month that passes without payment decreases the likelihood that the past-due account will be paid. Quick action in sending this letter can mean the difference between success and failure in collecting the balance due.
So, when you find yourself in a heated discussion with an uncooperative client over a past-due account, instead of becoming angry and threatening a lawsuit you’ll likely never file, turn to our free demand letter template for help making a lasting impression. Even if your client isn’t actively disputing your requests for payment, but the invoices you send seem to be disappearing down a black hole, our tutorial guide can help you create a letter that will make your next invoice command your customer’s immediate attention.
The Benefits of Using a Final Demand Letter
The following are some of the valuable things a well-written Final Demand Letter can help you accomplish on behalf of your company:
- Negotiate from a position of strength.
- Present concrete evidence to support your case.
- Make a persuasive, businesslike, unemotional argument.
- Leverage multiple motivating factors to get results.
- Make the consequences of non-compliance painfully clear.
- Force your customer to make a serious business decision.
- Greatly increase your likelihood of payment.
Download our Free Demand Letter Template & Guide
When you download our guide, you’ll receive the following three items:
- Explanations and instructions for each element of the Final Demand Letter
- A demand letter for payment sample that illustrates how to use each element to your advantage
- A fully editable MS-Word document you can use as a template for building your own letter
The demand letter for payment sample that’s included in our tutorial will guide you step-by-step in creating a Final Demand Letter that contains all the practical and motivational elements your customer needs to see that prompt payment is the only reasonable business decision he or she can make. For maximum effectiveness, our template will let you edit the copy and tailor the details to your specific client and account.
If you’re ready to give it one last try before going to court — or giving up — download our free Final Demand Letter tutorial and take control of your business debt collections process today.
Be Sure to Check Out Our Other Four Collection Letter Guides
Keep in mind that our Final Demand Letter tutorial is only one of the five free collection letter guides we offer to help you take charge of your commercial accounts receivable. The other four guides are always available whenever you need them. So, be sure to look them over to see exactly which tools you have at your disposal for other unique debt collection situations.
At Stevens and Ricci, our goal has always been to help businesses Collect Money Sooner, at Lower Cost, and Without Losing Valued Customers. And that’s exactly what these guides can help you do