First Collection Letter Sample & Template
This early collection letter has been designed to maximize your first follow-up success rate. Using a unique format based on debtor psychology, this letter has been developed, tested, and fine-tuned in a commercial credit department for more than ten years.
Nothing beats a phone call for that initial collection effort, but when you need a letter, use this one to greatly improve your response rates.
Get Your Debtor’s Attention with Our Simple-to-Prepare Early Collection Letter
When it comes to collecting a business debt, the sooner you can grab the attention of your delinquent customer the better. Why? Because the sooner you can get that CFO or controller or credit manager to engage, the easier it will be to collect the monies owed and the less likely you are to contend with a long, drawn-out debt collection process. This is why your first collection letter can be your most important debt collection tool. In fact, if done right, it may be the only letter you need.
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What an Effective First Collection Letter Can Accomplish
Why is it so important to get this letter right? Here are several things this early communication can do for your business when correctly handled:
- Make it easier and more desirable for your customer to cooperate.
- Encourage payment without alienating your customer.
- Give you discretion over the approach you use with various clients.
- Give your invoice priority over those of your client’s other creditors.
- Provide your customer with an opportunity to explain their reason for non-payment.
- Potentially avoid the necessity of small claims court or other, more-advanced collection options such as pre-legal or an expensive debt collection lawsuit in a higher court.
Playing your cards right at this stage of the game can help you steer clear of a potentially complicated, expensive, and stressful collections process.
Why Our Guide Could Be Your Key to Early Collections
Our simple yet practical guide for writing that early collection letter is not only based on debtor psychology that theoretically makes it more likely to be successful. But, it’s also been rigorously tested in a real-life commercial collections department. The result? Over multiple years of testing, this letter format and the early collections approach it utilizes have been shown to consistently improve customer response rates and increase early collections.
When Is This Collection Letter Needed?
There are a few reasons you may find it preferable to use a letter rather than a phone call — even though phone calls can often be more effective than letters. If any of the following apply to your company, a collection letter may be the better option for you:
- You lack experienced telephone collectors who are able to get results.
- Balances may be too small to warrant so much employee time.
- You may have numerous customers to contact and would prefer to automate the process.
- You’d like to start with a letter or e-mail and follow up with a phone call if needed.
In each of the above cases, a well-worded letter that follows our tested format can give you the results you need.
The Key Components of an Effective Early Collection Letter
To be effective, your initial collection letter will need to do the following:
- Identify the problem, without directly asking for payment.
- Ask your customer the reason for the problem (i.e. the non-payment).
- Provide a simple way for the customer to respond.
It’s very important that while letting the customer know the debt is due and payable — and in most cases accruing interest — you do not ask for payment outright. By asking the reason for non-payment, rather than asserting your right to demand payment, you give the customer enough space to consider the reasons for doing the right thing (e.g., the debt is rising as interest is added). You also appear to be more understanding. This softer initial approach avoids placing you in an adversarial position in relation to the customer, which can help reduce resistance. You may, in fact, be able to improve your relationship with this customer by using this approach.
Download Our Free Initial Collection Letter Template & Guide
To learn everything you need to know to prepare this letter, download our free template and guide. When you download this guide, you’ll receive the following:
- Information and instructions for creating your own letter to fit your company’s unique situation.
- A sample letter that illustrates how it’s done.
- Editable Microsoft Word file for use as a template to create your letter.
If you’re ready to try a new, more effective approach to early commercial debt collection communication, download our free First Collection Letter. It may just turn out to be the only collection letter you need.
Our Other Four Collection Letters Are There Just In Case
Because we know that every customer and every credit situation is different, we’ve prepared five unique collection letters to cover every stage of the debt collection process. If you should ever need them, our other four free Debt Collection Letters are always available, so please feel free to check them out anytime.
At Stevens & Ricci, our hope is that our collection letter templates and guides will help you Collect Money Sooner, at Lower Cost, and Without Losing Valued Customers.
