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Small
Business Debt Collection Letter Writing
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by: Joel
Walsh
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Writing a
debt collection letter is
one of the most important skills of any small business owner. Do you
have what it takes to get the money you’ve earned?
I have a confession: I'm a business writer who's let clients get away
with not paying me--a huge sign of failure of my writing abilities. You
see, I never learned one of the most important writing skills for any
self-employed person or small business owner: how to write a debt
collection letter.
Debt collection letters--an overview
"Debt collection letter" in the singular may be an oxymoron, since
unfortunately, one is rarely enough. You should have a series of
letters to send to deadbeat clients, each one becoming a little more
insistent. Here are some ideas for a five-letter series.
1. Don’t make your first letter look like a collection letter
at all. Make it a friendly note. You’re more likely to get
money from someone who thinks of you as a partner than a dun.
2. If that first letter doesn’t get a response--and usually
it won’t--send another the next week that’s more
urgent and directly asks for the money. Express your concern that you
have not been able to contact the client. Ask if he or she is all
right, and if he or she is having any trouble paying.
3. The next week, if you still have not gotten a response, send a
letter referring to the payment terms in the agreement you and the
client originally made (you did have some kind of written agreement,
even if it was just on the back of your invoice, right?). Mention the
effect this nonpayment is having on your cash flow, and that your
business’s cash flow is just as important as theirs.
4. Still no response by the next week? State plainly that you are
asking for the money for the final time before referring it to
collections. Include a copy of the entire agreement between you and the
client.
5. If you still have not heard back from the client, and are confident
that you do not simply have a problem with their contact information,
call a collection agency—in fact, you may have wanted to have
gotten a collection agency from step one (more on that below).
More Tips for Successful Debt Collections
Tip: Don’t wait to start asking for your money.
If it’s been a week since the payment deadline passed,
it’s been a week too long. Send out that first
“reminder” letter today. Don’t hesitate
to send these letters as little as a week apart from each other. The
longer your bill goes unpaid, the less likely it is you will ever see
that money again.
Tip: If you’ve been sending email, try sending paper.
For whatever reason, there are people who take a paper letter more
seriously. There’s also the real chance that your emails
really are not getting through reliably, or are ending up at the bottom
of an overflowing Inbox.
If you do send email, make sure it’s digitally signed. A
digital signature proves that you sent the email to the specific
recipient. In fact, you might want to make sure all your emails to
clients and prospects are digitally signed, to have solid documentation
of everything you said, and everything they owe.
Unlike with regular emails, the date, time, “to”
and “from” fields can’t be forged, so the
email has legal standing, even more than certified mail. While
web-based email programs cannot send digitally signed email, there are
third-party services that will let you send hundreds of digitally
signed emails from a desktop email program for only a few dollars a
month.
Tip: Follow up your debt collection letter with a telephone call.
As any collection agency will tell you, telephone calls are useful if
your debtor has ignored the collection letters. But with caller ID,
Caller Blocking and voice mail - if people don't want to take your
calls it is hard to reach them. This technique could be especially
effective in the case of someone with whom you know will answer their
own phone.
Of course, your writing skills won’t go to waste: you need to
make sure you have scripted what you want to say. You should take the
same attitude and touch on the same points as your letter. Whatever you
do, don’t let yourself get sidetracked, and don’t
be embarrassed. They’re the ones who are putting you out.
Don’t know your deadbeat’s telephone number? Try
looking up the “Whois” record of the
business’s website, which usually has the owner’s
telephone number.
Does all this sound like too much work?
If you’d rather be writing proposals than collection letters,
there are small business collection agencies that will take on debts
for as little as $20 each. After all, your client had enough sense to
go to you rather than doing your specialty themselves.
Shouldn’t you have as much sense when it comes to your debt
collection letters?
About the author:
Joel Walsh is a regular contributor collection-agency-information.com
Read all his articles on small business debt collection: http://collection-agency-information.com[Web
publication requirement: use "small business debt collection" as anchor
text/visible link text for http://collection-agency-information.com]
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