Factors to be considered in writing Collection Letter

Collection letters are written in a series. Each successive letter becomes stronger in tone. However, letters should be written in such a way so as to collect the dues promptly by maintaining relationships with the customers. a through consideration of the following factors may help the seller to achieve the goal of wringing collection letters.

  • Expressing regret: In collection letter, the seller should regret that the account of the customer is still unsettled.
  • Mentioning the dues: The amount of dues, due date of payment, items of sales etc. should be clearly included in the collection letter.
  • Persuading the customer: In writing an effective collection letter, an attempt is to be taken to persuade the customer to pay the bill promptly.
  • Honor to the Customer: The language of his letter should be courteous, polite and gentle. it should be written in a motivating tone. no such word that can hurt the customer should be used/
  • Considering the nature of customer: In writing collection or dunning letter, focus should be given on the particulars of customers like their previous dealings, position in credit rating, goodwill, business honestly, size of business, present circumstance of the customers etc.
  • Mentioning the reference: If collection letters are written in a series, every subsequent letter should mention the reference of the previous letter.
  • Giving importance to the customer: In order to realize the dues, the seller needs to put importance and value upon the customers. For doing so, the seller can use some motivating words or phrases.
  • Indicating legal action: If the customers do not pay the dues after sending reminder and appeal letters, the final letter of the series should be written by indicating that necessary legal action should be taken against them.
  • Sending Through Post: The seller should send collection letters especially, the last letter of the series through registered with acknowledgments. it helps to avoid unnecessary delay or missing of the letter or denial from the part of the customer.

COLLECTION LETTER or Dunning Letter
Finally, we can conclude that the ultimate goal or a collection letter is to maintain goodwill while getting overdue payment from the customers. Lack of concern about customer’s goodwill will cause them to do business elsewhere. Therefore, collection letter should always rely on the art of persuasion.

Features of Ultimatum Letter or Final letter of dunning letter series

Dunning letters are written in a series. The series starts with sending a statement of account. After that, reminders letters are sent. if reminder letters do not work, credit department sends an inquiry and discussion letter. if this letter also fails to produce satisfactory result, the seller then sends an appeal and urgency letter. if the customer still ignores the seller’s request, then the final letter of the series is drafted indicating that necessary legal action will be taken against the customer. the final letter of the series contains some distinct features. these are as follows:

  • Mentioning the reference of previous letters
  • The opening section of the ultimatum letter is brief because the customer is well aware of the situation.
  • The language of this letter is not discourteous but makes less use of courteous words.
  • The seller expresses relatively straightforward opinion.
    In this letter, the seller clearly shows his dissatisfaction regarding nonpayment of dues by the customers.
  • Since this is the last letter, it gives an ultimatum for payment of overdue bills.
  • Through this letter, the seller indicates threat of legal action if the customer does not pay within the date.
  • In this letter, the seller offers any discussion with the customer only after the full payment of his account.
  • Although this letter indicates threat of legal action, it expresses regret for this.

Purposes of Business Letter

There are wide varieties of business letters like circular letter, inquiry letter, order letter, collection letter etc. all these letters serve important and multidimensional business purposes. The major purposes or objectives of writing business letters are discussed below:

To exchange information: The main purpose of business letter is to exchange information related to business. Through it, business organizations collect and convey business related information.-business-letters

To establish business relationship: By exchanging information through business letters, new business relationships can be established with various parties and existing relationships can be strengthened.

To make inquiry: Another important objective of writing business letter is to make inquiry about people, product, price etc. With the expansion of business operations of a business, importance of business letter is also increasing.

To take right decisions: Taking right decisions require accurate information. Since business letter s collect information form reliable sources, executives can take right decision using that information.

To place orders: A common purpose of writing business letter is to place order for goods specifying quantity, quality, price, payment method etc.

To create goodwill: Goodwill is an important asset for any business. Businesses can create goodwill by writing letters like order confirmation letter, adjustment grants letter, inquiry letter, reply to inquiry letter etc.

To save time and cost: Saving time and cost of communication is another objective of writing business letter. Posting letter is cheaper and less time consuming than making personal visits.

To expand markets: Through writing various business letters like inquiry letter and circular letter, business organizations can create new market for their products.

To overcome misunderstanding: If there arise any misunderstanding between a business and its stakeholders, business letter is written to overcome it.

To settle transactions: By means of writing business letter s, concerned parties can settle their transactions. For example, customers write claim letters to the sellers for compensations, sellers write collection letters to customers for collecting dues.

To keep records: Another reason for the wide use of business letter is to keep permanent record of information. Business letters help to develop an information base in the organization and facilitate future decision making.