Importance of Business Letter

Letter is as an indispensable tool of communication in business. Business letters are used to sell the products, make inquiry about customers or prices of goods, seek information and advice, maintain good public relation, increase goodwill and perform a variety of other business functions. With the continuous growth of commerce and industry, usefulness and importance of business letter are also increasing gradually. Some points highlighting the benefits or importance of business letter are discussed below:

  • Exchanging business information: Letters are the most economic and convenient means of exchanging information. With the help of letters, executives can easily exchange information with customers, suppliers, investors, government offices; regulatory authorities etc.
  • Establishing business relationship: Business letter play important role in establishing and maintaining relationship with various parties. Business letters reduce the distance between a business and its customers, suppliers, creditors and other public groups.
  • Creation of markets: Circular letter a form of business letter, helps to create new markets for goods and services. This letter contains information about utility, features and usefulness of the products and induces the customer to buy the products.Importance of Business Letter
  • Substitute to personal visit: Introduction of letters in business world relieves the business executives’ form visiting their clients, suppliers, creditors and other public groups by traveling a long distance. For this reason, commercial letters are called alternative technique to personal visit.
  • Saving cost and time: Business letters relieve the busy executives from visiting personally their clients and other concerned parties. Therefore, valuable time and costs can be saved.
  • Maintaining secrecy: Business letters also help to maintain secrecy of information. Non one other than the sender and receiver can know the message contained in the letter.
  • Increasing goodwill: Business letters, like inquiry letter, circular letter, order acknowledgement letter, adjustment grant letter etc help to increase good will of a business with the customers.
  • Formal agreement: Business letter acts as formal agreement between buyer and seller. For example an order letter contains name of items, price, and quantity, time of delivery and mode of payment. All these are regarded as the conditions of agreement between buyer and seller.
  • Settlement of transaction: Commercial letters have paramount importance in setting business transaction. For example, by writing claim letter, buyer can raise his claims to the seller by writing collection letters; seller can collect dues from the customers.
  • Use as reference: Information exchanged through letters can be preserved permanently and used as reference when need arise. Therefore, making business decisions becomes easier.
  • Legal acceptance: Business letter is an acceptable document in the eye of law. It can be stored and produced as a documentary proof.
  • Assistance in local and international trade: Bothe local and foreign trade essentially requires the help of various business letters. Through letters, businessperson make inquiry about products and prices place orders for goods collect the dues make and settle claims etc.

From the above discussion, it can be concluded that successful operation of business activities establishing, maintaining and developing business relationship and finally achieving business goal all require help of business letters. In a sense, conducting business is impossible without business letters.

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.