Dunning letters are usually written in a series. In each successive stage of the collection series, the message becomes stronger or insistent. The series contains the following: Sending statement of accounts, Reminder letter, Inquiry and discussion letter, Appeal and urgency letter and ultimatum and warning letter.
Methods of Writing Collection Letters
Sending Statement of Account: Statement of account is the first notification that the customer receives after purchasing goods on credit. Companies usually send the statement before the due date of payment. Sending the statement of account has become a common business practice. Its purpose is to inform the customer about the due amount and due date of payment. It also acts as means of maintaining contact with customers.
Reminder Letter: Collection letter series actually starts with a reminder letter. If the customer does not pay the bill in due date, a reminder letter is sent assuming that the customer has forgotten to pay. Therefore, the seller reminds the customer that he has an outstanding account with the company and the payment has become due. Companies usually send several reminder letters. The first reminder is sent within a week after sending the statement of account. The second reminder is generally sent after a seek or a fortnight of sending the first remainder. Though the first reminder letter simply reminds the customer about the bill, successive reminder letters courteously ask for payment.
Inquiry and discussion letter: An inquiry and discussion letter is sent of the customer gives no response to the earlier letters. This letter is written assuming that the customer is either unwilling or unable to pay. Therefore, the goal of writing inquiry letter is not only requesting the customers to pay the bill but also seeking the reasons for non-payment. This letter is written in a sympathetic manner so that the customer becomes willing to write to the seller. If the customer is really in trouble, alternative payment schedule can be arranged. Depending on the type of customer, discussion letters range in number from two to five or more. However, successive letters become progressively stronger and the last discussion letter ends with a hint of negative appeal.
Appeal and urgency letter: If the previous collection attempts have failed, sending an appeal and urgency letter is the next step. This stage clearly assumes that the customer is reluctant to pay the outstanding bills. Therefore the seller strongly requests the customer to pay the bill. This letter is not rude but is stronger in tone. In this letter, a deadline of payment is mentioned. However, the seller can also seek an explanation for non-payment. If the customer is in real trouble the seller can arrange an alternative payment schedule.
Ultimatum and warning letter: This is the final stage of the dunning letter series. If the customer does not respond to any one of the previous letters, then the ultimatum letter is sent. A distinct feature of this letter is that it indicates possible legal action unless payment is made promptly. In this letter the customer is given a deadline of payment. At the same time, this letter conveys the possible legal action or consequence if the customer fails to meet the deadline.