About Andika Hendra Mustaqim

April 12, 2009

Theory of Collection Letter

Filed under: Business English Correspondence — guruandikahendra @ 9:58 am

Hate collecting your money? Join the crowd. Recent OPEN Small Business Network Polls from American Express shows accounts receivables is the top cash flow concern of small business owners. Learn the secrets of collection letters and other mastery tips to ensure your customers pay.

You started your business to make a difference, to delight a customer, to express your vision, not to become the bank of choice for your customers. Use the following collection letter and debt collection mastery tips:

Take a Positive Stance: Don’t take it personal if your customers aren’t paying the bills. Explore why the bill is late. It could be your client simply forgot. Provide a gentle reminder immediately following the due date.

Increase Directness Gradually: One of the secrets of collection letter mastery is to gradually increase the assertiveness of the letter over time. Your first letter is positive and helpful, the third collection letter may show concern for their situation, and so it builds.

Use Multiple Channels: In today’s electronic age, handling your entire invoicing and collection letter sending by email is simple and quick. It also can ensure your correspondence is buried in an overstuff inbox and low priority. Use additional means of sending out your collection letter correspondence including faxes, phone calls, regular mail, courier, and telegrams.

Empower the Right People: As a small business owner the temptation is great to have the sales people handle accounts receivables. It’s better to assign one person to the task and provide proper support, training, and incentive.

Call the Heavy Hitters: After numerous calls and collection letter correspondence you’ll reach a point where the account is long overdue. Bring in a collection agency to handle these delinquent clients. Spending too much time and resources can be draining on your operations.

Don’t Ignore FDCPA: There are laws and regulations as to how collection agencies can go about collecting debt. Debt collectors cannot lie to, mislead, or harass your customers. Make sure the collection agency you select abides by the Fair Debt Collections & Practices Act (FDCPA).

Run a Credit Report: Reduce your overdue accounts by running a credit check on your potential business client before the deal is done. Expect to spend at least $30 on a Dun & Bradstreet report. D & B uses self reported data but adds credibility by including: banking data from company suppliers, bankruptcy filings, media sources, suits, liens, and judgments.

Always Check References: Any small business planning to sign a “big deal” would be advised to run trade and bank reference checks. Simply inquiring with your potential client’s or partner’s bank can reveal important banking relationship information and how they have maintained their accounts.

Change Industries: To improve your collection abilities, diversify your business into industries that have a tendency to pay bills on time and who have lower failure rates.

Handling the debt collection process is a responsibility of successful business ownership. Too many small businesses place aging receivables and collections as a low priority. It’s important to monitor your cash flow and aging receivables on a monthly basis or more. It’s ok to write off bad debt, but in the end, it’s your business savvy to handle the matter that will impact your growth.

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