Debt Reminder Letters – The Best Approach
If you consider yourself the kind of business that dreads having to deal with customers or clients who have an outstanding account or an unpaid bill that needs collecting, trust me, you’re not alone.
No one likes to risk destroying customer goodwill by having to demand payment, but in many cases, there is no other option.
Before you find yourself having to go down that route though, there are steps you can take beforehand to try and avoid the situation escalating to such a level.
Ensuring that payment due by dates and terms are clear, and also indicating any interest that will be applicable if payment isn’t made by the date agreed will go a long way to helping this part of your business run a lot smoother.
Even taking these steps can’t guarantee that you won’t run into issues, and when that happens you’ll want to take an approach that is both firm, yet doesn’t run the risk of souring relations with a valued client or customer.
Step 1 – Keep It Friendly & Informal
The first step should be to issue a short, friendly reminder along with another copy of the invoice. Many times an unpaid bill can be a result of the client simply forgetting. We all know that running a business is time-consuming, and it’s easy to forget what needs paying on what date. Many times this will result in an apology and payment being made, which is the ideal outcome.
If payment isn’t made within a few days of the letter being delivered, a more direct approach may be required.
Step 2 – Be More Direct
Your second letter should be a bit more formal, and with directness replacing the friendly tone of the first notice you sent them. At this point, the failure to pay what is owed can’t be put down to forgetfulness.
Step 3 – Introduce The Threat Of Legal Action
If payment still isn’t forthcoming, you’re going to have to get tougher, laying out a set date by which payment must be made otherwise legal action may be the result. Usually, payment within seven days is a more than reasonable demand, giving the client time to read the letter and act upon it.
Step 4 – Issue A Final Notice
If the threat of legal action hasn’t prompted payment to be made, then you issue a final notice demanding payment and setting a date whereby legal proceedings will be launched against them.
One piece of advice that will prove valuable is to not lose your composure when writing these letters. It won’t do you any good to make empty threats, and in many cases, these threats can be used against you by the client.
Keep it professional, and to the point.
No one enjoys going through this procedure when dealing with a client who hasn’t paid what is owed. It can be emotionally draining, and also takes valuable time away from your business and other customers.
Usually, the best option is going directly to a reputable debt collection company who can take the stress and hassle away from you. They also have far more experience in these matters and know how to approach such clients in a manner that will see a speedy and satisfying result.
All you can do is try to be as fair and as reasonable as possible.
Are you claiming debts from individuals or sole traders?
More about the Pre-Action Protocol for Debt Claims