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The Most Essential Components to Include in a Collection Letter


Every serious process starts with the collection letter and it is one of the best ways to collect the due amount from the clients or customers. With the help of a collection letter, you can officially inform the debtor that they have to make a payment as soon as possible. The collection letter can be used to inform the debtor that the payment date has been passed away. Sending a collection letter is just the beginning of the collection paper trial. You can use the collection letter as evidence while taking any legal action.

All kinds of collection processes are comprised of the collection letters and they can be used as an important piece of evidence. With the help of the collection letter, you can easily avoid disputes with your customers. But, it is very important to wisely create a collection letter.

Mostly collection letters do not contain various important components and an improper collection letter is not capable to convince a debtor to make payment as soon as possible. Some collection letters also missing the vital information that would make your letter credible. If you want to improve your collection letters, you should include the following five important components in your letter:

  • Formal Letterhead

The collection letters should be printed on the formal letterhead of your company. The formal letterhead will set the tone and make your interaction formal with the debtor.  If you use professional letterhead, it will show that you are serious about collecting the due amount. If you do not use the formal letterhead of your company, there are chances that you look too friendly and debtors may not consider your letter too seriously.  The collection letter may create an impression that you are not serious about the collection due amount. You can also check collection the important things to add while creating collection letter.

  • Properly Describe Your Case

You should explain all details surrounding the debt. You should mention the details that are surrounding the debt. In the collection letter, you should itemize the list along with the additional interest or fees. If you are charging a late payment fee, you should separately mention it on the list. It is imperative to use the right collection letter format.

  • Make A List Of Payments List

Once you have precisely explained the origin of debt, you should precisely mention the details. It would be quite beneficial for you to list the dates of each payment that the debtor has made. You should mention the amount as well as the remaining balance after receiving the payments from debtors. It will help you to ensure that you have informed the debtor of the series of payments that you have received. The collector letter with the series of payments that you have received will help you to start a point with a legal case in case the situation escalates.  Well, there are different types of collection letters and you have to choose the right one.

  • Precisely Describe Next Steps

If you follow all payment information, it is imperative to provide exact details to the debtor. You should clearly describe the further steps on how they would prefer to settle the debt. It is recommended that you should exactly spell out the details of how you would prefer to collect the payment after considering various other options.

You should precisely describe all the next steps in the collector letter and send your letter to customers.  It would be a good starting point for your legal case.

  • Require a Debtor Signature

The final important component in the collection letter is that you have to send the letter properly. You should ask for the sign of the debtor. The signature acknowledgment from the debtor side is important. It will show that the collector letter has been received by the debtor. In case, your collection ends up in the court, you should eliminate the ability of the debtor to deny that they were not properly notified in advance. You can use the signed collector letter as proof that you have sent the letter in advance to inform the debtor that they have to make payment.

Final Words

If your debt collection letter includes various five components, you are on the right path to improving the performance of your collection process. You should always keep in mind that polite language should be used with the customers. Even if they are delaying in making payment, you should use polite language. 

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