When you have sent several notices and statements, made several phone calls to the customer urging him to pay the amount he owes you but have been ignored despite repeated remi
nders, it’s time to consider writing demand letters. A demand letter is considered an effective tool for bad debt recovery and John Zukerman provided some tips on how to make your demand letter more professional and persuasive.
First, the letter needs to look professional. This can be achieved by having a well-formatted letter typed on company letterhead. Highlight the seriousness of the situation. Make sure to be clear in your intention by mentioning the date of the original invoice, reference number, the product purchased or service rendered, and the amount owed. Remind the customer that the account is way overdue, and give him options on how the bill can be paid based on your company policy.
Keep your demand letter brief, concise and check for spelling and grammar errors before printing and sending out.
Cite also previous correspondence with the customer – like the phone calls or personal discussions made regarding this obligation. Attach a photocopy of the proof of transactions, like the invoice and reference to the terms and conditions signed by the customer. Be clear by mentioning that the customer’s future credit standing is at risk if this debt is not paid.
Inform the customer about the actions you will take if the demand letter is ignored; you will refer the unpaid account to a debt collection agency or proceed to file a case in court. While some customers may see this as a threat or a bluff, it is important that you follow up on everything you said in your letter.
If there is no response after a specified number of days, then refer the debt to a professional collection agency. Debt collection agencies are experienced in dealing with customers with overdue accounts, and are aware of all excuses. They can employ tools and techniques necessary to increase your chance of being able to collect bad debts.
