Collection Letter

What is a collection letter?

A collection letter is written communication sent to customers with overdue invoices requesting payment. Effective collection letters escalate in tone and urgency through a series of contacts. The first letter may simply remind. Later letters reference consequences like service suspension, interest charges, or third-party collection. Professional but firm communication often resolves receivables without legal action.

Building a collection letter sequence

Start with a friendly reminder at 15 days past due. Send a firmer notice at 30 days referencing your payment terms. At 45 to 60 days, communicate consequences and request immediate contact. At 90 days, issue a final demand before escalating to collections or legal action. Document all communications. Consistent follow-up dramatically improves collection rates compared to sporadic contact.

Legal considerations

Collection letters must comply with fair debt collection practices, especially if you use third-party collectors. Avoid harassment, threats, or misrepresentations. State clearly what is owed and how to resolve it. Preserve your right to charge interest or fees if your original agreement allows it. For significant amounts, consult an attorney before threatening legal action. The cost of collection efforts should be proportional to amounts owed.