What is an effective collection letter?

In one of my most recent speaking engagements I was once again asked a very common question: what can we do to make our collection letter more effective? Well, I must admit that in the Philippines, collection letters are not as “forceful” as in other countries. Maybe, because most of the companies or entities sending collection letters are not even aware that they are not demanding payment but merely “asking” and worse, some collection letter I have seen did not even ask for immediate PAYMENT in full.

I understand that a lot of Credit and Collection executives are afraid to ask for immediate full payment of the debt. They talk about credit standing, expect “to hear from you at an early date”, “please give us a call”, “please do not hesitate to contact us”. While some are already giving away their weakness by writing “weak statements such as “appreciate your looking into this matter”, “call us for reconciliation”, or the most common closing “kindly give this matter your utmost preferential attention, while some even enclose an additional envelope for convenience”. They narrate, state what is obvious, they sometimes even patronize, but…they do not ask for immediate full payment. How can you expect to collect when you are even not asking for payment?

So in order to know if your company’s collection letter has some flaws, below are some characteristics and/or attributes of an effective collection letter:

Effective Collection Letters are Short but Complete- They must present the facts of the situation, invite explanation of the delinquency, and urge a response and request payment immediately. Do not go into lengthy explanations of procedures and ideas, which have no interest for the debtor.

Effective Collection Letters are Polite. They are business correspondence. They seek to retain the “goodwill” of the reader, in spite of an uncomfortable situation at the moment. It must have a strong opening statement and an even stronger last sentence.

Effective Collection Letters Make Sense. They are written for a specific purpose. That purpose must be conveyed immediately to the reader.

Effective Collection Letters are Tactful. They provide an opportunity for the debtor to save face while paying his account. They do not seek “to win”, but only to receive payment. They reassure that his past business is appreciated and that the future business is welcome, but payment must be received today.

Effective Collection Letters Have a Selling message. This gives the writer an opportunity to build goodwill, at the same time that he asks for payment.

Effective Collection Letters Attract Attention. While this feature of the letter will not affect its contents, it does play a large in determining whether it will be read. Physical arrangement is important. The businessman receives many letters during the day, and naturally prefers to read one, which is neat and clear. Color of the envelop and statement of account could also make a difference.

For comments, rejoinders and questions on credit & collection call or text 0917-7220521 or email at [email protected].