Make Effective Use of Your Collection Letter

Get paid while maintaining a good rapport with customers.

Grow Your Business, Not Your Inbox

Stay informed and join our daily newsletter now!
3 min read
Opinions expressed by Entrepreneur contributors are their own.

Frank shook his head as he pored over the aged balance printout. Sales just weren't what they were last year. He knew he faced an uncomfortable but necessary task if he wanted to stay in business: He needed to send out collection letters. They had been written by an expert and gave him specific instructions, so he knew just what to do. "Send sooner rather than later," the expert had commanded.

Frank took his pile of past-due invoices and started inputting customer information into the collection letter templates. As Frank worked his way through the pile, his confidence grew with the thought of getting paid what he was owed.

Many business owners never send out collection letters because they don't know how to write one or don't know how to write one that doesn't alienate their customer.

Collection letters should do two things: help you get paid and maintain customer goodwill. You know a letter is working when you send out a batch of letters and your phone rings off the hook or payments start arriving. If you send out a batch of letters and there is no response, you need to write a new letter.

The most effective letters are short, to the point and easy to read. Avoid using long or confusing words and sentences. A direct letter reduces misunderstandings.

Your letter should:

  • explain the reason for the letter in the first sentence
  • explain more about the first sentence in your second sentence
  • suggest a solution
  • thank the recipient

Your letter is a reflection of your business, so keep it professional.

Remember, the purpose of the letter is to persuade someone to send you money. Precise wording and tone are critical, especially if this is a customer you want to continue doing business with. Always assume the customer will pay. Enclosing a pre-addressed envelope for payment is a good idea. If you can include postage on the payment envelope, even better. The easier you make it for the customer to make the payment, the better your chances of getting paid.

Below is a sample of a collection letter:

December 2009

Frank's Plumbing
123 Main Street
Anywhere, NH 05000

Account No./Invoice #: 123

Balance due or past-due balance: $100.00

Dear Jim,

This is a reminder that your account balance of $100.00 was overdue as of November 28, 2009.

Please pay this amount today. I have enclosed an addressed, stamped payment envelope for your convenience.

Thank you for your payment.


Frank Smith
Frank's Plumbing

More from Entrepreneur

Get heaping discounts to books you love delivered straight to your inbox. We’ll feature a different book each week and share exclusive deals you won’t find anywhere else.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Create your business plan in half the time with twice the impact using Entrepreneur's BIZ PLANNING PLUS powered by LivePlan. Try risk free for 60 days.

Latest on Entrepreneur