It's easier to collect money from a satisfied customer than to wring cash from someone with whom you've severed ties. It's essential to write collection letters with an eye toward preserving customer relationships. Les Kirschbaum, president of Mid-Continent Agencies, a collection agency, in Rolling Meadows, Ill., offers these tips:
Avoid threats. This advice makes good business sense when an account has only recently become overdue. "If you warn a customer whose account is 45 days overdue that the quality of your service will suffer, you're putting people in a situation where they have nothing to lose," says Kirschbaum.
Write clearly and concisely. "Don't bury your message in all kinds of wordy sentences," says Kirschbaum. To ensure that the basic message comes across clearly, he suggests showing a draft to someone outside your industry and asking if it's easily understood.
Take prompt action. "If you don't bill your customers until a couple of months after they receive your service, there's no reason for them to take your bill seriously, because you don't," Kirschbaum advises. Send an invoice promptly, follow up with a friendly collection letter at 30 days, and telephone overdue accounts 10 to 14 days later. If there's still no response, send a more serious letter within a week. Bring in a collection agency or lawyer when receivables are 90 to 120 days old.