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ACCOUNTING

Get the Cash, Keep the Client

Tips for writing collection letters that will preserve your customer relationships.
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It's easier to collect money from a satisfied customer than to wring cash from someone with whom you've severed ties. That's why it's essential to write collection letters with an eye toward preserving your customer relationships, says Les Kirschbaum, president of Mid-Continent Agencies, a collection agency in Rolling Meadows, Ill. He offers these tips:

Avoid threats. Especially when an account has only recently become overdue, this makes good business sense. "If you start warning people when an account gets 45 days overdue that the quality of your service to them will suffer, you're putting them in a situation in which they have nothing more to lose."

Write clearly and concisely. It will improve your chances immeasurably. "Don't bury your message in all kinds of wordy sentences," says Kirschbaum. "Think of this as a letter that someone will glance at for five seconds." To make certain that the basic message comes across clearly and quickly, he suggests showing a draft to someone outside your industry.

Take prompt action. "If you don't get around to billing your customers until a couple of months after they receive your service, there's no reason they should take your bill seriously, because you don't." He suggests the following schedule: 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 -- when you no longer care to preserve the customer relationship. (See also "The Ideal Collection Letter," February 1991, [Article link].)




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