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Collection letter to client
September 15, 2018 Wedding Anniversary Wishes 2 comments

Collection letter to offer payment plan for default account. Collection letters to clients. Guide, letter example, grammar checker, + letter samples.

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Our Info Base is a collection of fact sheets, templates, downloadable forms, .. and effort chasing late payments you should consider having collection letter templates If you do end up having to send a final notice to a client it is important that.

How to Write a Collection Letter to a Client with Tact in a Therapy Practice

collection letter to client

From
Mr. Daniel Scott
XYZ Shop
Hudson Lane 1254
New York City, USA.

Date: 12/10/2016

To
Mr. Alex Dayes
Da Vinci Road 2346
New York City, USA.

Subject: Refund For Overpayment

Dear Mr. Dayes,
Thank you for your recent payment of $100. You might be glad to know that at the time of this payment your balance was only $29.55, leaving a $70.45 overpayment. Our sales bookkeeper has already credited this amount to your account. You will receive the billing statement in your mail by tomorrow evening.

If you prefer, we would be more than happy to send you a refund check of $72.45. Please contact Jane telephonically if you wish to have this amount refunded. I have enclosed a copy of your last billing statement if in case you did not receive it before. Jane Doe will be pleased to answer any queries you may have about our billing procedures. She may be reached at 555-5555.

Also if you wish to receive the above-said amount in cash, then please contact Jane Doe and inform her of the same. She will assist you throughout this process till you get your refund. We trust that you will find all to be in order and look forward to being of service to you again soon.
Thank you for your valued business!

Yours Faithfully,

Daniel Scott

Marketing Head

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collection letter to client

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Writing a Demand For Payment Letter to Collect on Past Due Invoices

Written by Allan Branch on Dec 9

I’m writing this article in collaboration with Anitha Cadambi, an attorney from California who actually enjoys writing about the law!

Let’s start with a hypothetical situation:

“Beachy Design Studios,” a Florida-based design firm, lands a big awesome website project in 2011 with “Mountain Top Hotel,” a Colorado-based hotel chain. Beachy Design Studios uses a service contract and Mountain Top Hotel signs the project, pays the deposit and the project starts. The contract is an hourly one and the client pays each month after receiving an invoice. After six months, Mountain Top Hotel gets behind on their payments, and after another 30 days of work Beachy Design Studios stops work.

First Line of Attack: “Demand Letter” often called a “Demand for Payment Letter”

Why a demand letter?

It starts the negotiation process between Beachy and Mountain Top. It lays the foundation for a well thought out presentation of Beachy’s case to the court, if necessary. It presents a carefully crafted letter rather than a verbal threat. A shouting match may not accomplish anything, and Beachy is better off having a carefully crafted letter sent to Mountain Top where Beachy can at least pretend to be calm and composed. At the end of the day, try to maintain a peaceful demeanor throughout your demand letter process.

Why a demand for payment letter?

By sending a demand for payment letter, you are establishing the first blow but it’s more of a wimpy punch that isn’t a total knockout. But at this stage in the bout, that’s ok. It’s basically your attempt at being nice and simply alerting the other side that they are late in their payments and should take note of the payment owed.

Wait a minute…are demand letters really that helpful?

They can be. It boils down to the party you are dealing with. We hear people living in colder regions aren’t as chilled out as us beach goers. But cold weather aside, the ultimate determining factor is that a demand letter will serve its purpose–that is, it makes a demand to the other side to either make a payment or set a timeline within which said payment should be made. In the event that the payment is not made, the party who sent the letter knows that it’s time to start a more formal, legal process, also known as “let’s go to court.”

What about demand for payment letters? Again, they can be. If Beachy and Mountain Top have a decent relationship, and the only issue is that Mountain Top forgot to pay, we don’t see why Mountain Top would object. Things get a bit complicated the minute Mountain Top refuses to pay. At the same time, if you are willing to compromise, you could even recommend working with the other side on easing payment terms. For example: “You can pay the amount due in installments of $5000 over three months.” By offering a solution, you are showing the other side your willingness to cooperate.

Typical Schedule for Demand Letters

Initial considerations:

  • The basic premise of your letter is this: State why you have a dispute, and that if this particular attempt at negotiation fails, you will take the case to court.
  • Make sure you send the demand letter in a timely manner because waiting too long after your claim becomes due could jeopardize your attempt at collection.

Particulars:

  • Use a letterhead. This makes the demand letter look official and formal. State why you are writing the letter.
  • Outline the facts/story leading up to the demand letter in a chronological manner.
  • State the legal basis for your claim.
  • State how you will pursue legal action if your demand is not met, and include a timeline within which the demand is to be met.
  • Do not threaten or use accusatory language, as this definitely won’t help your cause!
  • Make and keep copies of your demand letter and any response received.
  • Use a mailing option that requires the recipient to sign for the document. This way, you know the recipient actually received the letter and you can keep track of it.

Example Demand Letters

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Skeleton of a demand letter – This is just an example and should be tailored to fit your specific situation.

Mountain Top Hotel
1 Street
Leadville, Colorado

Re: Unpaid Invoices amounting to $15,000

Dear Mr. Mountain Top,

This letter is pursuant to your agreement to pay Beachy Design Studios for our services dated February 15, 2013 for the amount of $15,000.

{Include facts surrounding your issue here: how you had an agreement, the date of the agreement, what you agreed to, and how payment hasn’t been made based on this agreement.}

Your failure to pay as per the February 15, 2013 invoice amounts to a breach of contract.

Please acknowledge receipt of this letter within five business days. Please make your payment (insert means of payment as per your contract terms) no later than March 15, 2013. If you fail to respond, I will be compelled to pursue legal action.

Thank you in advance for your prompt attention to this matter. I look forward to hearing from you. If you have any questions, please do not hesitate to contact me at (xxx)-(xxx)(xxxx).

Sincerely,
Beachy Design Studies
{Insert any relevant documents/copy of invoice to this letter.}

Skeleton of a Demand for Payment Letter

We previously wrote about collecting on unpaid invoices, the advice is still the same, focus on the following essentials:

  • Using “please,” “I request,” “thank you,” and other words of kindness are a must.
  • Your tone should be soft and less assertive.
  • State why you are writing the letter.
  • Indicate the exact invoice that is overdue, by how much, and how a late fee might apply.
  • Attach a copy of the invoice to the letter so the client knows the specific invoice you are referring to.
  • Indicate how you need an acknowledgement from the other side as soon as they receive your letter.
  • Be clear about what you are asking for. Indicate a deadline within which payment should be made and identify how payment should be made.

What if you have no contract, but have a verbal agreement?

Oral agreements are honored provided the statute of frauds does not apply to the particular transaction. However, oral agreements may be harder to prove. (Note: statute of frauds is a topic beyond the scope of this article.) A court will look at all transactions and performance leading up to the date of dispute and award a remedy accordingly.

Emails or letters as contracts? Remember, just because you did not have a seven-page service contact typed up doesn’t mean your contract wasn’t in writing. If your email or other letter communications satisfy the basic contractual requirements of offer, acceptance, and consideration, and no other legal issues prevail, you might still have a written contract.

What if your contract has a vague statement of work?

A vague statement of work will create an issue at some point in the future so try to get it right the first time. However, any potential vagueness argument is for the other side to bring up. You want to stick with the fact that the statement of work is clear and that you are owed a certain amount as per the contract. Further, any issue of ambiguity will be hashed out in court, and you should be prepared to show to the court why your interpretation is correct. Typically, the court may decide to interpret the ambiguity against the party who drafted the contract but this differs with every situation.

Will my demand letter be used in court?

Yes. You can use it to show the judge that you made a good faith effort to collect but failed. Typically, with small claims cases, the court requires you to make a request for payment first before initiating a case in small claims court. (For more about small claims cases in different states, please visit this website.)

DISCLAIMER: This article is just friendly advice and only reflects the personal views of a few ‘ordinary’ people. It may not be the kind of advice that you agree with nor prove to be helpful for your situation. This article is not a substitute for legal advice from an attorney in your own state. By using this website, you understand that there is no attorney-client relationship between you and the author. We encourage comments and viewpoints but try to be nice!

Read on…

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Follow our tips (and use our template!) before sending out another collection letter to a client behind on payment.

Collection Letters for Business

collection letter to client

We speak to a lot of service companies who, after months of back-and-forth with their client, come to the realization that they simply aren’t going to get paid for their work. What do you do when faced with that type of situation? If you had to get one thing right before you handed an aging account receivable off to collections, it would be the Final Notice.

What is the final notice?

The final notice is intended to be the last communication between you and your client regarding the amount past due. When you get here, the assumption is that you’ve already exhausted all of the internal options in your receivables department. If you haven’t yet, read here. The point of the final notice is to let the delinquent client know you are no longer going to work with them to resolve payment as the account is being forwarded to a collections company. It is your last formal communication, and in many cases, signifies that the business relationship is finished.

The ultimate goal of the final notice is to get payment. The way it is written can make the difference for a customer agreeing to pay, resolving the balance due, and potentially keeping them as a client. A poorly handled Final Notice can cause you to be completely ignored. In the latter case, the bottom line impact to your company has a ripple effect when you consider not only the account itself but also revenue from referrals that are now unlikely to happen.

Can I see an example final notice?

Yes! Here you go:

"Dear Client,

It has come to my attention that you have not complied with our formal requests for payment. Please see the attached invoices that document the sum of your outstanding balance past due. On January 1, 2015 you approached our company for [product or service provided]. The service was completed expeditiously and in accordance with our [agreement or contract]. The total balance due is $2,500. It is very important that we hear from you regarding your payment intentions on this account.

We will delay any action for 10 business days, until [22 June 2015; Note: assuming this is 10 business days from the date of the letter] to allow you the opportunity to make payment arrangements. Be advised, the next step is to place your account with a collections agency. Please contact the undersigned no later than 22 June, 2015 to let us know of your intentions. Pursuant to the credit agreement you signed, we will be adding [30%] to the total balance to cover the cost of collections once we place your account with National Service Bureau.  

Respectfully,

[Undersigned]

[Phone Number]

[Email]"

Other Considerations

Here are three to think about:

  1. Include verbiage in all of your contracts that allows you to increase the balance due to cover the cost of collections in the event of non-payment. Here is an example:

“In the event that [CLIENT’S] account becomes past due and is referred by [SERVICE PROVIDER] to an outside collection agency or attorney, [CLIENT] will be responsible for the cost of collection services at the rate of 20% of the balance due, along with reasonable attorney fees and court costs incurred by [SERVICE PROVIDER].”

  1. Consider printing out the Final Notice email and sending a hard-copy of it via overnight mail “return receipt” so you can legally verify receipt from the client. This costs between $5 and $10 at the United States Postal Office. A few days after sending you will receive a green receipt in the mail that is useful for legal verification of Final Notice delivery.

  1. Invoices. In many situations, you may only be able to collect on the amount that has been formally invoiced. Make sure you aren’t forgetting to include legitimate payments due in your invoicing, and that you have an accurate record of invoices sent to the client.

Conclusion

Unfortunately, once you get to the point that you are contacting a collections agency, the time for second guessing and/or rewriting contracts is over. That happened months ago and you’re left with what you have. Learn from the situation and improve the deficiencies in your contract and your invoice procedures for next time. Take care of the things you can control - drafting a well thought-out final notice.

 

Final_Notice debt collection The point of the final notice is to let the delinquent client know you are no longer going to work with days from the date of the letter ] to allow you the opportunity to make payment arrangements.

collection letter to client
Written by Yozshushakar
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