Accounts Receivable Collection Letters: Three Examples for Different Approaches
Customers Not Paying Their Bills Timely?
Your receivables help your cash flow—that’s plain and simple enough right? Often, the small business owner will allow receivables to build up and that means no cash coming in to pay your vendors. If you allow your accounts receivables to constantly lag behind, your credit customers will catch on—and fast. This alone is reason enough for you to utilize effective accounts receivable collection letters.
You certainly don’t want your receivables to turn into allowances for doubtful accounts!
Initial Approach
As a business owner looking to collect on your receivables, you have a couple options for business letters. You can buy one of those bold red stamps that scream “PAST DUE!” or you can try a simple collection letter first. Here’s an example of an accounts receivable letter that is appropriate for first time late customers:
Date
Tom’s Parts
123 Anywhere Street
Hidein, USA, 80000
RE: Past Due Account #
Dear: (Put name in if you have a contact; otherwise, address the letter to the accounts payable department)
Your invoice(s) numbers (list them) dated (date of invoice(s), are past due. As a new customer, we would like to reiterate that we operate on a net 30 (or whatever your terms are) policy. This means that invoices are due within 30 days of receipt.
Please use the enclosed envelope to remit your payment as soon as possible.
If you have any questions, please feel free to contact Debbie in our accounting department.
Sincerely,
Controller or Business Owner
Often, the initial letter may not reap the payment you want and need, so you may have to be a little more aggressive.
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State Your Case
This example of an accounts receivable collection letter is a little more aggressive.
Date
Tom’s Parts
123 Anywhere Street
Hidein, USA, 80000
RE: Past Due Account #
Dear: (Put name in if you have a contact; otherwise, address the letter to the accounts payable department)
Your invoice(s) numbers (list them) dated (date of invoice(s), are past due. As a valued customer, we would like to reiterate that payment is due on all invoices within 30 days (or whatever your terms are).
Invoices not paid by (list specific date), will incur a 3% interest penalty, plus a $10 late fee (use your specific fees and penalties).
We ask that you remit prompt payment as quickly as possible to ensure your account remains in good standing.
If you have any questions, please feel free to contact Debbie in our accounting department.
Sincerely,
Controller or Business Owner
Sometimes, even a letter as direct as this one still needs a little “push.”
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Offer Some Solutions
In this example of an accounts receivable letter for collection, you can offer your customer some solutions:
Date
Tom’s Parts
123 Anywhere Street
Hidein, USA, 80000
RE: Past Due Account #
Dear: (Put name in if you have a contact; otherwise, address the letter to the accounts payable department)
Your invoice(s) numbers (list them) dated (date of invoice(s), are past due. As a valued customer, you are aware of our late fee of $10 per invoice and interest penalties of 3% on unpaid or overdue accounts.
We do offer two options to aid you in avoiding interest and late fees:
- Credit Card Payment – Use the enclosed coupon to enter your credit card information (we accept VISA, M/C and AMX), sign and return the coupon. Or, you may contact Debbie in our accounting department to pay via credit card over the telephone.
- Electronic Payments – Our company is pleased to offer you a way to stay on top of your account by enrolling in our electronic payment program. Payments can be set to match your due dates. Please contact Debbie in our accounting department to set up your e-pay account.
- Payment Arrangements – We also understand the tough economy and if you are unable to pay the entire amount due, please contact Debbie in our accounting department to set up a payment schedule. Please understand that a payment schedule will include interest and penalties.
If you have any questions, please feel free to contact Debbie in our accounting department.
Sincerely,
Controller or Business Owner
Each of these examples of accounts receivable collection letters can be used based on the customer and their history with your company. Keep in mind that threatening letters will often get you nowhere and it’s best to be business-like and helpful when attempting to collect upon your receivables.
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