A Collection Letter is generally written by the creditors to their debtors who have taken a loan from them for their personal use or a new business. The need for writing arises from credit sales. The traditional business policy that enhances the volume of sales is “Selling on Credit.” The amount is being credited once both the parties sign an agreement in which a date is mentioned by which the debtor has to make the payment of the loan on an installment basis.
In this scenario, the seller allows the customers a particular period for payment of dues. A collection letter is written by the creditors when the payment by a debtor is not made on time.
A collection letter is also written to collect the refunded money on any defective product or service. In this case, it is written by the customer to the dealer, so that he can collect his refunded money. A refund letter should also be written formally and with the utmost respect towards the dealer you are writing it to. Tell them about the defect in their product/services in detail and what grievance it has caused.
Format of Collection Letter
Ap #481-7473 Cum Rd.
Yorba Linda South Carolina 28423
Ap #146-3132 Cras Rd.
Kingsport NH 56618
Subject: Compliment Letter
Dear Aaron Trujillo,
This letter is to inform you about the loan amount ……….. (Amount) taken from our bank and is now due for its first installment. You can make the payment before ——– (Date) as it is your late submission. As per the signed contract by both parties, if the payment is not made on time, we are supposed to take legal action against you. Furthermore, we would also like you to update us with the mode of payment and how would you like to proceed with it. We are glad to serve you and hoping to have a long-term association with you.
Tips: How to Write Collection Email
From: name @email.com
Subject: Collection Letter for payment reminder
This letter is written to inform you about the loan that you had taken from our institution, which is registered with the docket number dated ----- (the date on which the loan is listed).
For the loan that you have taken, we would want to inform you that the date of your first installment is coming close and is due on ----- (date) as mentioned in the agreement of the loan.
Please let us know how and by when the payment will be made to us.
As per you decide the mode of payment, we can also send a representative to collect it at a convenient time. However, you must be aware that we will have to take legal action if payments are not received before their due date.
It is our pleasure to serve you and we hope to have a pleasurable business association with you.
(Name of signing authority)
Writing Tips: How to write Collection Letter
- The initial step of writing a collection letter is it is vital to give some extra time to debtor to arrange funds for the payments in the letter.
- While writing the letter, the tone should be firm and formal.
- The letter should mention the due date of the payment and also the amount.
- You must mention the repercussions which the debtor may face regarding nonpayment and also provide a last date for the payment.
- After writing the letter, please recheck for punctuation and grammatical errors.
Sample of Collection Letter Example