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What Is Collection Letter? - Features of Collection Letter

Collection letters are letters sent by sellers to customers who have purchased goods or services on credit but have not paid their outstanding balances. They are written in a series that begins with a simple reminder, progresses to inquiry letters and urgent appeals, and ends with a warning letter indicating that legal action will be taken if payment is not received promptly. Collection letters have distinct features: they are between a buyer and seller, written as a series with the objective of collecting payment while retaining the customer. The letters reference previous correspondence and the last letter warns of legal action if payment is not made.

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596 views1 page

What Is Collection Letter? - Features of Collection Letter

Collection letters are letters sent by sellers to customers who have purchased goods or services on credit but have not paid their outstanding balances. They are written in a series that begins with a simple reminder, progresses to inquiry letters and urgent appeals, and ends with a warning letter indicating that legal action will be taken if payment is not received promptly. Collection letters have distinct features: they are between a buyer and seller, written as a series with the objective of collecting payment while retaining the customer. The letters reference previous correspondence and the last letter warns of legal action if payment is not made.

Uploaded by

Nitin Arasappan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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What is collection letter?

| Features of collection letter


Posted By businesscom Leave a Comment
Meaning of collection letter: Letters written for realizing payments from the debtors are known as
collection letters. The need for writing collection letters arises from credit sales. Selling on credit is a
traditional business policy that enhances volume of sales. Under the credit sales policy, the sellers
allow the customers a definite period for payment of dues. However, sometimes the buyers make
unexpected delay in paying their dues. Even, some custom stances, the sellers write letters reminding
and requesting the customers to pay the due bills. Instead of sending one letter or repeated copies of
the same letter, credit departments send a series of letters.

In the opinion of Kitty O. Locker, “Collection letters ask customers to pay for the goods and services
they have already received.”

Quibble and others defined, “Collection letters are used by an organization to entice its charge
customers to pay an outstanding charge-account balance.”

Collection letters are written in a series. When collection letters are written in a series beginning with
a simple reminder and end with a warning letter indication legal action the dues promptly by retaining
the customers with the company.

Features of collection or dunning letter


Collection or dunning letters possess some distinct features that differentiate them from other business
letters. Some of the features of collection letter are as follows:

1. Parties involved: Buyer who buys on credit and seller are involved in collection letter. Seller writes
this letter to the buyer for payment of dues.
2. Series of letter: Collection letters are written in a series. The series includes remainder letter, inquiry
letter, appeal and urgency letter and warning letter.
3. Objective: The prime objective of writing collection letter is to realize the dues from the customers.
4. Governing principle: The governing principle of the letter is to collect the dues by retaining the
customers with the company.
5. Referring the previous letter: When dunning letters are written in a series, every subsequent letter
mentions the reference of immediate earlier letter.
6. Threat for legal action: The last letter of collection letter series warns the customer that the matter
has been handed over to the lawyers for taking necessary legal action.
7. Sent through registered post: The seller sends collection letter especially, the lat letter of the series
though registered with acknowledgement to avoid unnecessary delay, or missing of the letter or denial
from the part of the customer.
8. Language: The letter is written by using friendly, persuasive but straightforward language.

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