Debt Collection Letters

Debt Collection Letters

The secret to maintaining a financially healthy business is by having a knowledgeable team utilising the right credit processes and procedures.

Tackling cash flow problems head-on means you need to ensure you have the right credit terms in place and the right template letters on file.

And this is where Direct Route comes in.

Helping to provide you with credit control support when you need it most, we can help chase

Outstanding invoices, streamline credit control processes, and provide the right template collection letters for you.

Check out our page for further information.

What is a debt collection letter?

Debt collection letters are a great prompt and reminder for debtors to pay on time and encourage them to continue paying on time.

Other names for collection letters include debt letter, demand letter, creditor letter, and official notification.

Reasons for a debt collection letter

Late payment of commercial debts is a huge problem in the UK, affecting businesses of all sizes and dramatically impacting cash flow and balance sheets.

However, with the right debt collection letter, you can achieve effective results.

A debt collection letter can:

Provide insight into the debt outstanding and what happens next. Highlighting when the payment was due, how payment can be made, consequences of late payment, etc.

Open the lines of communication. Acting as an additional form of communication with the right debt collection letter template, you can look to identify ways to settle the payment that satisfies both you and the debtor.

Be the next step toward legal action. It’s important to be aware that legal proceedings can not be initiated until the debtor receives a collection letter. This collection letter acts as proof that reasonable contact has been attempted, notice was offered, and payment options were provided – with no subsequent payment made.

Types of debt letters

A reminder letter – this is the first letter issued to a debtor, taking a soft but firm approach by assuming the debtor has simply “forgot” to pay or has a genuine reason why payment is late. This letter will offer solutions and is typically sent 14 days after the invoice due date.

A letter of enquiry – maintaining client relations is always beneficial, especially when clients directly affect cash flow. Just because the debtor is yet to respond to your first letter doesn’t mean you should resort to threats. An enquiry letter asking if they received the letter can show that you’re sensitive to their situation, with offers of payment plans or partial payments to please both parties.

Demand notification. Now things start to become more serious, your appeal letter/demand notification should explain the urgency of the situation, explaining that you have tried to reach out with no success and the invoice/payment is now considerably overdue.

Final collection letter. This is the final notification before taking legal action. In this letter, you must notify the debtor of any action you plan to take, i.e., outsourcing to a collection agency, court action, etc. Be assertive but professional.

Letter of claim. This letter instructs the start of court proceedings, with court form letters including deadlines for debtors to respond.

A collection letter is a great way to support overdue invoice emails and collect on outstanding payments. However, it is essential to remember that collection letters are legal documents, so they must be correct and appropriate.

Writing a successful debt collection letter

Remain compliant at all times

All collection letters must comply with the Fair Debt Collections Practices Act and include, for example, outstanding amounts (clearly and legibly), dates (both due dates and current dates), and letters must only be sent to the intended person.

You must also include in your collection letters:

  • Name of creditor
  • Amount owed
  • Action required
  • Any reference details
  • Payment deadlines
  • Late payment charges and interest.

Ultimately, your letter must be practical and compliant.

Keep letters concise and to the point

Get straight to the point, so the debtor knows what the letter is about asap. Through personalisation, you can avoid it sounding like every other generic collection letter – appeal to their emotive side.

Have your debt validation letters ready

A debtor can request a debt validation letter to prove the debt is theirs and that the debt is actually outstanding. Debt validation letters include all, and we mean all, details of the outstanding debt. These letters must be requested within 30 days of the debtor receiving the original collection letter.

Work with a professional

A professional, experienced debt collection agency, like Direct Route, can help collect on outstanding debts and provide you with professional, effective, and compliant debt collection letters.

Whether you’re looking for templates to personalise or an external credit control team to help support your full collections process, working with the right debt collection agent can be the most effective and efficient solution.

What to do if you receive a debt collection letter

If you miss a payment for goods and services you have ordered and are in receipt of, you should expect a collection letter. And hiding from these letters helps no one.

These letters serve as a form of communication and show the various ways you, as the debtor, can take action and resolve any outstanding payment issues.

The best thing to do when you receive a collection letter is to acknowledge it and, if appropriate, send a creditor letter in return explaining and detailing any information from your side.

Chasing invoices

If writing collection letters is not your forte, or you don’t have the time or resources, let the team at Direct Route help.

Working as part or your entire credit control team, we can provide collection letter templates covering all situations.

Helping to keep your business running and your cash flowing, call us on 0330 229 1991 or email