Businesses would not run if everybody had money for everything that s/he desired to have. It is only because of money being available with someone that there are people who fulfill their dreams. A Creditor may be a person or an institution or a bank that offers the facility of giving money as loan to be paid back with interest. A Debtor on the contrary is a person or an organization that takes the money for its business or any other requirement.
A creditor usually writes a Collection Letter to her/his debtor. This letter is written when a payment is either due or overdue. It could also be just a simple reminder Collection Letter for the debtor.
DOS AND DON’T’S OF COLLECTION LETTER
- A Collection Letter should be written well before the payment due date so that it gives enough time to the debtor to arrange for the funds
- It should be short and brief
- The letter should only talk about the current payment due or about any pending payments only
- Even though the creditor writes this letter, the tone of the letter should not be rude or insulting or humiliating or threatening. The creditor must not forget that the debtor has taken money under some compulsions
- The language of the Collection Letter should be simple and easily understandable
- It should clearly give the deadline by when the payment needs to be made
- The letter must also have the date when the letter has been written to be able to track it later
- Since it is a Collection Letter and it has a loan reference attached to it, the reference number should also be mentioned in the letter to track the payment history of that particular loan
- A Collection Letter is purely an official letter so it should always be typed
- There should not be any grammatical or punctuation errors
- Any repercussions for non payment should also be mentioned in the letter to ensure transparency of communication
SAMPLE COLLECTION LETTER
_________________ (Name and address of debtor)
Subject: Reminder for collection against first installment
Dear Ms/Mr ___________
This is with reference to the loan that you have taken from our institution vide docket number _____________ dated ____________.
We would like to inform you that your first installment is due on _________ (date) as per the loan agreement. This is a payment collection reminder for the same.
Please let us know how and by when will the payment be made to us. Alternatively we can also send our representative to collect the payment from you at a time convenient to you.
Just to reiterate that if the payments are not received before the due dates, we will have to take legal action.
We hope to have a pleasurable business relationship with you.
(Name of signing authority)