Telephone calls can sometimes prove more effective than sending out a debt collection letter. If after chasing your client for the money you are still given the run around it is worth considering putting it in writing.
Sending out a letter or an email can provide a clear record of your attempts to recover your debt.
If payment is still outstanding, send a debt collection letter clearly showing the company details, phone number, amount outstanding and that court proceedings might be taken.
If the customer is an individual or self-employed you must follow the Pre-Action protocol. The information below is for business to business.
The first course of action would be to send out a customer statement at the end of each month. The statement will show all the outstanding invoices due for payment. The total outstanding and a breakdown month by month.
The easiest way to send customer statements is by using online accounting software. You can set statements to automatically send, as well as reminder letters.
Follow it up with a phone call to the client.
It may sometimes prove challenging to telephone all of the customers that owe you payments if you have many companies or people to chase. Standard formatted debt collection letters can be an effective method in any credit control procedure.
14 Day Collection Letter
The debt collection letter is now called a letter before claim.
Before sending a debt collection letter, you must have done everything you can to collect the debt.
It is always recommended to make a phone call before sending a court threatening letter to see if it can be avoided.
The rules have changed, it used to be a 7-day collection letter, you now have to allow at least 14 days notice, if a customer has not paid their account within the credit terms as agreed.
Before sending a payment reminder, ensure that you have taken all the steps available in credit control to try and collect the money. It includes telephone calls, sending out customer statements and letters.
You should only ever send out one final chase reminder that stipulates the course of action to take if payment is not received within a deadline set out in the letter. Sending a 14 day letter should always be a last resort.
It is worth considering if this is the right course of action, especially if you wish to continue business with this customer. You also have to be prepared to take legal action if the balance remains unpaid after 14 days.
If you need to start legal action, go to Money Claim Online if the amount is below £100,000. It is a simple process, but it will still take time for the customer to pay you.
Debt Collection Letter Instructions
- Download the debt collection letter using the link at the end of this page
- Open the letter in Word or word processing program that you use
- Enable editing of the document
- Enter the company name and address at the top.
- At the bottom enter your name, title and company name.
- Save this as a template to use for further letters
- The date is automatically updated
- Enter Customer details
- Complete the reference details, include as much information as possible
- Enter the amount that you are claiming
- Save the letter as a separate file
- Print, sign and send a statement to the customer
Debt Collection Agency
There are debt collection agencies that can send a debt collection letter for you and take legal action. When they collect the money, you will have to pay them a percentage of the amount recovered. It can take all the stress out of chasing clients for money, but you will have less money in the end.
If they can’t collect the debt they can proceed with court action.
Download our free debt collection letter. By downloading this letter you agree to our licence agreement.
Further information on small claims can be found on the money claim online website.
Letter Before Claim Template Conclusion
Before sending a letter before claim make sure that you have sent statements, emails and made phone calls.
The debt collection letter used to be 7-days notice this has been changed to 14 days.
Only send a 14-day letter if you are prepared to take proceedings against the customer.
Ensure that any communication is recorded with details of dates and details.
If needed use the services of a debt collection agency.
Return from Debt Collection Letter to Credit Control page.