Accounts Receivable Collection Letter
Balance at 30 days receives a reminder letter. Then balance at 60 days receives a harsh collection letter and credit hold. Then balance at 90 days receives attorney letter. Finally, balance at 110 days turned over to collections.
The number of collection letters in a series should be kept to a minimum. Experienced commercial credit grantors have found that there is a point of diminishing returns, generally reached after the first letter goes unanswered.
Example of Accounts Receivable Collection Letter
Remind Letter Example A:
January X, 20XX
Dear Company A,
This is a friendly reminder that your account has a past due balance of $X.xx. Attached are the invoices we show to be unpaid; please check your records and if you find that these have already paid, please contact me at 713-555-5555.
If we do not hear from you or receive payment within 10 days from the date of this letter, your account will be put on credit hold and no further services will be provided until all overdue balances are paid in full.
Thank you for your prompt attention to this matter.
A reminder letter, signed by the accounts receivable (AR) collections representative, once a balance has reached 30 days old and a subsequent, harsher collection letter when a balance reaches 60 days can produce desired results. Should the harsh collection letter not produce results, an attorney letter may be in order as well as the services of a collection agency. The following example is of a harsh collection letter which should be signed by the company’s controller.
Remind Letter Example B:
February X, 20XX
Dear Company X:
We show your account has a past due balance of $X.xx. Previous attempts to collect the balance have failed and as a result, I have been forced to put your company on credit hold. Please call me immediately at 713-555-5556 to resolve the balance on your account and to avoid having this issue referred to a collection agency.
Managing accounts receivable and collecting on-time is just one of the many ways to improve cash flow. The next step to improving cash flow is to download the free whitepaper, 25 Ways to Improve Cash Flow.