Copy of Collection Letters

8/6/2019 Copy of Collection Letters

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COLLECTION PROCEDURE

Prompt collection of money is essential for the successfuloperation of a business organization.

If the creditors do not clear their accounts within the stipulatedperiod of time, there would be a fall in the amount of capitalturnover and this may adversely affect the profit of the companywhich had supplied goods on credit.

Many organizations have therefore, evolved an effectivecollection procedure. This is often called a collection letter

series.

Obviously the main purpose of the system is to collect theamounts due and at the same time ensure that the businessrelationship with the customer is maintained. To achieve thesetwin objectives you should be in mind the following points:

1)Be courteous, tactful and patient in dealing with debtors. Neverassign any motives. Always assume that he is sincere and

intends to pay.

2)Decide the extent of time gap between communication on thebasis of the type of credit risk and the urgency of collection. Thecustomers assets, volume of business, record of paying debts inthe past would help you come to a decision.

3)Start by sending a regular monthly statement. Follow it up by aroutine reminder. The next step is to write a personal letter to the

concerned officer and if there is no response, talk to the personon phone and then send a telegram. As a last resort, write aletter giving notice for legal action.

4)Mention the amount due in each communication.

5)To motivate response, appeal to the customers sense offairness, good intentions or self-interest. Or you may try toexcite in him the emotions of sympathy and fear. One way of

framing your ideas to achieve these tasks is given below:


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SENSE OF FAIRNESS:

We agreed on certain terms when theaccount was opened. In all fairness youshould honour them.

GOOD INTENTIONS:

It appears our statement of amount hasmissed your attention. On receipt of thisletter we hope to receive the payment.

SELF INTEREST:

It will become difficult for you to obtaincredit in future if there is any further delay inclearing the outstanding dues.

SYMPATHY:

You can very well imagine how difficult it isbecoming for us to run our businesssmoothly in the case of non-payment ofamount due to us. We therefore, request youto act fast and clear your account.

FEAR:

Unless we receive the payment within afortnight from now, we shall be forced toplace the matter in the hands of our legaladviser for necessary action.


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Kashiwal Plastics Limited

234, Subhash Chandra Bose Road

Churchgate, Mumbai 400 029

Phone : 020-23445566, 23445577, Fax : 020-23445588

Ref. No. _________

10 November 2001

The Manager

Dagar Enterprises

472A, New Rohtak Road

Bhiwani 125 021

Subject : Supply ofKarywel Suitcases

Dear Sir

Please refer to your letter dated 12 October 2001.

We are pleased to accept you as a credit customer of our company.Your order for 200 suitcases is being sent immediately through Golden

Transport Company on the credit terms proposed by you. A bill for Rs.55,000 is enclosed. You will notice thatg we have allowed the usualtrade discount, and that the last date by which the payment shouldreach us is 9 January, 2002. The shipping papers have been sentseparately to your bank.

We have investigated the credit references given by you and foundthem satisfactory. We look forward to serving you in future and hopeto receive an order for another lot soon. We wish you success inpromoting the sale ofKarywel.

A form for credit information is sent herewith in duplicate. Please fill itin and send us one copy. This request is a part of our creditprocedure and helps us update our records as regards our creditcustomers.

Yours faithfully

Sd/-

P.K. Saxena

Credit Manager


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ROUTINE REMINDER

15 December 2001

Dear Sir

I am sending a copy of the statement of

account dispatched to you on 30

November, 2001. The draft for Rs.

55,000/- for the supply of 200 suitcases

has not yet been received. Pleaseexpedite payment.

Yours faithfully,

Sd/-

P.K. Saxena

Credit Manager


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SECOND REMINDER

31 December 2001

Dear Sir

This is our third attempt to collect Rs. 55,000thatg you owe us for the 200 suitcases

supplied to you on 10 November 2001. Noaction seems to have been taken on ourstatement of account sent to you on 30November and our reminder of 15 December2001.

We had readily agreed to your terms of credit

and it is only fair that you honour them. If bychance our earlier communications haveescaped your attention, I am sure this onewill reach you and evoke a prompt response.

Yours faithfully,

Sd/-

P.K. Saxena

Credit Manager


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15 January 2002

Dear Shri Ram Das

Before I come to the purpose of writing this

letter, let me wish you and your firm a

prosperous New Year.

As you know, we supplied 200 suitcases of

different sizes to your firm on 10 November 2000,

ad for this supply a sum of Rs. 55,000 was to be

remitted to us in early December. But despite

three communications, we have not so far

received the payment.

We do not in any way wish to damage your credit

reputation. I am aware that you value yours just

as we do ours. But any more delay on your part

may force us to a still avoidable course of action.

I should therefore, be grateful if you could kindly

send the amount by demand draft immediately

on receipt of this letter.

Yours sincerely,

Sd/-

P.K. Saxena

Credit Manager

THIRD REMINDER : PERSONAL LETTER


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FOURTH REMINDER : TELEPHONE CALL

On January 2001, Shri Saxena speaks to

Shri Ram Das on the phone, requesting

him to send the payment of Rs. 55,000 for

the supply of 200 suitcases.

Shri Ram Das explains that he was away

from Bhiwani for the last two months for

some personal reasons.

He regrets the delay and promises to

dispatch the cheque on 31 January 2001.


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FIFTH REMINDER: TELEGRAM

After waiting for seven days, on 8 February

2002, the following telegram is sent to Shri

Ram Das.

REFER TELEPHONE CONVERSATION

ON 30 JANUARY, DRAFT FOR RUPEES

55000 NOT YET RECEIVED. SENDTODAY.


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SIXTH REMINDER : THE FINAL LETTER

23 February 2002

Dear Shri Ram Das

This is to inform you that unless the

demand draft for Rs. 55,000 is

received by 7 March, 2002, we shall

place the matter in the hands of ourlegal adviser for necessary action.

Yours sincerely

Sd/-

P.K. Saxena

Credit Manager

Documents

Copy of Collection Letters