Collection Letter Definition and Meaning

In general word collection letter definition is the notification sent by a supplier or seller to his customers or buyers for reminding the payment of dues (arising from credit sales) is called collection or dunning letters.

Collection Letter Definition

In the business world, a huge business is done or credit. But there are sometimes problems when the debtor (buyer) delays the payment beyond, the credit period. And debtor is found to be reluctant in the settlement of dues because of natural habit Here the seller has to resort to what is called a collection or dunning letter to solve the problem.

Collection letter definition according to As L. Gart’ “A request to settle the outstanding account is known as collection letter.

No businessman wants to lose customers and therefore collection of debt appears to be one of the most difficult problems to the .creditor. Hence the collection business has to be -handled very carefully and the collection letters drafted tactfully so that customers can willingly response to pay the dues

Collection letters are usually written in a series and the typical stages are as follows:

  1. Sending statement of account;
  2. Reminders ;
  3. Inquiry and discussion;
  4. Appeal and urgency;
  5. Demand and warning.

Collection Letter Definition

 

Features of collection or dunning letter

The following are the features of dunning letter.

  1. Collection of Debt: It is a letter that attempts to collect debt from the customer or buyer.
  2. Patience: The creditor should keep patience while communicating through such letter. Lack of patience may result in loss of money, goods and the customer’s future business.
  3. Positive tone: The tone of such letter should be positive with cheerful and optimistic approach. There should be fairness and self respect for requesting the creditor.
  4. Exchange of letters: Such a letter is exchanged between debtor and creditor for the settlement of dues and usually written in a series.
  5. Language: The language of such letter must be tact and persuasive so that collection of debt as well as goodwill remain side by side. Send by post: Dunning letters are sent by post through registry
  6. Planned structure: The letter should have planned structure to make the best possible efforts to retain the customers with prompt collection.

The above features distinguish such letter from other business letters

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