Importance of Collection Letter or Dunning Letter

Undoubtedly, in general, everyone can say that collection letter has great importance in every kind of business. Formally importance of collection letter describes below:

Importance of collection letter according to L. Gart side, dunning letter is written for two purposes to be addressed at the same time:

  1. To influence the debtor to pay his dues;
  2. To maintain goodwill.

Because of credit facilities in the business world, the buyer gets the opportunity. But in many cases, it is found that buyer remains silent at the time of settlement accounts with the seller.

This causes a seller to take the help of the dunning letter. If every business could be done in cash there was no need for such a letter at all. But credit facilities, the business has expanded a lot and therefore giving credit is the usual tradition in the business world. As long as credit exists, the application of a dunning letter also exists.

Importance of collection letter

Babenroth and Parkhurst have divided the buyer into seven (7) collection or dunning letter is required. They are as follows:

  1. The person making negligence to pay the dues or having a weak business policy to adjust the dues.
  2. Person/giving less importance if the credit is of a small amount.
  3. The person making a delay because he is doing business with the amount of creditor.
  4. A person who wants to enjoy the discount and various benefits.
  5. A person having financial weakness due to economic conditions.
  6. A person who is naturally slow.
  7. A person who is a fraud.

Importance of Collection Letter

So, the existence of the above persons in the line of credit transactions will obviously call tor dunning letters. Even the seller may need more before the due time for which he can also take the help of a dunning letter.

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