Importance of Collection Letter or Dunning Letter

Undoubtedly in general every one can say that collection letter has a great importance in every kind of business. Formally importance of collection letter is describe 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, 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 the seller to take the help of dunning letter. If every business could be done in cash there was no need for such letter at all. But credit facilities, 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 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. Person making negligence to pay the dues or having weak business policy to adjust the dues.
  2. Person/giving less importance if the credit is of small amount.
  3. Person making delay because he is doing business with the amount of creditor.
  4. Person who wants to enjoy discount and various benefits.
  5. Person having financial weakness due to economic conditions.
  6. Person who is naturally slow.
  7. Person who is fraud.

Importance of Collection Letter

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

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