When you are running a business, it is necessary to have a proper communication system in place too. At least 82% of the businesses can fail in their initial days due to the lack of the proper system of communication within the organization and outside it. And that is why you need to know when your credit buyers owe you money and how you should draft a demand letter to them so that they can pay attention to this problem and pay you back.
Demand Letter and Guide to Write it from Experienced Debt Collector
A demand letter is an official letter that will inform your debtor that they owe you money and it is time that they should pay it back. Having money in the market can lead to a disrupted cash flow, which can actually affect the production, wages, and regular expenses of your business. So, in order to avoid that, it is necessary that the debtor starts paying.
Now, if you are planning to hire a debt collectorand get them to write the letter, then it is a good idea. But this will cost you money whereas the letter might not bring any money. So, for you, the best step now should be to start searching for collection companies near me for the actual part of the collection while you can draft the letter yourself. Take a look at the following points to know what a demand letter is and what you need to know about it.
What is a Demand Letter?
As it has already been said, a demand letter is an initial communication through a letter. The letter will contain the following information:
- A brief review of your business association over the years
- A description of the debt with the predetermined timeline
- Legal justification for why the demand letter has been sent
- A discussion of the attempts before to get the payment
- An official demand to the debtor about when they should pay
- Your further options if the debtor fails to pay this time
You can use the company letterhead to send this letter and use this as the final deadline. It is always advised that you should go for this so that you can get the money even before hiring debt collection agencies in Houston, Texas.
Types of Demand Letter
There are three types of demand letters that will include the following:
- A reminder letter is often a friendlier version of the demand letter where you are reminding the debtor about the money and you want a peaceful resolution of the problem. This can be sent 14 days after the failure of payment.
- An inquiry letter is another option that is formal and yet sensitive so that you can retain good relation with the debtor for your future business dealings. In this case, you can ask about their difficulty and offer to have a conversation.
- The appeal letter should be sent after these two options. This means that even after keeping the communication open, the debtor didn’t respond. So, you will have to explain the urgency of the situation.
- The debt warning letter is the final letter that is meant for an unwilling debtor. Here, you will inform them about what you are going to do next. This will be a completely professional one.
Essential Things to Know about Demand Letters
The demand letter is a serious step and can be used against you as a document during the pre-litigation period if you have used an aggressive approach or threatened the debtor. Hence, you need to know about the following things to avoid such a situation and get it done.
- First of all, you need to understand the legal boundaries. FDCPA, state and federal governments have many protective regulations for debtors. That is why you need to make sure that you are complying with them while drafting the letter.
- Consulting a professional can be a good idea. Even if you are planning to draft it on your own before resorting to collection agencies, you can still consult them on how to draft it.
- Know which details you should include in the demand letter.
- Use a title that will catch the attention of the debtor. You don’t want the letter to get lost in the crowd of other letters.
- Keep it brief and professional.
Now, and importantly, you need to get in touch with commercial collection agency in Houston, Texas for the recovery of the debt as it is obvious that the debtor is not ready to pay without the nudge.
Summary
Are you planning to draft a demand letter? Read the article to know what it is how you should draft it, and what types you can write.