Debt Collection Letter Template

Have you ever encountered situations where your clients go months without paying an invoice? You can adjust if the payments are a few days or weeks late. But it requires timely communication, transparency, and trustworthiness.

If your efforts to discuss the payment terms and get a response on due invoices go in vain, you may need to take a more formal approach.

For instance, you can use a debt collection letter template to contact debtors every few days. It reminds them of the due payments and motivates them to pay at the earliest.

But how do you draft debt collection letters to get quick payments?

Can you automate the process to print and send these letters on time?

Let us discuss the answers to these questions in this blog to help you get paid faster and steady your revenue flow!

Not all debt collection letters are the same. It would be best to have different formats based on when you want to send them and your relationship with the client.

Also, your last interaction with the client makes a broad difference in what you include in the letter.

You cannot send the same message to someone you spoke to yesterday and another client who hasn’t replied in weeks. Similarly, it would help if you used different tones when addressing clients who are late by two weeks compared to those whose payment due date was two months ago.

Below, we have included a debt collection demand letter template for different situations. Let us see how to draft each!

Letter 1: Reminder Debt Recovery Letter

Many refer to it as the “soft letter” companies send to their debtors with an invoice copy as a reminder. This message alone can do its job and push the client to honour the due payment. However, you may need to send two or more letters to get some people to respond or take action.

Here is a debt collection letter template to remind debtors about their dues:

[Your business name]
[Apartment number and street address]
[City, state abbreviation, and postal code]
[Date]

To,

[Your client’s full name]
[Their organisation’s name (if applicable)]
[Their delivery address]
[Subject]

Dear [Your client’s first name]

This letter is regarding invoice [number] for your outstanding amount of [amount]. The payment has become overdue by [number] days, and we would appreciate it if you could pay it at the earliest.

Please ignore this debt recovery letter if you have already paid. Otherwise, you may contact us to arrange alternative payment arrangements to settle your due amount.

Yours sincerely,

[Your name and designation]
[Signature]

Here is a sample to help you use the debt collection letter template correctly:

Keith Legal Consulting

8 Main RD

PIMPAMA QLD 4212

August 14, 2024

To,

Mike Robbie

7 8 AVE

PIMPAMA QLD 4209

Subject: Debt recovery letter

Dear Mr Mike,

I am writing to inform you that- your invoice #12507 has become overdue. The outstanding amount is $1,405, and the due date was August 7, 2024. We urge you to look into this matter and complete the payment immediately.

Your representative, Mr. Charles, is happy to answer any questions. Also, we can arrange an alternative payment system if needed to help you pay the bill.

Please ignore this message if you have already paid.

Yours sincerely,

James Tonkin, Accounts Head

[Signature]

Letter 2: Enquiry Debt Collection Letter Template

Drafting this letter is challenging compared to the first one. You sent the client a message but have yet to receive a reply. So you might assume they didn’t get time to respond or missed your mail. You might want to save your professional relationship while not coming off too strong.

But the second free debt collection letter template is essential to inform the client that you have already tried to get a reply on the matter. Try being firm instead of rude. This letter should sound like an enquiry wherein you are curious to know why the client did not respond.

Here’s a template for the second letter:

[Your Letterhead]
[Date]

To,

[Recipient’s name]
[Their delivery address]
[Subject]

Dear [Recipient’s first name],

[Include the invoice details, like the number and the outstanding balance. Also, add the number of days since the payment has become overdue. Please mention that you have already sent them a letter with the arrival date.]
[The second paragraph should include an enquiry about why the client did not pay the invoice. Emphasize that you want to save the business relationship with them. But you must receive the outstanding payment before working on new contracts.]
[Provide your contact details and ask the client to contact you with any concerns.]
[Closing]
[Your Signature]

Now, let us put this debt collection letter template Australia to use:

[Letterhead]

August 14, 2024

Jake Campbell

201 Collins AVE

CAIRNS QL 4280

Subject: Debt Collection Letter

Dear Jake,

I hope you are doing well. We spoke over the phone last Thursday. Your outstanding payment of $2,200 for the June 2024 invoice is still overdue by 20 days. We also wrote to your finance head on August 4, 2024, but didn’t get any definite response.

We would like to know if you have any concerns or questions about the invoice amount or the payment terms. Also, we are happy to help in any way, including arranging a different instalment payment plan for you. Our organisation values you and wants to retain our relationship for the long term.

If you have already paid, please provide us with the payment details by calling XXXX XXXX. We apologise for any inconvenience it may cause.

Yours sincerely,

Janice Smith

[Signature]

Letter 3: Appeal Debt Collection Demand Letter Template

The third stage is among the most difficult in the debt collection process. You may have spoken to the client several times over the phone and sent many emails. Also, you sent two letters and are still waiting to receive a response.

It is time to speak about the consequences of not replying to your debt collection letters, like added interest and surcharges.

Here’s a debt collection letter template for the third stage:

[Your Letterhead]
[Date]
[Your client’s name]
[Their mailing address]
[Subject]

Dear [Recipient’s first name]
[Mention the purpose of your letter. Express urgency and appeal to the reader to complete the payment immediately. Tell them that you have attached the invoice copy in the envelope.]
[Emphasise your interest rates on late payments. Make it explicit that you will charge an extra fee to the client if they don’t clear the bill in a specific number of days.]
[Reinstate your message. Please mention that you look forward to hearing from the client soon.]
[Closing]
[Signature]

Below is a debt recovery letter sample for your reference:

[Letterhead]

August 14, 2024

To,

Rob Jones

THV Inc.

7 NS 1st LN

NEWCASTLE NSW 2952

Subject: Debt Recovery Letter

Dear Mr Rob,

This letter informs you that your recent consignment #365 invoice is still overdue. Its due date was over two months ago, and we have tried contacting you many times during this period. I have attached the invoice copy for your reference.

We regret to inform you that you must pay interest at 10% per week if you fail to honour your dues by August 25, 2024. This step is essential to reinforce the payment terms we had initially discussed.

We look forward to hearing from you soon and resolving the matter. Please feel free to connect with us to clear any concerns or doubts.

Regards,

Barbara Walker – Vice President (Sales)

[Signature]

Enclosures: 1 (Invoice #365)

Letter 4: Final Demand Letter Template

This debt recovery debt collection letter template should demand the client completes the payment within a few days. You sent them three letters. And they did not bat an eye.

So you must take more assertive steps, like charging a late payment fee and warning the client that you plan on passing on the invoice to a collections agency.

Here’s a debt collection letter template for this situation:

[Your Letterhead]
[Date]

To,

[Recipient’s name]
[Their organisation’s name]
[Delivery address]
[Subject]

Dear [Recipient’s name],

[Come straight to the point and tell the reader their invoice is long overdue. Mention that it is your final message to them before contacting a collections agency to retrieve the payment.]
[Total the invoice amount with the late payment surcharge and give the client the ultimatum date to pay everything.]
[Conclude your letter saying that you look forward to a reply and expect the reader to resolve the issue on priority.]
[Closing]
[Signature]

Find below a sample of your final demand debt recovery letter:

MKV Manufacturers

68 Shirley ST

CARLINGFORD NSW 2118

Phone: 04XX XXX XXX

Email: info@mkvmftrs.com

August 14, 2024

To,

Ellie Joseph

Starcane Retailers

5 SE Crown ST

SYDNEY NSW 2016

Subject: Debt Recovery Letter

Dear Mrs Ellie,

We regret to inform you that your invoice #781 for the order we delivered in February 2024 is overdue for four months. It is our last call for payment before we connect with a collections agency to retrieve our amount.

Please complete the payment for the said invoice with the late fee and interest on or before August 22, 2024. Here’s a breakdown:

• Invoice amount: $1,890
• Late fee: $200
• Interest @20% p.a.: $126
• Total: $2,216

We highly recommend you look into the matter to save both parties from any inconvenience.

We look forward to receiving your payment soon.

Regards,

James Bower

[Signature]

Letter 5: Legal Debt Collection Letter Template

This letter informs clients that you have initiated a legal proceeding against them. Since they didn’t complete the payment or agree to a monthly instalment system, this step is your final attempt to resolve the matter.

Here’s a legal debt collection letter template:

[Letterhead]
[Date]
[Recipient’s name]
[Their delivery address]
[Subject]

Dear [Recipient’s name],

[Inform the reader that you have passed their invoice to a collection agency and contacted the legal authorities, who will speak to their company about the hearing date.]
[Ask them to contact you if they plan to pay off their debt and close the matter.]
[Closing]
[Signature]

Let us see how to write the legal action letter via a sample:

[Letterhead]

August 14, 2024

To,

Cleo Cabral – Finance Head

JP Industries4

40 Hunter ST

SYDNEY NSW 2019

Dear Mr Cleo,

We have passed your invoice #9808 to a collection agency that will contact you regarding the payment. Also, we have alerted our legal team about your outstanding bill. They will contact you within a few days with a hearing date.

If you want to pay the bill now, please call Mr George as soon as possible.

Yours sincerely,

[Signature]

Enclosures: 4 (Letters dated: June 4, 2024, July 1, 2024, August 2, 2024, August 9, 2024)

The above samples are easy to follow for your quick reference. But they should always include the following elements to be effective:

• The invoice amount: Always include the amount that the debtors owe you. Also, you can attach an invoice copy if they lost the original or forgot about it. It is an excellent way to remind clients of their outstanding payments and bring the matter to their attention.
• Number of days since the invoice has been overdue: One effective strategy when writing a debt recovery letter is to mention the number of days overdue. You can also add the due date and provide clients with a new payment schedule to honour their dues.
• Your contact details: Print the debt collection letters on your branded paper stock to help readers find your contact information hassle-free. Try mentioning someone the client has been in touch with to shorten the communication channel and get speedy responses.
• Repercussions of non-payment: Mention your plans to take legal action against the letter’s receiver and send the invoice to a collections agency. It motivates the reader to respond with an immediate solution, helping you retrieve your payments faster.
• Alternative payment options: Discuss your intentions of providing alternative payment choices to the client if they can’t pay the entire amount at once or need an installment system.

PostGrid’s direct mail API offers many professionally built letter templates to help you curate your messages well. You can download them in PDF or HTML formats and add customised content according to your preferences.

Then, we help you print and mail your debt collection letters to your intended clients. PostGrid simplifies the process using automation, eliminating manual effort and saving time!

Here are the steps to help you write an effective invoice collection letter:

1. Use a checklist: Fortunately, we have compiled the checklist with a debt collection letter template for all situations. Thus, you can ensure you don’t miss out on any information.
2. Personalise all information: Sending generic messages cannot guarantee responses. Try personalising your letters to catch the reader’s attention with accurate details about their outstanding payments and get them to pay. PostGrid’s direct mail solutions allow you to use variable data printing to send client-specific, unique mail to everyone. It lets you connect with debtors using relevant data that they can refer to for making quick payments.
3. Use a subject line and salutation: These are crucial letter elements that give it a professional look. Using them ensures the reader does not throw your mail in the trash. Instead, they treat it as a significant message and read it on priority.
4. Mention your concerns upfront: Don’t wait for the second or third paragraph to discuss the due payment. Include the invoice number and due date at the beginning and express concern for the delay.
5. Add your details: You can mention your company’s representative’s name, whom the client can contact to discuss new payment terms. But always add your details (the person who writes the debt recovery letter) to maintain authenticity and authority.

It is vital to remember that your clients bring you business. They are also an excellent source of referrals for your brand. Thus, maintaining positive connections must be your top priority.

Try curating a debt collection letter template Australia that maintains a professional yet firm tone. It should give clients the benefit of the doubt that they must have forgotten to pay their bills.

Don’t worry! Here are some tips you can follow to write empathetic yet appealing letters that drive responses:

• Be understanding and clear: Don’t confuse your clients with vague and incomplete information. Please provide accurate details about the invoice, due date, and payment terms, helping them pay the bill without contacting you for more data.
• Be flexible: Try offering a new payment window to your debtors instead of sticking to the old due date. They can make arrangements or connect with you about an alternative instalment plan.
• Use templates: Following a debt collection demand letter template lets you mention all the necessary information. It helps you stay formal and motivates clients to reply.
• Follow the legal debt collection method: Australian law prohibits you from threatening your debtors, using profane language, or unfairly treating them. Always contact your legal team to check the letter for these things and other factors before sending it. It helps you file a lawsuit (if needed) without facing trouble yourself.

You can customise a collection agency debt dispute letter template by adding your contact details and logo. Also, you can tailor your message to suit the client’s unique situation.

For instance, you can send a friendly reminder to a long-term client who missed a payment for the first time. But you may need to send a firm letter discussing legal action to someone who ignores your calls, emails, and mail.

However, many companies skip customisation because of time and resource constraints. Luckily, PostGrid offers a reliable solution—direct mail automation.

You can integrate our API into your CRM to print and mail debt collection letters from your existing system. Or download our automation software to get started!

Then, you can set up your accounts and create print and mail tasks. Our direct mail services help you do everything online and using a single platform, like

• Drafting and customising letters
• Uploading contacts
• Choosing print and mail delivery options
• Sending on-demand and bulk mail
• Tracking sent mailers in real-time, and
• Getting campaign analytics, etc.

Some clients would refuse to pay their invoices even after you sent many debt collection letters and warnings. You can contact a debt collector after your efforts fail.

These agencies are experts in their field and have negotiation specialists who can handle the matter on your behalf. They deal with businesses of all sizes and in all segments.

You may need to pay a small commission to the agency after the client finally pays the bill, but it is worth it!

You can rely on PostGrid’s automated direct mail services to prepare, print, and ship a debt recovery letter to all your debtors.

Our solutions are quick, affordable, and efficient, helping companies solve their cash flow issues. Also, their finance teams can use our API or software to send other mail types, including

• Customer statements
• Cheques
• Notices
• Tax documents
• Legal notices
• Compliance letters
• Policy change messages

You can send any number of letters or other mailers to anyone! Also, we don’t have minimum or maximum mailing limits, giving you 100% flexibility to control your shipments.

We offer our clients many features, like

• Address verification
• Metadata tagging
• Personalisation options
• List import and export
• API integrations
• Print and mail fulfilment
• Campaign analytics
• Competitive Pricing

Request a demo to learn more about drafting a debt collection letter template and how we can help!