Collection dispute letters in B2B finance and accounting are written communications used to dispute a debt or an invoice listed on a company's account.
The purpose of the letter is to notify the creditor of a dispute over the amount owed and request that they investigate the matter.
Sending well-crafted collection letters can help reduce disputes and improvecollection and recovery by providing the debtor with all the information they need to make an informed decision about payments they owe, but sometimes disputes over contested debts happen.
When sending a collection dispute letter, it will typically include the debtor's name, the amount owed, the invoice date, and the invoice number.
In addition, it should also provide a clear and concise explanation of the dispute, including any supporting documentation that backs up the company’s claim.
Lastly, maintaining a positive and professional tone makes the debtor less likely to become defensive or confrontational, reducing the chances of the dispute escalating into a legal battle.
Writing a good collection letter that avoids collection disputes is important for several reasons:
Maintaining positive customer relationships: A collection dispute can harm your relationship with the customer. By avoiding disputes, you show that you value the customer and are willing to work with them to resolve the issue.
Reducing legal risk: A collection dispute can lead to legal problems, especially if the customer feels they have been treated unfairly or harassed. By avoiding disputes, you reduce the risk of legal action being taken against your company.
Saving time and money: Collection disputes can be time-consuming and costly. By avoiding disputes, you save time and money that could be better spent on other aspects of your business.
Improving your reputation: A collection dispute can damage your company's reputation, particularly if it becomes public. By avoiding disputes, you show that your company is professional and respectful, which can enhance your reputation.
This first collection letter should contain the following information:
Days past due
Amount due
Note previous attempts to collect
Summary of account
Instructions about what would you like to happen next
The due date for payment—it is important to use an actual date, not “in the next 7 business days,” as this can be vague and open to interpretation by the customer
Your contact information and clear payment information so the company can quickly and easily make payment
The second collection letter should include:
Mention of all previous attempts to collect, including the first collection letter
Original invoice due date
Days past due
Invoice number and amount
Instructions about what would you like to happen next
Offer help to work on the payment terms
Hint at the impact non-payment could have on their credit terms/ratings
Your contact information and clear payment information so the company can quickly and easily make payment
The third collection letter should include:
Mention of all previous attempts to collect
Invoice number and amount
Original invoice due date
Current days past due
Instructions on what they should do next
A warning of the impending consequences
Your contact information and final request to contact you alongside clear payment information so the company can quickly and easily make payment
When it comes to collections and recovery, sending a final collection letter can be an effective way to encourage debtors to pay outstanding debts.
Companies should follow these best practices to ensure this process is carried out in the best possible way.
Use a professional and courteous tone: This will help to avoid offending the debtor and maintain a positive relationship between the debtor and the company.
Include all relevant information: The final collection letter should include all relevant information about the debt, including the amount owed, the due date, and any interest or penalties that may have accrued. This will help to avoid misunderstandings and ensure that the debtor has all the information they need to make an informed decision about payment.
Set a clear deadline for payment: The final collection letter should include a clear deadline for payment, after which legal action may be taken. This will encourage the debtor to take the debt seriously and take steps to pay it before the deadline.
Offer payment options: Companies should offer the debtor various payment options, such as payment plans or electronic payment options, to make it easier for them to pay the debt.
Follow up promptly: Companies should follow up promptly after sending the final collection letter to ensure that the debt is paid or to take further action if necessary.
By following these best practices, companies can increase their chances of successfully collecting outstanding debts before the dispute escalates into a formal legal dispute.
Collection management can be a time-consuming and complex process, but with the help of an automated solution like BlackLine, it can be much more efficient and effective.
BlackLine offers a range of tools and features that can help you streamline your collections process, including automated workflows, real-time reporting, and automated communications.
These tools help businesses streamline their collections process, improve efficiency, reduce errors, enhance the customer experience, and provide valuable data insights.
By leveraging AR collection management software to automate collections activities, businesses can save time, reduce costs, and improve their chances of recovering unpaid debts.