Is a demand letter any use in collections?

Is a demand letter any use in collections?

On Behalf of | Aug 27, 2022 | Collections

A lot of companies have trouble collecting unpaid bills, and they sometimes resort to just about anything to actually get a debtor’s attention.

One of the first things they might try after an invoice has gone unpaid for a few months  – particularly if communications have become hostile – is a demand letter.

What’s a demand letter, and what use is it?

It’s basically a professional letter, usually written by an attorney, that briefly reviews the unhappy situation. It includes a description of the debt, some mention of prior attempts to collect and a firmly stated demand for payment within a specified time.

Are they useful? They can be. A demand letter is very good at grabbing attention. For many debtors, it’s a sign that you aren’t going to go away and the situation is about to get very serious. That can prompt some debtors to make good on their bills.

It’s also useful to send a demand letter if you think (or know) that you’re going to end up fighting about this debt in court. Your demand letter can be used to restate the justification for the bill, outline your collection efforts and outline your case – if it comes to that.

Are there any drawbacks to sending a demand letter?

Not usually – but you do need to keep in mind that all correspondence between your company and the debtor could end up being exhibits in court someday. That means you want to avoid any appearance that you may be unreasonable, partially at fault for the breakdown in communication or outright insulting and threatening. Keep the tone professional and the information in the piece factual, not emotional.

It’s frustrating when your accounts are going unpaid – and your business can suffer for it. When you’ve done everything you can reasonably do to bring an unpaid account into compliance and your bottom line is hurting, don’t hesitate to seek guidance about your other legal options.