The Ultimate Collection Letter

It’s summer, who wants to think? Sit back, relax with a cold one and I’ll tell you a little story.

Once upon a time, when Disco was dying and Grunge was still Seattle garage bands, I went to an all day seminar at the famous Biltmore Hotel in downtown Los Angeles. The topic: “The Ultimate Collection Letter”. In those days step one in the collection process was a friendly reminder letter. Step two was a follow up letter, usually beginning with a remark about not responding to letter number one. Step three was a letter that implied a threat of some sort. Finally, someone would actually pick up the phone and call. Obviously there was a demand for collection letter verbiage that would inspire an immediate check issuance by the reader.
The ballroom was packed with credit people hungry for knowledge on the subject. The speaker promised a revolutionary letter format; one that literally turned letter writing on its head. Yes, it was an upside down letter! The speaker was recommending that the letter head be on the bottom of the letter, the debtor’s name and address should be positioned on top and you immediately begin with the closing: pay or else. In other words, the letter should cut to the chase in the opening line. Collection letters, normally, started off with something like, “apparently our previous correspondence was been lost” or “our previous reminders have been ignored” or “surely you understand the importance of good credit”. Our speaker was suggesting that letters begin, “you owe $X, pay it now!” or something along those lines.

I took all of this information back to the office and without the benefit of a computer, typed about fifty of these sure fire, guaranteed to get the debtor to pay, upside down collection letters. At the time I was working for a lumber company that had home centers in several of the most uninhabitable locations in California, Arizona and Nevada. I chose as my initial sample, the mostly delinquent customers that had charged at the Parker Arizona store. The store manager was responsible for all credit and collection activity. My role was to train and introduce proper procedures. However, the manager had the final say, and since the store as well as most of Parker, serviced the local Colorado Indian Tribe, the manager willingly extended the local Indians the credit they needed to purchase building materials, cast iron skillets and Thunderbird wine despite the fact that there was no practical legal recourse should they default; which they did en masse.

I was hopeful that at least some of the debtors would respond with at least a token payment. I did not have high expectations; maybe ten percent would have a conscience and recognize their responsibilities as debtors. I typed and typed for days and sent all of the letters on the same day and sat back to await the checks.

Zip. Nada. Nothing. I did not even get any return to sender mail. It was as if all of the letters I mailed were dropped into one large incinerator.

The experience taught me a valuable lesson. Collection letters by and large are a waste of time. You want someone to pay you, call them up and ask them to. Most of the time they will; (though I cannot speak for the Colorado Indians).

Strategic Credit Management Solutions comes from experience. We can provide a total package of training techniques, including effective collection letters. See our website at http://powerscredit.com/. You can e-mail us at patrickpowers@sbcglobal.net. Your comments are welcome.