A lot of times, I am asked this seemingly simple question: how to write an effective reminder letter? The question seems to be easy and simple to answer, but I tell you, it’s definitely not! Writing effective reminder letter is far more sophisticated than writing demand letters. The person tasked to write reminder letters must require an understanding of human nature and an ability to apply that understanding to individuals. The most obvious difference between writing a demand letter and reminder letter is that while both letters are written to "collect the money", reminder letters on the other hand still has to balance and/or at the same time try to still keep the goodwill and business of the existing (and sometimes valued) customer/ debtor.
As in a lot of cases, most people, when reminded of any wrongdoing, naturally assume an attitude of hurt and belligerence. They bristle at the first implication that they have broken a promise, even when the implication is based on obvious fact: "lend a money and lose a friend" would never have become an adage if people did not by nature resent reminders of obligations. Furthermore, any suggestion of curtness on the part of the creditor may induce a debtor to "get even", for the real or imagined “indignity” he suffers, by delaying payment until he is forced to pay. In the same manner, another debtor may respond to a curt reminder by promptly paying the bill but at the same time closing the account and transfer it to your competitor.
Different people, of course, react differently even to identical letters. The writer of the reminder letters must try to put himself in every debtor's place, and determine every possible reaction to his letter. The writer must decide which classification his debtor falls in, and adapt his letter to stimulus most likely to stir that classification of debtor. This is where the understanding of human nature and an ability to apply that understanding to individuals would definitely become handy.
Whether or not, you are using a form letter, the reminder letter to the debtor is usually the most critical among them. Reminder letters are usually casual and mild in tone. The objective of this letter is just to remind and not to make any threat or attempt to exert pressure. Remember, in the reminding stage, the goodwill of the customer is much considered than the immediate collection of the amount. The reminder letter may simply state that the account is past due, perhaps suggesting that the customer has overlooked the statement or implying that there is somebody that is “maybe at fault”. For example, the body of a reminder letter may be as simple as this: "Your payment has never been late before, and we have known you not to be a delinquent payer. However, as per our records, your account shows P XXXXX.00 overdue since XXXXXX”.
Overall, reminder letter is suited for first time delinquent and long time clients. The stimulus here is giving the "benefit of the doubt", but at the same time creating an opportunity of reminding him of his outstanding obligation. Likewise, timing is everything. I always suggest that immediately send a reminder letter as soon as the account is past due to be able to show urgency and to be able to get a reaction or feedback as soon as possible (or none at all) that will provide you with a better feel of what is really going on and to lay the foundation for your next move.
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