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There will be a time where every business will need to chase for payment, unfortunately more invoices are paid late than on time in the UK which could be the reason for a 24% rise in company closures last year. Now, debt chasing has become the ‘norm’ in business practice and the value of total CCJ’s issued last year hit a record high since 2013.
Here at Creditsafe we are passionate about helping companies through all the ups and downs of running a business, especially when it comes to getting paid on time!
Reminder letters can make a big impact when it comes to reducing the amount of time taken to collect a debt that’s why we have included 3 tried and tested letter templates, ready for you to use.
Whether you’re a small business or a corporate giant, we all need to get paid on time and reserve the right to enforce penalties for unpaid invoices. But before you go threatening legal action, try sending out debt reminder letters at different stages of the collection process. If this doesn’t work, we are able to offer a range of proven debt recovery solutions.
Learn how to improve your cash collection with these 3 easy steps.
Step 1 – The Gentle Reminder
Tone: ‘Hi Remember me?’
When to send it: Send this letter the day your payment is due. Most of the time businesses don’t deliberately withhold payment from you, your invoice is probably sitting under a pile of paperwork or lost in an overflowing inbox.
How to send it: It can be sent via email or post, but ask for a delivery of receipt. There’s not much point in sending debt chasing letters if you are unsure your customer has received them!
Step 2 – The formal reminder
Tone: ‘I don’t mean to be rude, but your invoice is now over-due…’
When to send it: You should usually leave 7 days between sending your first and second letter to give your customer time to respond with a revised payment data or provide payment. If you haven’t heard anything for 7 days, fire off this letter!
You could also follow up with a call, but sending a second letter will also leave a paper trail of your efforts to receive your money if you are to take it further.
Step 3 – The urgent reminder
Tone: ‘This is getting serious now… ‘
The term ‘3 strikes and you’re out…’ is very relevant here. If another week of silence goes by and you have no further information about when or even if you are going to get paid, issue a final warning letter stating that there will be penalties if payment isn’t made imminently. You’re legally entitled to issue statutory interest rates the day the payment is late if you haven’t already agreed when the money will be paid with a customer. However if you didn’t have an agreed payment term, the law has set a default period of 30 days before you can charge daily interest, You can also claim debt recovery costs with the amount you can charge based on the amount of the overdue invoice.
Although these letters will help you collect payments from your customers you may want to consider using Creditsafe to increase the impact and streamline the process.
A small reminder with big impact.
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