Dunning Notices

Dunning Letters or Notices, (also called Collection Letters) are a prime collection tool for a credit manager.

The common types of collection efforts available for a credit manager include personal visits, telephone calls, e-mails and letters in order to collect past due accounts. In a busy credit and collection environment, a letter is often the method of choice, particularly with the smaller balance, less risky transactions ("risky" as pre-determined by the credit manager). A progression of letters are normally each designed with a different purpose. Each succeeding letter is slightly more strongly worded than the previous one - ranging from a friendly reminder to notification that you are turning over the matter to a lawyer or collection agency.

A dunning letter has two main objectives:

• Get paid
• Retain customer goodwill
  

For the letters to be successful consider the following:

Style:

• Keep the letter to one page
• Be brief, with short sentences, paragraphs, and simple words
• Customize the letter (with many customers, form letters can be devised)
  

Opening and Closing:

• Use specifics - get the name of the person responsible for payment (Mr./Ms./Mrs. (last name)
• Sign the letter personally
• Keep a non-threatening tone
  

Body:

• Date(s) of Invoice(s)
• Total amount due
• Request for Full Payment immediately or by a certain date
• Reference their purchase order number
• Reference your invoice numbers
• Request for sending the payment by courier or EFT
• Convey urgency
  

Tone:

• Be Firm
• Urgent
• and Unapologetic

When credit managers correspond with a customer, a large degree of diplomacy and knowledge of human nature and psychology need to be demonstrated. In many cases, the credit manager wants the relationship to continue and desire the customer to continue buying his/her products and/or services.