Here's Another Idea For Bad Times

Coupons for Past Due Accounts


All businesses are in the position of waiting for people owing them money, for one reason or another. Sometimes writing letters reminding about this money proves to be rather irritating and time consuming to the businessperson. Therefore, you could offer a service for businesses of writing letters to these people. This service would be a coupon service where you sell coupons for the recovery of money.

The coupons that you sell are actually forms where the executive has to enter information of the person with a past due account, information on the due account and the amount of money owed, each coupon reasonably priced, at about $10 per coupon. Upon receiving the coupon, or coupons, the businessperson fills in the relevant information, and sends the coupon back to you when in need of your services. You then write a personal letter to the person who has the legal obligation to pay money.

This letter is a reminder for the customer to pay the amount that is due to the business. For $10, you could offer to send about three letters to the customer, with each letter relaying more importance than the one before it. Make sure all these letters urge the person to pay their overdue amount. These letters collectively called; collection letters or dunning letters, meaning to press somebody persistently for the settlement of a debt.

When writing collection letters, it is important to keep in mind that the business wants payment, and at the same time, maintaining customer goodwill. So write letters that are short, about a page long, and with short sentences and paragraphs. When opening the letter, use the word dear, and sign the letter personally. Avoid using threatening tones in the letter.

Make sure to contain all relevant information in the collection letter; like the date of the invoice, amount due, need of full payment by a stipulated date and convey a sense of urgency by requesting the payment be by phone payment with business or EFT (Electronic Funds Transfer). Be as firm and urgent about the money as possible. In addition, never become apologetic in the letter!

There are different types of collection letters you could send. The first letter, a sort of simple reminder of the amount of money owed to the business. Your letter would be a friendly letter; presuming that the recipient had forgotten about the money, and should treat the letter as a reminder.

Then there is the inquiry collection letter in which you beat around the bush to find out the reason for the customer not paying the balance amount. You could also offer different terms for repayment if you find that the customer did not pay the proper amount due to financial constraints. The appeal and ultimatum collection letters sent, if both these letters fail to bring any results, you state the action taken if the amount is not paid within a stipulated date or length of time.

Once you develop a knack of writing effective collection letters, and help businesses receive owed money, they will be happy with your services. The more collections acquired for businesses, the higher the number of clients you obtain who will be interested in your services. This in itself provides all the advertisement you need for your successful service!

Ok, This would not be complete, (although some of my ideas are no where near complete on purpose so the reader can think on their own), if I did not include some collection letter templates. You can get them here:

http://makemoneyalert.com/collect/




Resources are:

http://www.creditguru.com/collection.htm

http://www.writeexpress.com/

Best of success,

Skip Rosell

Okay as far as it goes in some areas. Be aware that sending certain types of collection letters are highly regulated. In some places collection agencies/agents under them must be licensed and adhere to very strict local and federal regulations. You'd have to be VERY careful to avoid legal problems with some of this suggestion. Suggest you do your due dilligence.

I used to do collections and I also worked for an outfit that sent these dunning type letters on an escalating basis. Things were tight, legally, back then. Hate to think what it might be now considering how laws tend to bloat up after being instituted.

Sandi Bowman

Some years ago....I was talking to my Veterinarian as he was checking over my dog. He asked me what I did. I told him I was an "Idea Guy" where I helped businesses "increase their business or their profits".

He told me he had a LOT of delinquent accounts and didn't want to turn them over to a Collection Agency because they charged 50% of the bill.

I told him I'd get back to him.

This was Pre-Google days, however...in my local phonebook was a Category of "Collection Agencies".

I found a small biz listed and went to their office. Found a 1-owner biz with 2secretary/assistants. It happened I knew the owner from our church. I told him my Vet was having a problem collecting from some of his accounts and I was doing some research for him.

He told me that he normally charges a percentage of each account HOWEVER, he said that most of the time all he does is send out 1 to 3 letters with his Letterhead....and that the very fact that a "3rd Party KNOWS" the person is not paying...is a "Powerful, Psychological" tool.

He called it "3rd Party Influence"....and his "3-Letter" series were "Pre-Collection" letters.

And...he told me he'd be willing to sell me his "Pre-Collection Package" for $500 because he was going into "Hospital Collections".

So...I started up a "Pre-Collection Agency" where I put together a 3-ring Binder with 100 "Start" Cards for which I charged $1495. My clients I sold the "Pre-Collection" progam to would tear out a "Start Card", fill in the delinquent account's info and mail to me.

When I received a "Start Card" I would mail the 1st Letter....and the other 2 in 10 day increments. My client would call me when payment was received so I wouldn't have to send the other letters.

Over half of those receiving the 1st Letter....would pay. Again, because a "3rd Party KNEW of their delinquent bill".

Because payments went directly to my clients (I provided envelopes addressed to my clients with each letter)....I wasn't actually collecting any monies.

The same program could probably be sold today. MANY businesses and professionals have delinquent accounts.

Don Alm.......former owner of "Accounts Control Service" in Northbrook, IL

Originally Posted by Sandi Bowman

Okay as far as it goes in some areas. Be aware that sending certain types of collection letters are highly regulated. In some places collection agencies/agents under them must be licensed and adhere to very strict local and federal regulations. You'd have to be VERY careful to avoid legal problems with some of this suggestion. Suggest you do your due dilligence.

I used to do collections and I also worked for an outfit that sent these dunning type letters on an escalating basis. Things were tight, legally, back then. Hate to think what it might be now considering how laws tend to bloat up after being instituted.

Sandi Bowman

Hi Sandi,

Thanks for your input. But that applies only if you collect the money. If you are sending the letters and the business owner is getting the checks in full it does not apply.

Best of success,

Skip

Thanks for the update, Skip.

Sandi Bowman

I found this interesting and possibly relevant to this topic:

from: http://www.usatoday.com/money/perfi/...lts-rise_N.htm

Record Rate Of Consumers Falling Behind On Loans

A record 4.2% of consumer loans were delinquent at least 30 days

A record number of consumers are falling delinquent or into default on their loans, a problem that some economists say will only get worse this year.

A record 4.2% of consumer loans were delinquent at least 30 days in the fourth quarter, the latest data available, according to the Federal Reserve. Another 4% of consumer loans were in default, meaning they’d been written off by lenders.

Recent data from the American Bankers Association and Moody’s rating agency show the same sobering trend: More consumers are paying late - or not at all - on home, car and credit card loans.

Employers shed 663,000 jobs in March, pushing the nation's unemployment rate up to 8.5%, the Labor Department reported Friday. Since December 2007 — when the recession began — companies have cut a total of 5.1 million jobs, more than 2 million of them this year alone.

The worst is likely yet to come. Chessen expects consumer loan charge-offs and delinquencies to continue rising through the end of this year.

In this economy, many families are juggling their bills, figuring out which ones to pay first, says Joel Naroff, founder of Naroff Economic Advisors.

Historically, consumers pay their mortgages before their credit cards and auto loans, because their home is often their most important asset. But this trend no longer holds true for all borrowers, data from the nation's credit bureaus show.

Some financially squeezed borrowers have begun paying their credit card and car bills before their mortgages, according to Experian and Equifax credit bureaus. That's because some consumers owe more on their home than it's worth, so they may be giving up on their mortgage and paying their credit card and car loan to get by, says Mark Zandi, chief economist at Moody's Economy.com.

But more people may soon fall behind on those bills, too. Zandi expects card charge-offs to peak at 10% in the first quarter of 2010, vs. 6.3% now.

"I don't think there's … any loan category that will avoid this storm," Zandi says.

I love this idea and, the wheels are really spinning.

I just did a search for pre-collection letters and something a little disturbing came up...

Fair Debt Collection:

"1. False collection/dunning letters

This section prohibits the practice of selling to creditors dunning letters that falsely imply that a debt collector is participating in collection of the debt, when in fact only the creditor is collecting.

2. Who this section applies to.

This section applies to anyone who designs, complies, or furnishes the forms prohibited by this section.

3. Misleading/False pre-collection letters.

A form seller may not furnish a creditor with

(1) a letter on a collector's letterhead to be used when the collector is not involved in collecting the creditor's debts, or

(2) a letter indicating "copy to (the collector)" if the collector is not participating in collecting the creditor's debt.

A form seller may not avoid liability by including a statement in the text of a form letter that the sender has not yet been assigned the account for collection, if the communication as a whole, using the collector's letterhead, represents otherwise."

Now, I am wondering....how can you get around this? Can you simply have something on YOUR company letterhead that says "so and so has alerted us that you delinquent on this account and you have x time to pay before collection action will begin...." Something like that?

I would love to pursue this but, without examples of letters or further explanation, I can't be sure it's legal.

If anyone could help, I would appreciate it!

Regards,
Kathryn