Receivable/Accounts - Information for Credit and Collection Issues

Sunday, September 16, 2012

Having The Last Word

Having The Last Word
Final Demand Wording That Is Effective

Often, creditors will ask me if they should send a final demand letter before they send a file to collections, and what wording should be used.  In 99% of the cases, the answer is certainly yes – it’s essential if creditors can make one last, best  attempt to recover their own debts before sending it to a third party agency. 

Firstly, there should be a hard deadline for the final demand to go out – and it truly should be a final step.  Whether you draw the line at 60, 90, or 120 days outstanding, you should always give the customer one last chance to deal with you, and work things out.  But, as you are getting in the last word, you need to make that word as effective as possible.

Often, companies large and small do not empathize with the people actually receiving the final demand, and thinking about what motivates them into paying their account.  Here is an example of a final demand letter that covers a number of essential elements.

ABC Cable Company - 123 Generic Blvd - Mississauga, ON L5L 5L5

David Walters
888 Witherspoon Dr
Brampton, ON L4L 4L4
Thursday, September 13th, 2012 

Mr Walters,

Your credit terms with our company are payment within 30 days, and your account is now over 90 days due with our company for the amount of $454.25, and is incurring interest at a rate of 18% per annum. 

It is our policy at this point to cancel your services, which we have done.  However, before we send your file to our collection agency, I am sending this letter to give you a final opportunity to resolve your account no later than Thursday, September 27th.  To pay this account by credit card or pre-authorized payment, you can do so by going to

It would be unfortunate if we had to involve our agents at Kingston Data and Credit  – I urge you to resolve this, and return to a customer in good standing.  If you have any questions, you can call our credit department at 1-888-555-1212.


Elizabeth Marshall – Credit Manager, ABC Cable

If you look closely, this letter includes several tools that increase your chances of recovering your account and customer.

Choice: The tone of this letter should be one of choice – it’s not belittling the customer, or getting into details of how the bill was incurred, or that you’ll never have them as a customer again – it’s simply an “A/B” choice of payment or cancellation and collections.  When presented with a dispassionate choice, debtors or debtor companies will more likely be to resolve the account.

Deadline: Every letter should have a deadline for resolution.  This deadline is best kept to 14 to 21 days to keep a sense of urgency, and not let things drag out.  Remember, this is the final deadline.

Consequences: In this case, the consequences are cancellation of service and sending the file to a collection agency.  There should always be a clearly stated consequence for failure to pay, whether that is interest charged, cancellation of service, reporting to the credit bureau, repossession of a vehicle, or what have you.

Also, if you are going to send your file to collections, by all means name the agency specifically – it creates a real consequence to encourage them to pay (especially if the agency is known), and if the file actually does go to collections, it supplements their authority and involvement.

Direction For Payment: Too often, a final notice goes out demanding payment, but without clearly indicating how to pay the account.  A final demand should clearly indicate what the customer has to do to bring their account back to good standing.  If you have a method for online payment, or payment via telephone, or electronic bill payment, this would be an excellent method of allowing the delinquent customer to avoid “the cheque is in the mail”, and try to work past the firm deadline you have set.

Open Communication: This letter has a personal tone from the credit manager, without detracting from the authority of their company’s position, treats the consumer with respect, and gives a telephone number for the customer to call to make arrangements, which are an option if the consumer cannot pay in full by the deadline.  You want to encourage the customer to remain in contact with you to work things out.

Sign It!:  The important thing is to make the letter be a direct communication from the person in authority at the creditor to the consumer.  Take the time, and sign the letter.  In my time in this industry I have sent thousands of collection letters, and I can tell you I have tracked nearly a 15% increase in payments when the letter is signed by a human being.

Registered Mail?: If your balances are significant, it often creates the right tone of urgency to send the letter registered mail with a signature required.  It sets your final letter apart from any previous notices, and lets the delinquent customer know that their receipt of the letter is recorded.

Building A Better Letter

The example letter here is simply a sample that does not likely deal with your company’s specific needs, but it should prompt you to think of areas of improving your final notice internally.  If you need a final demand wording reviewed, or need specific ideas for rewording or improvement, I’d be pleased to assist – feel free to contact myself at my direct line below.

Blair DeMarco-Wettlaufer
Kingston Data and Credit
Cambridge, Ontario

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