What is a Letter of Collection? Also explain what is its Three-Fold Purpose?

What is a Letter of Collection

What is a Letter of Collection? Also explain what is its Three-Fold Purpose?

Letter of Collection

A letter, which is written to customer to collect overdue amount is called collection letter or dunning letter.

Explanation :

We cannot deny the reality that now a days the most of the business is done on cred i t. ll creates problems regarding the collection of money. People do not clear the outstanding balance, which causes problems. In these circumstances, it becomes t he need of hour to Write and remind the customer about the payment. A collection letter consists of series of  letters, reminding the customer to pay his overdue  amount. A good businessman should be careful in writing a Collection Letter to the customer. A Single mistake in this regard can annoy the reader. A good collection letter contains three-fold purpose.

Three-Fold Purpose

  1. Collecting the Money
  2. Retaining the Customer
  3. Building Goodwill

1 ) . Collection the Money

The procedure of collection of money is considered to be the most difficult task in the business world: It requires power of patience  and practical experience to collect the money from the customer. If the letter is handled carelessly it may lose the money as well as the man. Business organizations adopt various money collecting method s, like notices, letters, telephone, Cells, telegram, fax, emails etc. courtesy can play a vital role in  this matter.  tt is much very easy  to collect money through courteous and tactful manner

2 ). Retaining the Customer

A good  collection  letter not only recovers the money but it also retains the customers. As old saying goes; “Collect the amount but keep tire customer intact. ” The defaulting customer must be given a chance to explain the reason of delay in payment. A courteous letter can achieve its purpose successfully. On the other hand, discourteous collection letter not only loses the money but it also loses the customer.

3 ). Building Goodwill

A collection letter must be written very carefully. A letter written in a bad manner may destroy  the goodwill of a company. Therefore, one must be careful  in  choosing t he words. One should use soft and pleasant words which may win the heart of the reader. Do not use such words in the beginning that annoy the reader. Try to win the sympathy  of the reader and  explain your point of view clearly and tactfully.

Read Also   :    What are the kinds of informative and persuasive speaking?

What is a Letter of Collection

About Muhammad Usman Younas

Hello, I am Muhammad Usman Younas a founder of worldstudypoint.com and some other websites. I have created Study Point Website to promote the Eductaion in All Over the World. And to help the Students in their Studies.

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