Accounts Receivable Collection Letter

Accounts Receivable Collection Letter is the official document that the supplier sends to customers to remind them regarding to the outstanding balance.  The company sends this letter to customers to push them to make a payment related to the unpaid invoice.

In order to boost the revenue, the most company allows their customer to purchase on credit. Not all accounts receivable will be collected as expected. Some balance will be uncollectible a company needs to write off from the balance sheet. To prevent such a case, the company will do everything to collect the money from their customer before it becomes bad debt.

Accounts receivable collection letter is one of the methods that company uses to remind the customer and put pressure on them to make payment. It depends on the company policy regarding the time frame in sending this letter.

Accounts receivable collection letter template

Accounts receivable collections letter should include the following features:

  • Company name: we need to state clearly our name so customer will not confuse with other suppliers.
  • Customer name: to ensure we send the right letter to the right customer.
  • Outstanding amount: it allows them to compare with their outstanding balance.
  • Invoice number: we have to list down invoice numbers if there are multiple invoices.
  • Due date: it shows the date on which we expect the customer to make payment.
  • Payment Method: In case the customer wants to settle, they will be able to find the payment method easily.
  • Contact person: It should be the person who has enough information related to the outstanding invoice in case the customer contact back. They may want to reconcile the balance when their recording shows the different number.

Advantage of accounts receivable collection letter

  • To improve cash collection: It will help the company to collect cash faster than normal.
  • Remind customers: some customers may forget to pay our invoice, so by sending this letter, it will help to remind them to make payment.

Disadvantage of accounts receivable collection letter

  • Impact Relationship: Sending this letter too early, may impact the relationship with customers. They may feel bad about our company due to the letter demand for payment.
  • Increase admin work: It just increases admin work without any benefits. The customers who go bankrupt will not pay after we send