How to Write a Letter to Collect Funds on a Bad Check

One of the most frustrating aspects of running a business is dealing with bad checks. Dealing with returned checks can be a complicated affair. The most common issue business owners and managers face is how to broach the subject with a customer, especially if he is a regular one. Perhaps the most common and courteous way to collect funds is with a well-crafted letter regarding the debt.

Instructions

1. Write the letter on your company stationery, if you have it. If not, create basic letterhead with the company's name, mailing address, phone number with area code, business email address and website address.

2. Date your collection letter on the top left side of your letter.

3. Put your customer's return address on the left side of your letter, two spaces down from the date.

4. Use the appropriate greeting for your customer, two spaces under the return address. Use the term "Dear" plus the last name such as "Dear Mr. Jones" or "Dear Ms. Smith." You can use the general "Hello" or "Greetings" instead, but a personal address is better. Avoid using a first name or informal greeting such as "Hi."

5. Begin the body of the letter by addressing the debt in a non-threatening way. An example of this would be, "We are writing to let you know we received a personal check from you that was returned to us."

6. Give all the details regarding the bad check, such as the name of the bank, the check number and date as well as the amount. Also, reference the customer's account number with you and document the balance on that account.

7. Reference your "return check fee" policy if you have one. For instance, if you have a written policy specifying a $20 fee for all returned checks, you would quote from it and request it along with the amount of the check. Always provide the customer with the amount of the full balance due such as "Please remit $150.00 for your returned check plus the $20 returned check fee for a total of $170.00."

8. Instruct the customer as to how he may remit the funds to you. For example, you can request he bring cash to your place of business or mail a money order or certified check to your business address. Also, indicate whether you can accept credit or debit cards over the telephone or in person.

9. Request the customer pay the debt as soon as possible and call you with any questions.

10. End your letter with "Sincerely" or "Thank you" and your name and title. Sign your typed letter.

Tips & Warnings

• Always be polite and professional in your correspondence.

• If you do not hear from your debtor within 10 business days, follow up with another letter emphasizing your need to hear back from him within a week.