When an invoice is overdue, the way you communicate can make all the difference. A well-crafted debt collection letter can prompt payment quickly without damaging your business relationship. But how do you strike the balance between firm and fair?
What Is a Debt Collection Letter?
A debt collection letter also called a letter of demand is a written notice that formally reminds a customer of their unpaid invoice and requests immediate payment. It’s often the last step before outsourcing to a debt collection agency or pursuing legal action.
In New Zealand, these letters must follow specific standards to be compliant and ethical.
When Should You Send a Collection Letter?
If you’ve already:
? Sent a reminder
? Attempted follow-up calls/texts/emails
? Offered a payment plan
...and still haven’t received payment after 30–60 days, a collection letter is your next move.
What to Include in a Debt Collection Letter
Your collection letter should be clear, professional, and leave no room for misinterpretation. Include the following:
- Business Details
- Name, company, and contact info at the top.
- Debtor’s Information
- Full legal name or business name and their contact details.
- Invoice Details
- Reference the invoice number, amount owed, due date, and any relevant contract terms.
- Clear Request for Payment
- Politely, but firmly, request immediate payment and specify a deadline (e.g., “within 7 days”).
- Consequences of Non?Payment
- Mention possible escalation, such as involving a debt collection agency or legal action.
- Payment Instructions
- Bank account or payment portal details must be easy to find.
Sample Debt Collection Letter (NZ-Friendly)
Subject: Overdue Invoice #1029 – Immediate Payment Required
Dear [Client Name],
Our records show that Invoice #10XX for $X,XXX.XX, issued on XX Month Year, remains unpaid despite previous reminders.
Please make full payment within 7 days of this letter to avoid referral to our debt collection agency.
If you have already made payment, please disregard this notice. Otherwise, you can pay directly to:
Bank Name: Bank Name
Account Number: 00-0000-0000000-00
If there are any issues or questions, contact us immediately.
Yours sincerely,
[Your Name]
[Your Business Name]
Final Thoughts
Writing a good debt collection letter means being assertive, factual, and clear. The right letter shows your client you’re serious while keeping your professionalism intact.
Need help, reach out to the team info@icollect.co.nz
