When people, or rather customers, do not pay their bills, the need to issue a late payment reminder letter arises. These letters are basically issued as a reminder upon the lapse of the payment period.
In the world of trade and commerce, providing certain credit extensions to clients and customers is a common practice, and is often reciprocated. This practice is quite prevalent in all sectors and fields, and in many cases is considered to be a better option than borrowing a loan. The process of such a credit extension is quite simple. The seller gives off the goods to the client and an agreement is made between the two of them according to which, the client will make the payment to the seller with an additional rate of interest, by the end of a specified time period. This time period is followed by a small grace period. At the end of the grace period, the seller is entitled to take legal action to recover his losses.
A late payment letter is usually issued at the commencement of the grace period, but some people also prefer to issue a letter when the actual period comes to an end. Drafting a reminder letter can be quite a task because it has to be drafted carefully, as it is a demand for payment.
How to Write a Reminder Letter
As mentioned above, writing such a letter is exceptionally difficult, considering the fact that it must be firm yet polite, and short yet informative. The language of the letter is another worry, as it has to be formal, yet simple and plain enough to get the message across.
While writing such a letter, it is best to ascertain some facts, such as the date of sales, expected date of payment, grace period, etc. In addition to that, it is also important to have a look at some other facts, such as the payment history of the client, total cost of goods sold, payment period and grace period permitted by your company, etc. The next concept that is to be taken into consideration is the presentation of facts, within your letter. This is best done by arranging the above mentioned facts in a chronological manner, which theoretically should go like this:
- Date of purchase
- Date of signing the agreement
- Period of payment
- Grace period
- Rate of interest
The next step is of presenting these facts in a polite and courteous manner with a firm sentence construction. Remember that your sentences should never be arrogant or menacing, as it puts a blemish on your company’s reputation and goodwill.
Template for Reminder Letter of Late Payment
The following is a template of the late payment reminder letter that you may refer to while issuing the actual letter.
|Date: (Date of issuance of letter)
Address of you company and your designation
Address of receiver
Kind Attention: Name and designation of concerned person
In spite of several reminders and requests, your Finance and Accounts Deportment has failed to complete the payment for goods invoiced as on Date of Invoice, coded, code of invoice.
It is my duty to inform you that the grace period for this credit extension starts as of date of commencement of credit extension period. I must also inform you that lack of payment, along with the interest amount, will invite legal action as per the agreement signed on date of signing of agreement.
The management of my company will cooperate with you if you are suffering from intense financial difficulties. A show cause meeting can be arranged for this purpose with the executive directors according to your convenience.
We hope that you will be able to write off your financial liability towards us at the earliest without suffering exorbitant expenses. We also hope that you are able to do so at the earliest as it would contribute to a further nurtured relationship between our companies.
Hoping to hear from you at the earliest.
Your name and designation
In the above template, you may have noticed that the writer maintains a cooperative, yet firm approach while drafting the letter. Such a professional approach is absolutely necessary as it develops a very good trade and public relations between the two firms and during a financially difficult time for you, it will definitely prove to be useful.