As a business owner, or even as an individual, you may, on occasion, have to remind someone of the fact that you are owed a sum of money.
According to most' states' business and tort laws, you can accomplish this with a Late Payment Collection Letter, which also happens to be the first step to collecting funds legally owed.
A Late Payment Collection Letter ought to fit the situation or purpose in tone and content. The sum of money owed and the overdue status may dictate the course of action. A business owner may choose to send three Late Payment Collection Letters before referring the debt to a collection agency or the courts. Just for illustration purposes, you could send the first Late Payment Collection Letter two weeks after the due date as a friendly reminder.
This and a subsequent letter could serve to broach the subject of an installment plan just if the debtor is having problems coming up with the funds. You may choose to send the second Late Payment Collection Letter after a month or two with an upgrade in the tone's solemnity, including a warning to refer the matter to a collection agency. If that is the case, the third and final Late Payment Collection Letter could disclose the debt being sold to a collection agency or elevated to litigation.
Depending on your state, a Late Payment Collection Letter may also be known as:
You could use a Late Payment Collection Letter whenever you have to collect a debt, most commonly as a small business owner but not necessarily. For example, independent contractors can use a Late Payment Collection Letter to collect fees promised but unpaid for approved work.
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In crafting your Late Payment Collection Letter, you will want to balance between casual and severe or intense.
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Your Late Payment Collection Letter does not have to be signed, and you could send it by email with or without a digital signature. However, in most instances, a business owner selects a method with signature confirmation, which may be required for a debt collection agency to touch the case.
After you have generated your Late Payment Collection Letter on 360 Legal Forms, download a copy and know it's on you to deliver it to the recipient in a way most optimal to a reception. Sign the letter before you attempt to send it in person, by mail, or with a shipping company (with or without signature verification).
You do not, especially when you are sending the first reminder letter. After you have sent your final notice, you can retain an attorney if you wish to elevate the matter to mediation or litigation.
The Late Payment Collection Letter is a type of demand letter customized to debt collection. Of course, as in the case of a demand letter, you can use it to make literally any legitimate demand.
Many if not most businesses and contractors issue an invoice before commencing work on a project. You could ask for a deposit on the invoice, which, even without a mandatory deposit, creates better client involvement by virtue of the receipt. You have the privilege to specify all the payment terms upfront so as to avoid future misunderstanding.
Charging a fee for late payments is legal (as long as it is not extortionary) and not uncommon in business. However, any late payment fees must be specified upfront for the knowledge of the person or business that you intend to provide goods or services.
Late Payment Collection Letters can only do so much. If you deep appropriate, you can refer the matter to a debt collector agency that would know all the aggressive tactics permissible under the law. These agencies may charge up to a fee of 25% on the money collected and some may attempt to buy the debt from you for pennies or dimes on the dollar. Another alternative could be to offer an installment plan for the payments, failing which you can always elevate to litigation if the sum is worth the trouble and expense.
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