When you allow customers to buy on credit, you send them invoices that they are supposed to pay within a set time period, typically 30 to 60 days. However, in many cases vendors are providing “90 days same as cash” payment terms, or extended billing terms of 6 to 12 months.In all of these cases it is good business to remind your customers of their obligation, or provide an inducement (e.g., discount) to pay their bill before it is due. You can do this with a letter or series of letters called “billing letters.”
A billing letter is not the same thing as a collection letter. Collection letters are sent
only when the account becomes past due or delinquent. A “delinquent” account is a customer who has not paid one or more invoices within the credit terms you have extended.The purpose of the billing letter is to persuade your customers to pay now instead of later for two key reasons: (1) to prevent delinquencies, and (2) to get your money sooner and improve cash flow.
Billing letters provide an opportunity to strengthen the bond with your customer by explaining how you expect the credit relationship to be handled. The letter should create a dialogue and build additional goodwill with the reader, since you’re trying to coax them into parting with their money sooner than they expected.
A billing letter is always sent before payment is due and is routinely sent out with the
Tips for Writing a Billing Letter
• Enclose or attach an invoice listing the items purchased and the amount due.
• Thank the customer for her order.
• Urge the customer to pay the bill now, while it is still handy.
• If your terms reward the customer for prompt payment, make this the main point of your letter.
(For instance, some vendors give a 2-percent discount if payment is received within ten days.)
Handy Phrases: Thank you for your recent order!; Thank you for requesting our services; Please remember that if we receive payment for this order within one week, you will receive a 5% discount off the regular price;You may take the discount if we receive your payment by; Remember, you will receive $25.00 off your next purchase if you return full payment by; I hope you will take advantage of this offer;We are happy to offer this discount on your payment; Please call us at 000-0000 if you have any questions; We look forward to receiving your check for the discounted amount of; Thank you in advance for your prompt payment; As always, I have enjoyed serving you. Thank you.
Sample Billing Letter:
Dear Robert Smart,
Thank you for ordering from W&W Publications Inc.We hope the books will be a valuable resource for your upcoming projects.We have enclosed your invoice and a postage-paid return envelope for your convenience.
I want you to be aware of the 5% discount we offer for early payment. To qualify, simply be sure
that your discounted payment is postmarked no later than 10 days after the date of your invoice.
I hope you take advantage of this offer by sending in your payment as soon as possible. We appreciate your business and look forward to providing more of the resources you need in
Thanks again for your order.