What is a Debt Collection Email?
The use of emails for debt collection has recently become a more prevalent method of communication, and Baker Law Firm has found that it can be done efficiently and effectively. The power of email gives the client/customer an ability to quickly and easily get in touch with the company. The interaction of emails is an instant form of communication without the need for a dedicated phone line or employees to answer calls. More and more companies have made a conscious decision to not have live people answering phone calls, rather they instruct people to email the company at a designated email address .
Baker Law Firm also tends to send a lot of follow-up emails to clients/customers after a phone call. Instead of just making that follow-up phone call, or sending a letter, we incorporate emails into our collections strategy. The benefits are: (1) you have a written record of the communication, (2) you have now provided the debtor an extra incentive to pay because now all of your communication is documented in writing, and (3) you have now created a paper trail for yourself in ensuring your employees are following the law. However, there is no protection even with creating a paper trail; you must ensure that your employees are following your policies and procedures.
How to Create a Debt Collection Email
An effective debt collection email contains a subject line that demands attention, such as the subject line, "[Company Name] past due account". This is the electronic equivalent of framing an envelope that has a past due invoice inside. When your prospect sees the subject line, they think to themselves, "I have to open this immediately".
The first line of the email must be short, direct and to the point. It must also address your prospect by name, such as, "Dear [Prospect name]". After that, the body of the email should be short and very quickly outline what the issue is, such as, "Your past due invoice in the amount of $XX is now three weeks past due. When are you going to pay it?" Then the email must include the email address of your accounts receivable department, the full name of your company and signed with your full name beneath that. This simple two-paragraph email works best. After you send this email, you call the prospect and ask them if they received and read your email. If they did not get it or intentionally ignored it, you must not stop with that prospect. That prospect will pay their debt if they are forced to do so. They will pay because the pain of not paying will become greater than the pain of paying. That is their socialization and you must exhaust every avenue of putting pressure on them to pay.
Legal Rules and Regulations
Baker Law Firm takes a number of legal considerations into account to ensure that the use of email to communicate with customers is compliant with applicable consumer protection legislation. Not only does Baker Law Firm attempt to avoid legal pitfalls, but the Firm also aims to foster a more congenial dialogue with debtors by treating them with respect.
Debt collection laws are slightly different from other consumer privacy legislation in the sense that they permit telephone and other forms of communication with the consumer. However, even if a debt collection agency or company is sending debt collection letters, and not communicating with the consumer by telemarketing calls, it is still subject to certain requirements under the Fair Debt Collection Practices Act (FDCPA), which is a federal law in the U.S. that controls the actions of organizations attempting to collect debts on behalf of others. Additionally, many states have their own laws regulating the practices of debt collectors.
The emails sent to customers in Canada and to customers within the U.S. comply with the Canada’s Anti-Spam Law (CASL) and the Telemarketing Sales Rule (TSR). As such, all emails include an "opt-out" procedure to ensure compliance with the laws. Baker Law Firm requires all employees who use email for debt collection to participate in annual training seminars on legally compliant emailing practices.
Common Errors in Debt Collection Emails
When the threat of phone or in-person communication is removed, debtors are more likely to respond to collection emails from lawyers. But just because an email is easier for your firm to send does not mean that you are relieved of the burden of ensuring that the form is well-written, accurate, and compliant with legal guidelines. Learn from some of the mistakes our Dallas attorneys have seen in various commercial and consumer debt situations.
- Using threatening language or making promises of what you could do if the debtor failed to contact you. This type of language encourages debtors to call the office out of fear. Avoiding phone calls gives the debtors time to consider how they will respond without the legal implications of not answering.
- Making the email’s tone so aggressive that it actually encourages a debtor to seek legal advice. It is in your best interest to send emails as professionally as possible because it discourages retaliation on the part of the debtor.
- Not being compliant with state and federal debt collection laws. Georgia, Alabama, and many other states have legal guidelines for addressing debtors via email, and violations can cost your company thousands of dollars in settlements and penalties.
- Sending rounded-number emails that represent an estimate of the balance of the debt. Emailing a debtor with an estimate of the amount due is a clear violation of debt collection laws, and it will result in an immediate complaint against your firm.
- Hiding the intent of your firm when contacting the debtor. Many borrowers are now savvy to the fact that communication can be recorded and used to harass them into payment. Hiding the intent of your firm (e.g., "answer this survey," "question about services") will only encourage compliance with email requests.
- Allowing multiple employees to contact the debtor about the same account. This can result in harassment claims against your firm.
Not all mistakes made by creditors end up as lawsuits, but it is important to abide within legal and ethical guidelines when contacting clients. When you need a debt collection attorney, the Baker Law Firm is there to ensure that all of your collection attempts are compliant with federal and state debt collection laws.
Baker Law Firm Templates and Tools
The demand for prompt payment of overdue invoices has never been greater. At Baker Law Firm, we are wide-angled on accounts receivable collections with templates and digital tools designed to help ensure payment and engagement from debtors.
Email Templates.
Our accounts receivable collection templates have been through the paces. Whether you’re starting or expanding your accounts receivable collections, our digital templates can set the stage. Quickly send payment reminders, set up appointments for payment arrangements, or create notices of discharge or set-off in a mouse-click. Baker Law’s collection templates can be easily merged with your records or used individually, no programming required.
Digital Tools.
With tools like Evernote and Wufoo you can add the ability to track some of your most important accounts receivable information . Evernote is an app that’s available on most smartphones that allows you to scan information into your Evernote account. Once you’ve scanned it, Evernote will recognize the text in the notes you’ve taken and link it to your information in your Evernote directory.
Digitize your existing accounts receivable information with Evernote and a scanner and put your account data in your pocket. Forget the spreadsheets, piles of invoices, or messy files, keep all your important accounts, numbers connected and within reach.
Wufoo helps you get paid by connecting you to your customers. With Wufoo you can create contracts and other terms with your client and get satisfied signatures quickly. Wufoo works with popular payment technology like PayPal, Dwolla, and check services and integrates with Salesforce.com for seamless information transfer.
Managing Customers via Email
At Baker Law Firm, we understand that effective debt collection is not just about pursuing the balance but also about maintaining a positive, professional relationship. Our system tracks each account and allows us to customize follow-up emails. The goal of follow-up emails is twofold. From an operational perspective, a consistent communication stream requires the debtor to continuously evaluate his or her willingness to address the account. The second purpose is to minimize complainant risk. By making follow-up communications as easy as possible through a predictable method, we minimize the possibility that the debtor will complain to the CFPB or complain to his or her attorney that we treated him or her unfairly throughout the process. We always leave our client to make the final decision on allowing the file to reach litigation. We leave the debtor with cell phone and email contacts. We never threaten litigation. Again, Baker Law Firm trains each account manager to avoid the temptation to "game" the follow-up system. The assistant writes an email from the perspective of the account manager directly to the debtor. We begin with a pleasant statement indicating that an account manager will be following up on a "special project." The special project cannot be to push the debt. The special project is a personal message. A statement detailing a personal detail can engage emotions and leave an impression.
Success Stories and Examples
Baker Law Firm has handled a variety of debt recovery cases across multiple industries, and email has proven to be a powerful tool in the collection process. Here are just a few instances where email was instrumental in recovering debts for our clients.
Case Study 1: Educational Services
A regional accounting academy turned to Baker Law Firm after struggling for years with a high rate of delinquent accounts. This client owed a substantial debt to local vendors that had gone to collections, which had been very costly for the academy.
The firm worked with the client to craft concise, polite collection emails that explained the firm’s association with the academy while requesting payment or an explanation of the non-payments. The tone of the emails was friendly but persistent: the emails offered the contacts a chance to settle their accounts but also warned that the academy could not continue to provide services if they were refusing to pay.
Through continued, consistent follow up, the academy was able to recover a number of its bad debts by handling them quickly and effectively in many cases, avoiding long drawn out legal processes. Most importantly, the academies accounts receivable balance decreased significantly.
Case Study 2: Home Services
Baker Law Firm helped a large carpet cleaning company recover a $1500 loan repayment from one of its own two-man franchises. The franchisee stopped paying their loan after the mother-and-son team had a significant falling-out. They had co-borrowed for the initial inventory of their business and wanted to simply walk away from the loan in the case of a falling out. Unfortunately, the company had no such policy , and the son began running an independent operation that would directly compete with his franchise.
The firm drafted a series of emails to be sent directly to the son and his business partner. These emails included a combination of polite requests for repayment, payment plans that discussed different payment options, and threats of legal action. It was particularly effective in this situation to handle this like a conversation over email, as the son was found to be highly intimidated by people in person but was willing to communicate via email. After a few months of back and forth, the pair agreed to a repayment plan and avoided what could have been a costly legal battle.
Case Study 3: Logistics Services
In this case, Baker Law Firm served as an external collections service for a small logistics service provider that had been suffering from bad debt with its third-party contractors. The company had provided services to a number of companies in the area but had been experiencing non-payment from some of the larger corporations with which they contracted.
The firm acted as the collections service for the company, sending a series of emails to each of the contractors. The firm also called into the company’s corporate representatives and left a series of voicemails until a representative finally got back to the firm. After explaining the firm’s purpose, the call quickly morphed into a negotiation, where the firm would explain how the contractors could either repay the balance or potentially submit a claim to their corporate insurers. In this case, most contractors sheepishly admitted that they had simply forgotten to process the payment and within weeks all debts were settled.
We’ve found that to encourage proper formatting and sincerity when dealing with clients, despite the fact that we typically represent corporations, we prefer to keep emails polite and jovial.