What Are The Difference Between Dunning Letters And Letters Threatening Legal Action?

No business can be run without granting credit. A firm has many customers and most of them may be permanent customers. As the relationship with the customers becomes close, it is obligatory on the part of the seller, to grant them credit sales, which are an important feature of retail traders as well as the wholesale traders. When credit sales increase, the collection problems also arise.
               It is customary that every salesman, before granting credit to a party, makes a through enquiry about his capacity to pay back the loans. But irrespective of the precautions, problems of non-remittances against the credit sales will arise even after correspondence thread with the buyer. Businessmen keep proper records of buyers, but, sometimes, due to oversight, the purchasers are overloaded with credit sales. Besides this, buyers may be reluctant to part with money for the purchases or the services they have acquired. Therefore, almost all business firms are faces with the problem of collecting overdue accounts.
                 There is no doubt when the letter carrying threat should be sent to the defaulters. Collection mangers believe that at least four or five reminders should be sent to the defaulting customer before the letter of threat is mailed. After a short gap of time the last or the fourth letter of final appeal is sent to the credit purchaser requesting him to make the payment by return of post, failing which legal action will be taken. In this letter the seller forces the customer by putting suitable argument in order to induce the customer to clear off the debt.