Five tips for improving arrears letters for better customer understanding
Arrears letters are vital to both businesses and the customers who receive them. The effectiveness of these letters hinges on clarity and understanding, as well as communicating with empathy.
This insight article offers five tips for making sure they are as clear as possible:
1. Make the amount owed prominent
The amount owed should be the most visible and easy-to-find number in the letter. Yet, in many cases, it’s buried in blocks of text or overshadowed by less critical details, like account or contact numbers. To ensure clarity:
Place the amount owed in a prominent position.
Use bold, larger fonts, or a different colour to highlight it (but avoid red).
2. Give clear instructions on what to do next
What do you want the customer to do after reading the letter? Whether it’s simply to pay the amount owed or encourage them to contact you to set up a payment plan, the message should be unambiguous.
For example, if the goal is to initiate contact, lead with “Contact us to set up a payment plan”.
3. Avoid information overload
Focus on what the customer really needs in this moment. A large table of missed payments or a “wall of numbers” on the first page can overwhelm readers, especially those already anxious about their financial situation. Instead, provide additional details (like a payment history table) on subsequent pages or in a less prominent section.
4. Use human language
clear tone using conversational, unambiguous language can make a big difference to how the letter is understood. For example:
Change phrasing like “we may need to seize your assets” with “we might have to take some of your belongings”.
Replace “You need to take action” with “We need you to give us a call.”
5. Simplify or get rid of the jargon
Many people don’t use terms like “arrears” everyday. Industry-specific language can alienate readers, making the situation seem more daunting than it is. Instead:
Use simple, clear language. For example, replace “arrears” with “missed payments.”.
If technical terms are necessary, provide brief explanations.
Avoid switching between terms like “repayments” and “payments,” they mean the same thing and it might confuse anxious readers.
Why clarity matters
A well-communicated arrears letter benefits both the company and the customer:
The company is more likely to recover the amount owed.
The customer is clear on what action is required of them, reducing their stress and increasing their willingness to engage.
Clear, empathetic communication creates a win-win scenario for all involved.