How to Write a Letter to Collect Funds on a Bad Check

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One of the most frustrating aspects of running a business is dealing with bad checks. Dealing with returned checks can be a complicated affair. The most common issue business owners and managers face is how to broach the subject with a customer, especially if he is a regular one. Perhaps the most common and courteous way to collect funds is with a well-crafted letter regarding the debt.

Write the letter on your company stationery. Don't confuse the issue by asking for payment on your personal stationery.

Use the appropriate greeting for your customer, two spaces under the return address. Use the term “Dear” plus the last name such as “Dear Mr. Jones” or “Dear Ms. Smith.” You can use the general “Hello” or “Greetings” instead, but a personal address is better. Avoid using a first name or informal greeting such as “Hi.”

Begin the letter by addressing the debt in a non-threatening way. An example of this would be, “We are writing to let you know that a personal check you issued us was returned to us unpaid by the bank.” Continue in a way that gives the recipient the benefit of the doubt: "We are sure this represents nothing more than an oversight on your part, and that you'll quickly correct the error."

Give all the details regarding the bad check, such as the name of the bank, the check number and date as well as the amount. Also, reference the customer’s account number with your company and document the balance on that account.

Reference your “return check fee” policy if you have one. For instance, if you have a written policy specifying a $20 fee for all returned checks, you would quote from it and request it along with the amount of the check. Always provide the customer with the amount of the full balance due such as “Please remit $150.00 for your returned check plus the $20 returned check fee for a total of $170.00.”

Instruct the customer as to how he may remit the funds to you. For example, you can request he bring cash to your place of business or mail a money order or certified check to your business address. Also, indicate whether you can accept credit or debit cards over the telephone or in person.

State the terms for payment: "Please remit payment within 15 days." Close with an invitation for the recipient to call you with any questions.

Sign off and copy your attorney. Append "esquire" to the attorney's surname, so the recipient knows a legal professional is monitoring the situation. You don't want to threaten legal action in a first letter. Settling the debt amicably is the preferred choice. Copying your attorney subtly warns the recipient that you may take the recipient to court if the issue isn't resolved.


  • If you do not hear from your debtor within 10 business days, follow up with another letter emphasizing your need to hear back from him within a week. If you don't receive a response, or the debtor refuses to pay, turn the matter over to your attorney.