Dealing with a customer filing for bankruptcy is a burden you certainly never want to face. Unfortunately, this is a part of the business that is inevitable if dealing with lots of customers. This blog will help you grasp a better understanding of what reclamation letters are and how to adequately develop one.
What is a Reclamation Letter and When Will You Need One?
When you have a customer that is filing for bankruptcy, you want to make sure you recover all goods sold within a timely manner. This helps you minimize the financial loss you incurred from not receiving payment. The best way to go about recovering these goods sold is through a well-developed reclamation letter. As with any legal document, reclamation letters require close attention to detail to ensure no significant information is left out. Absent information may greatly increase the difficulty of recovering lost assets. Certain aspects of an order must be valid in order for a reclamation letter to be valid. Last year we wrote about the opportunity to send a reclamation letter when a customer files for bankruptcy and the related debt involves the recent sale of goods. We wanted to share the information again as a reminder as well as for the benefit of our new clients.
What to Include in Reclamation Letters
- A detailed description of the goods in question. Leaving any ambiguity regarding the items in question will hinder your ability to quickly recover your loss of assets.
- A statement of the delivery date to your customer. Accurate record-keeping will help your debtor know exactly when items were delivered and give a time frame of when payment should have been paid.
- A Demand for the immediate return of the items. Explicitly demanding the return of items will show what you expect from your customer and emphasize that without immediate return, consequences will be significant.
- A Demand for the accounting records for the goods. This aspect of reclamation letters is incredibly important. If your customer has already sold the items in question then reclamation will be very difficult. If incorrect records seem to be in play, then immediately demand an inspection of inventory.
Additional Tips for Reclamation Letters
- Immediately contact the attorney of your customer. This helps emphasize the importance of the issue and will expedite the resolution process.
- Your reclamation letter should be delivered to your customer via fax as well as certified mail. Like all collection efforts, multiple means of communication keeps the issue on top of the customer’s mind.
Reclamation letters are associated with frustrating times when running a business. Nobody wants a payment issue to get to this point, but by educating yourself on what reclamation letters are and how to properly construct one, you will save yourself a lot of trouble.