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Letter template

Account Placed for Collection Letter Template

Updated 2026-10-24

An account placed for collection letter tells a business debtor that its unpaid balance has been referred to a collection agency. It names the agency, gives its contact details, states the balance, and tells the debtor to direct further communication and payment to the agency. It should be sent only after the referral actually happens and should describe only steps the creditor or agency has taken or may take.

When to use this template

  • On the day, or right after, you place a past due business account with a commercial collection agency.
  • When your final notice deadline has passed with no payment or response.
  • When you want the debtor to know that internal collection efforts have ended and who handles the account now.
  • When the agency asks the creditor to send a short handoff notice alongside its own first contact.
  • When a payment plan or settlement has failed and the remaining balance is being sent to an agency.

The template

{Your Company Name} {Your Address} {City, State ZIP} {Date} {Customer Contact Name} {Customer Company Name} {Customer Address} {City, State ZIP} Re: Account {Account Number} placed for collection Dear {Customer Contact Name}, We wrote to you on {First Notice Date}, {Second Notice Date}, and {Final Notice Date} about the past due balance on your account. Because we did not receive payment or a response by the deadline in our final notice, we have referred your account to a commercial collection agency. Account summary: Invoice number(s): {Invoice Numbers} Oldest due date: {Oldest Due Date} Balance referred: {Balance Due} Date of referral: {Referral Date} Your account is now being handled by: {Collection Agency Name} {Agency Address} {Agency Phone Number} {Agency Email} Reference number: {Agency Reference Number} Please send all payments and questions about this balance to {Collection Agency Name}. Payments sent to us after the referral date may delay the agency's records, so please contact the agency directly. If our terms provide for collection costs, those costs may be added to the balance as allowed by our agreement and applicable law. The agency can explain the current amount due. The agency can also discuss payment options with you. If the account remains unresolved, our company may authorize further steps to recover the balance, which could include legal action. Resolving the account with the agency now is the simplest way to avoid that. Until the balance is resolved, new orders will require payment in advance. Sincerely, {Your Name} {Your Title} {Your Company Name}

How to customize it

  • Confirm the agency's name, contact details, and reference number before sending, so the debtor can reach them on the first try.
  • Ask your agency whether it wants you to send this letter at all, or whether it prefers to make first contact itself. Some agencies have their own placement notice.
  • Keep the collection costs paragraph only if your signed terms provide for them. Delete it otherwise.
  • Change the credit policy line to match your actual practice, such as closing the account or requiring cash in advance.
  • Send a copy to the agency so its file shows exactly what the debtor was told.
  • Tell your own sales and customer service staff that the account has been placed, so they route any calls about the balance to the agency instead of making side deals. Note the placement date on the customer record in your accounting system as well.

Mistakes to avoid

  • Do not send this letter before the account has actually been placed. Saying an account is in collections when it is not is a false statement.
  • Do not say a lawsuit has been filed or a judgment entered. Say only that the creditor may authorize further steps.
  • Do not keep calling or emailing the debtor about the balance after referral without coordinating with the agency. Mixed messages slow the recovery.
  • Never threaten criminal action, arrest, or contacting the debtor's own customers.
  • Do not leave out the prior notice dates. Listing them shows the debtor, and anyone reviewing the file later, that the account was handled fairly before referral.
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Frequently asked questions

Do I need to notify a business customer that its account went to collections?

For commercial debts there is generally no legal requirement, but a short notice helps. It tells the debtor who to contact, cuts down on confusion, and often prompts payment.

What if the customer pays me directly after the account is placed?

Accept the payment, then tell your collection agency right away. Most agency agreements still apply a fee to payments made after placement, so check your contract.

Can I still settle with the customer after placing the account?

Yes, but work through the agency. It can negotiate a payment plan or settlement on your behalf, with your approval of the terms. Avoid making side deals directly with the debtor, since that can confuse the payment record and may conflict with your agency agreement. If the debtor contacts you with an offer, pass it to the agency.

What should I send the collection agency when I place the account?

Send the signed credit application or contract, all open invoices, proof of delivery or completed work, a statement of payments, copies of every notice you sent, and the customer's contact details. A complete file helps the agency start work right away.

Related templates

Prepared by the Ironside Commercial Recovery collections team. General information, not legal advice. Have counsel review letters that reference legal action or statutory requirements.

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