COLLECTION letters on installment accounts differ from commercial letters chiefly in that the purchase is a single transaction and there is frequently little probability of future business. For this reason the sales element is largely lacking. Reason for settlement must run on two points - the buyer’s honor and his obligation to abide by his contract.
The prime aim is to prevent the debtor from getting behind in more than one installment. When two remain unpaid, the account is doubly difficult to collect, and if three accumulate, some summary action or a “cash up” offer is almost absolutely necessary to make the account profitable.
Because installment propositions are usually sold to all buyers on a uniform basis of payment, form letters may be used far more extensively than in commercial work. In fact, debtors and their degrees of indebtedness may be so classified that a series may be prepared which will meet almost every objection and apply to nearly every situation.
One collection man has divided his accounts into four classes - those on which only the first payment has been made, those on which several but less than half have been made, those on which more than half have been made and those on which only a very small amount is still outstanding. For each class he has prepared a series of five letters and they have been so carefully developed through experience with installment buyers that they are in the vast majority of instances as well suited as personally dictated letters.
It is customary among houses doing an installment business on a monthly basis not to begin a strictly collection series until a second copy of the monthly statement, marked “Second Notice” has failed to bring a response. If fifteen days pass after this second notice without a reply, a first letter should be sent calling the debtor’s attention to the fact that the account has probably been overlooked and requesting immediate attention. It is not a bad plan to point out in this letter in a courteous way the importance of keeping these installments paid up promptly. One house follows its request with a paragraph something like this.
“Perhaps you have overlooked the fact that in signing this contract you agreed to send us a remittance regularly each month without fail, until your account has been paid in full. This, however, was the agreement and we have naturally planned on receiving the payments in this manner.
“We feel certain that for your own convenience you will find it most satisfactory to adhere to this plan, for if you allow two or more installments to accrue and are compelled to send us the whole amount in one remittance, it may work hardship. We will appreciate it if you will settle the overdue payment at once and see that future installments reach us promptly each month ass they fall due.”
If a courteous letter like this does not bring at least a reply as to why the payment has not been made within ten or fifteen days, a second letter considerably more urgent in tone should be sent.
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