The Fourth Collection Letter



The Fourth Collection Letter :




The Fourth Collection Letter :


The Fourth Letter — If no reply is received to the third letter within a reasonable time, it is probable that the debtor intends to avoid payment. The fourth letter should bring the matter to a definite conclusion. As a rule, it should set a definite date for a reply and should state specifically what action will be taken in case no reply is received by that date.

It is here that letters can be used to work upon the debtor's curiosity and fear. Of these two angles of appeal, curiosity is many times the more resultful, for it is the unknown danger a man fears most. If you can stimulate his curiosity regarding a pending action against him, the debtor may be more affected than by the mere statement of a definite action that is to be taken.

Notice the effect of the following letter.

Gentlemen,

If this letter does not bring an answer, we must pass your account of $145.20, now more than three months overdue to our energetic and inventive Treasurer.

We can not understand why you have allowed your account to drag along without attention. Manifestly, there is no reason why you should not pay this account or we would have heard from you to that effect.

You voluntarily incurred this obligation when you bought the goods. You were fully aware of the terms applying to the purchase. Yet you have not heeded our courteous requests for a remittance.

We expect you to pay this bill. We don't want to be forced to give your name to our Treasurer, for it is extremely probable that he will instantly take steps that will cause you considerable surprise and amazement.

Yours truly,

Such a letter, giving a straightforward recital of the facts of the case, puts the responsibility for future developments entirely on the debtor's shoulders. And the mention of steps that will cause great surprise and amazement will cause the reader to wonder whether it is quite the best thing to further procrastinate in remitting.

When we take up the element of injecting fear into collection letters, the account must necessarily have progressed to the point where collection through the courts is a near possibility. The purpose of such a letter, however — and this is an important consideration — is to bring the money in, not merely to pave the way for the suit.

And remember that the attorney should not be resorted to nor even suggested in the letters, until every other possibility has been exhausted.

Such a letter should be terse and conclusive. There should be an air of finality about the letter so that the reader may realize the earnestness and seriousness of his position.

The following is a good specimen of a collection letter that appeals to the customer's sense of fear.

Gentlemen,

You have compelled us to take the unpleasant step of informing our attorneys of your neglect to settle your account of April 15, amounting to $145.20.

We dislike taking this forcible step, but your failure to attend to your indebtedness gives us no alternative.

Of course, you appreciate the time you will lose in court, the harmful publicity, the lowering of your credit and the inevitable payment of the account, together with court costs that such a suit will cause you.

Follow our friendly and sincere advice to settle your account before our attorneys are called in. It is distinctly to your advantage to avoid any such unbusinesslike affair.

We shall expect your check for the full amount of your account by the 15th of this month. You owe it to yourself to see that it reaches us in ample time.

Yours very truly,

A letter such as this presents the case to the debtor fully and definitely, yet in such a manner that a direct remittance can be sent without any humiliation on the part of the customer.

The function of such a letter as this should be to offer the reader every possible opening for a direct settlement. Remember that the purpose of this letter is not merely to serve notice that the account is to be placed with your attorneys. It is a final endeavor to collect the account.

Failure on the part of the debtor to make remittance on the specified date should be met with prompt action by the attorneys. This step being taken, the debtor must, of course, deal in the future with your legal representatives.

All the principles mentioned, while applying specifically to the manufacturer or other concern catering to a wide trade area, are equally applicable to the local field. There are, however, one or two angles of collection work peculiar to the retailer exclusively.

Here, an individual is dealt with. Then, too, as in the case of a charge customer of a department store, the collection is a matter of monthly occurrence.

When credit arrangements are made and the account opened, the terms should be explicitly stated. One retail establishment that has had marked success with its collections sends to each new charge customer an engraved card with this wording.

The Blank Department Store has opened an account with (name of customer).

Itemized bills will be rendered the last of each month and payment is due the 10th of the month following date of purchase. Deviations from this rule should be by previous arrangements.

Again, the basic idea that payments are expected within a certain specified period makes the task of the collection man the easier.

Statements are rendered promptly at the close of the month's business so that they reach the customer on the first or the second day of the month. If the granting of credit privileges has been cautious, the majority of accounts will be paid within thirty days at the most.

A month later a duplicate statement is mailed accompanied by a card reading like this.

The Blank Department Store calls attention to its monthly system of receiving payment for all purchases made the preceding month. The privilege of settling accounts by monthly remittances is extended for the convenience of its customers. Deviations from this rule are only by previous arrangement.

The store that keeps close watch on its collections and follows promptly all delays soon builds a reputation for expecting timely payments, which aids materially in making collections.

Installment accounts, whether handled by a retailer or by a mail-order house, present peculiarities all their own. Here, instant and drastic action must be taken as soon as payment becomes overdue. The reason a customer makes a purchase on the installment plan is to avail himself of the easy payments. These payments are, as a rule, of an amount the customer can comfortably pay at the specified intervals. Inasmuch as a customer who buys on such terms does so because he can not pay more than one installment at a time, it is very essential that the first letter be made impressive enough to inspire prompt action.

More than half of the fight is won, if in the early stages of the transaction every installment is collected. There is no accumulated overdue amount and the customer understands that each payment is expected when due.




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