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Credit and Collection Lesson IV

LOANS AND REPAYMENT

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mercuriojohnjohn1998
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18 views

Credit and Collection Lesson IV

LOANS AND REPAYMENT

Uploaded by

mercuriojohnjohn1998
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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1 CREDIT AND COLLECTION

LESSON IV
LOANS AND REPAYMENT

CREDIT AND COLLECTION JOHNREYMERCURIO


2 CREDIT AND COLLECTION

FORCES OF COLLECTION
1. The Salesmen
2. The House Collector
3. Attorneys (Legal Counsel)
4. Collection Agencies
5. Government

TRENDS IN CREDIT AND COLLECTION OPERATION


The generally used and availed accounts receivables collection efforts are the
following:
1. In-House Collection Force
2. Factoring
3. Organize a Subsidiary to Handle the Credit and Collection Operations
4. Network with Reputable, Experienced, Reliable Credit and Collection
Company
5. Private Label Financing

TOOLS AND AIDS IN COLLECTING


A. NOTICE OR REMINDER
A good collection notice or reminder must have the following qualities:
1. It must be of the proper size.
2. The message must be simple and written
3. The notice or reminder must be designed to be effective
4. It must contain eye-catching object which can stand by itself to motivate,
command and prod the debtor to react positively
5. The color of the notice must be appealing.

B. LETTERS
Kinds of Letters sent to debtors
1. Form Letters
2. Personalized Letters

QUALITIES OF GOOD FORM OR PERSONALIZED LETTER


 Concise
 Leave the debtor a “way out”
 Use words with care

CREDIT AND COLLECTION JOHNREYMERCURIO


3 CREDIT AND COLLECTION

 It must, in a very simple way, tell the debtor how much he owes and when
he must pat
 It must tell the debtor what he must do to pay his debt
 It must always sound like business
 It must avoid sarcastic remarks
 It must motivate the debtor to pay
 It must diminish the debtor’s resistance to payment

C. STATEMENT OF ACCOUNT
A statement of account must be concise, informative and direct to the point. It
must:
1. Request payment
2. Tell the debtor how much he owes
3. Itemized what is owed
4. Be easy to understand

D. THIRD PARTY LETTERS


Third party letters are usually written by a collection agency and/or an
attorney on behalf of the creditor. A third party letter may be written by anyone
hired by creditor to collect an overdue account. It is recommended that the creditor
discusses with the third party the content of the third party letter. The third party
letter:
1. Must come from someone who has the respect of both the creditor and
debtor.
2. The writer must know what to do to collect
3. Must be persuasive to compel the debtor to pay his debt
4. Must be credible. It should not threaten a debtor unless the creditor intends
to carry out his threat.

E. TELEGRAMS/CABLES
A good collection telegram must:
1. Be concise and understandable
2. Avoid confusing words
3. Be followed-up

F. TELEPHONE

CREDIT AND COLLECTION JOHNREYMERCURIO


4 CREDIT AND COLLECTION

Your “telephone voice” or the way you sound on is a powerful collection tool.
Tips to Improve Telephone Collection Error
1. Use short, simple words and sentences
2. Talk at the level of the debtor’s language level
3. Do not interrupt

TELEPHONE COLLECTION TOOLS


1. Billings and Statements
2. Notice/Reminders
3. Collection Letters
4. Telephone Calls
5. Telegrams
6. Personal

DELINQUENT ACCOUNTS MANAGEMENT


Elements of a Delinquents Accounts
1. Cause
2. Cure
3. Collect

GENERAL TYPES OF DEBTORS


1. The up-to-date
2. Occasional Delinquents
3. Habitual Delinquent
4. The Change Circumstances
5. The Premeditated Delinquents

GENERAL CATEGORIES OF DEBTOR’S DEFENSES


1. Offensive or Aggressive
2. Denial or Evasion
3. Defiance
4. Plea for sympathy and compassion

KINDS OF DELINQUENTS DEBTOR


1. The Negligent
2. The Honest but Confused

CREDIT AND COLLECTION JOHNREYMERCURIO


5 CREDIT AND COLLECTION

3. The can’t be bothered


4. Seasonal Delinquent
5. Honest Late Payer
6. Chronically Slow
7. Wittingly late
8. The stretcher
9. Habitual Discounter
10. The tightrope walker
11. The Braggart
12. The “vanishing” debtor

DEBTOR’S/COLLECTOR’S PERSONALITY NEGOTIATION STYLES


1. Practical (Street Smart)
2. Friendly (Mediator)
3. Peacemaker (Trouble-shooter)
4. Chairman (Rigid)

CREDIT AND COLLECTION JOHNREYMERCURIO

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