Chapter X: Introduction (4)

=Collector's Card.= The most convenient method of handling collections is to supply the collector with cards as shown in Fig. 27. On the face of this card is a record of particulars, similar to that shown on the outside of the contract, while the reverse is ruled for a record of payments.

Since all contracts call for payments on certain days of the week or month, it is very necessary that the collection cards be brought to notice on the collection days. A simple method of providing for this is to use a card file equipped with a set of thirty-one numbered guides to represent the days of the month, or a set of guides printed with the days of the week. The cards are filed back of the guides which represent the collection days.

It is customary to divide the city into sections, assigning a collector to each section, the number depending on the size of the city and the number of accounts. It is necessary to use as many files as there are collectors, with an office file added for those who prefer to pay at the office.

Every morning each collector is given the cards on his route, on which payments are due. On his return, he turns in all cards to the cashier with the amount collected. If a back call is necessary, the card is filed ahead a day or two.

The cards in the office file are placed on the cashier's desk each morning and payments are recorded as made. Those on which no payments are recorded are kept on the desk, and after a reasonable time are given to a collector to follow up.

When payments have been recorded in the cash book, all cards are again placed in the files under the next collection dates. They are then ready for the collectors.

=Collector's Receipt.= Some method is, of course, necessary for checking up the collectors, and to insure the turning in of all money collected. A very satisfactory plan has been devised by the cashier of a western music house, in the form of a duplicate receipt as shown in Fig. 28. These receipts are bound in book form and numbered in duplicate, the original being perforated.

The receipt is especially convenient for the customer, as it shows exactly how the payment is to be credited. For the same reason, it is equally convenient for the cashier. All of the numbered receipts must be accounted for; if one is spoiled, it must be turned in, which provides an effective check on the collector.

=Mail-Order Installment Collections.= An increasing volume of installment business is now done by mail. An established principle of the mail-order business is that customers must be given an opportunity to inspect the goods before they can be expected to make a binding contract for their purchases. Beginners in the mail-order field are quite likely to look on this as an impractical plan, fearing the loss of goods, but experience soon teaches them that it is the only plan on which the business can be successfully conducted.

When experienced mail-order men, with the courage to try out a new idea, experimented on the plan of allowing customers to return goods, they found that the more liberal the offer, the more business they did. This led to the giving of an absolute guaranty, offering to ship goods on approval with the privilege of return for any reason within certain time limits.

As the fear of loss of goods became less pronounced, it was argued that more liberal terms of payment could be granted with safety--if goods could be sold successfully on the installment plan to local customers, why not by mail? A trial proved the plan to be practical, and now many articles are sold by mail on the installment or easy payment plan. Goods are even shipped without an advance payment, either the goods or the first payment to be returned within a certain time limit.

In selling goods by mail on the installment plan, it is necessary to secure a binding order, in which the customer agrees to return the goods within a certain number of days, or make the payments as specified, with an agreement that title to the goods shall be held by the seller until all payments have been made according to contract. The contract must also give the seller the right to recall the goods whenever the customer shall fail to make a single payment as agreed.

The success of the mail-order installment business depends largely on the manner in which collections are handled. Not having the advantage of personal contact with the customer, the collector is obliged to depend on the knowledge of the man which he gains from references and the correspondence of the customer. But the shrewd collector soon learns to read his man from the general tone of the correspondence, and sometimes from the absence of communications from the debtor. When he has learned the character of the man, he can handle each account independently; until then, he is obliged to follow the same line of action in all cases, depending on the law of averages to prove the correctness of his theories.

Too great emphasis cannot be placed on the importance of studying the character of the man. It is only by paying special attention to this point that the collector can learn to treat each account individually. In the first place, the class of goods sold largely governs the class of customers from a credit standpoint. The men who buy sets of business books are, as a rule, safe credit risks. Their training and environment have a tendency to teach them the importance of fulfilling an obligation; appreciating the necessity of maintaining their credit standing, they will make every effort to carry out the terms of the contract, or give a valid reason for asking an extension of time. Illustrating the opposite extreme is the class who will sign a contract for the purchase of a cheap musical instrument, at a high price, to gratify a desire to outdo a neighbor, without regard to their ability to make the payments as agreed. Such people trust to luck, and expect to pay in promises if they do not happen to have the money. For this reason, the percentage of profit that must be added to cover the cost of collection increases, as the quality of the goods and the standard of the credit risk decrease.

=The Account.= Accounts with mail-order installment buyers are handled in a similar manner to those of local buyers. All contracts should be numbered as received, and registered in numerical sequence. The form of register already shown answers the purpose very nicely.

After registering, the particulars of the contract should be entered in the ledger. A form of ledger sheet used by a publishing house is shown in Fig. 29. This is loose-leaf, and does not differ in form from the ordinary balance ledger, except in the particulars given at the head of the sheet. Here is shown the name and both residence and business address of the customer, number of contract, monthly payment and due date, references, source of order, price and name of books, and date of shipment. These sheets are filed in post binders, five-hundred sheets to the binder, and indexed alphabetically.

The next step is to enter the contract on a collection card. A satisfactory form is shown in Fig. 30. This is a card 4×6 inches in size, and is practically a duplicate of the ledger sheet. The card is filed in a chronological file under the due date--that is, if payments are due on the 24th of the month the card is filed under that date. Except when removed from the file for the use of the collector, or to enter payments, the card is always filed under the same date. If it becomes necessary to have an account brought to notice on other than the regular collection dates, a memo is made on a separate card and filed in a special tickler.

Should it become necessary to refer to a card on other than the regular collection dates, reference to the ledger--indexed alphabetically--gives the due date, by which it is quickly located. Sometimes, however, it is desirable to refer to all contracts in a given territory. To make this possible, a card file with indexes printed with the names of states and cities is provided. For each contract a plain 3-×5-inch index card is used, the name, address, and contract number only, being entered. This provides a complete set of indexes--alphabetical in the ledger; numerical in the register; by due dates in the collection file; geographical in the card file.

When a payment is received, it is entered in the cash book and posted to both the ledger and the collection card. Every card must be located at the time payments are entered in the ledger, or the customer will very likely receive notices after he has made the payment.

=The Collection Follow-Up.= The promptness of the follow-up on this class of collections is of the greatest importance--the debtor should not be given the excuse that he failed to receive a notice. Though not provided for in the contract, the debtor expects a notice of every payment due.

When the goods are shipped, a formal notice of shipment should be mailed, and if the first payment has not been made, it should be requested. In ten days, or after the approval time limit has expired, a second notice should be mailed, provided no payment has been received. This can be a formal notice, and should assume that the goods are entirely satisfactory, and at the same time calling attention to the fact that the first payment is past due. If this does not bring a remittance within ten days, it is well to send a draft notice. This notice should go into the conditions of the contract in some detail, and, without assuming a threatening attitude, it should assume that if payment is not received within five days it is the desire of the debtor that a draft be made. Either the notice or the draft will usually bring the first payment, or the return of the goods.

Each month, a formal statement showing the exact condition of the account should be mailed a few days before the due date. It is well, on this statement, to make an offer of a discount for cash to pay the account in full. A discount of 5% on an account that has several months to run will often be accepted, and is profitable to both parties. This statement should be followed in ten days by a second notice, also of a formal nature.

All notices up to this point may be printed, but further requests should be in the form of letters. Except when it has been found that an account should be handled in a special manner, form letters will be found most satisfactory. The letters should start out mild in tone increasing in insistence as the series is extended.

When persuasion fails, the debtor should be notified that the account is being placed in the hands of an attorney, or a collection agency. But before suit is actually started, it is well to investigate the probability of collecting a judgment. If a man is judgment proof, it is much better to take the necessary steps to secure the return of the goods. This is usually accomplished by requesting the express company to call on the debtor for the package.

Every debtor has his vulnerable point; if that point is reached, the money can be collected. The most successful collector is the one who finds that point in the largest number of cases.

=Collections by Attorneys.= The handling of collections constitutes an important part of the practice of many attorneys. It would naturally be supposed that attorneys handling collections for their clients would have an efficient system of records, but unfortunately this is not the rule. Except in offices handling a large number of claims the methods are very lax--there is an entire absence of a system that will reveal the exact status of every claim. And yet to install a system that will give just the information desired is very simple, and the operation requires less labor than to handle the claims in a haphazard way.

When a claim is received by an attorney, it should be given a number, and registered in numerical order. The register should be a book--either loose-leaf or bound--with headings for the date received, names of debtor and creditor, amount of claim, amount collected, fees, amount remitted, and date remitted or returned, as shown in Fig. 31. This is not intended as a complete history of the claim, but merely as a permanent record.

The papers in each claim should be placed in a folder. The old method was to use a manila jacket or document envelope, to be filed in a document file. The objectionable feature of this method is that the papers must be unfolded for reference. A better plan is to use a correspondence folder, such as is used in the vertical file, in which the papers can be kept flat.

Whatever style of folder is used, all papers should be fastened--either pasted, or by means of a paper fastener. On the outside of the folder should be written the names of debtor and creditor, and the number of the claim. The balance of the space on the folder can be used for recording special information about the claim from time to time. These claim folders should be filed numerically, according to claim numbers.

For a convenient record for daily reference, giving a brief history of the claim, a card is found very satisfactory. The folders are somewhat bulky and inconvenient for quick reference, and, except in special cases, it is not necessary to refer to all of the papers. Brief notes, which can be made on a card, will answer every purpose.

A convenient record form is shown in Fig. 32, which is printed on a card 4×6 inches in size. This gives the particulars of the receipt of the claim, the amount, date, and number, with a record of collections, fees, and remittances. A card is made for each claim, and filed alphabetically under the name of the debtor. The reverse of the card is printed as shown in Fig. 33. This shows the different steps taken to enforce collection.

The card file provides an index to all debtors against whom claims are on file, while both the register and the file of folders provide numerical indexes. But it is the creditor who is the client of the attorney, and it is very necessary that he be in a position to refer to or report on all claims received from any client. This necessitates another index to creditors, which is provided for in the card form shown in Fig. 34.

The card is headed with the name and address of the creditor, below which is a list of all claims filed by him. When a claim is returned--paid or unpaid--the date is entered on this card, so that the record shows only unpaid claims. These cards are filed alphabetically, under the names of the creditors.

A follow-up of the claims is provided by a plain index card on which is written the name of the debtor and number of the claim. This card is filed in a tickler, under the date on which it is desired to follow up the claim. This serves as a memorandum only, all records being made on the claim card or the folder.

THE SHIPPING DEPARTMENT