Web Vintage Literature

Chapter 14. Collection Correspondence

It is one thing to induce a man to take something that he wants; it is quite another to induce him to give up something he wants. And therein you have the vital difference between the sales and the collection letter. True, both letters are built largely upon the same elements of salesmanship. Just as in selling a man an article, you win his interest in it, prove its qualities, persuade him that he needs it and induce him to buy, so in selling a settlement of your account, you must interest him in a personal practice of the golden rule, prove the justice of your request or demand, persuade him that it is for his own good that he settle, and finally induce him to enclose the money he owes you and mail today.

Furthermore, a collection letter has just as many possibilities as the sales letter for those supplementary qualities that make talk on paper distinctive personality, the you element those intimate touches that get next to a man when mere formalities do little more than irritate and spur antagonism.

Recognizing this, collection managers are coming more and more to see the element of danger in a too strict adherence to the use of form letters. In the handling of a great many small accounts they are of course, an economic necessity, but in a commercial business, at least, the man who is worth selling the first time, and whose trade is worth retaining, is certainly worth individual attention in the settlement of his bills.

Classified according to their manner of treatment, collection accounts fall pretty strictly into two divisions: ordinary commercial accounts and installment accounts; and they should be considered separately.

Getting the right tone into commercial collection letters is largely a matter of getting the right viewpoint and the right perspective on what your customers relation and his obligation to you really is.

It is a mistake, in the first place, to look upon a just debt as anything but the strictest business obligation or to intimate in the slightest degree that you do not expect the debtor to pay it promptly. The merest suggestion that you consider it as any other than a straightforward business proposition will be eagerly grasped by the debtor with intent to evade. Furthermore, it is a mistake to ask payment on any other ground than that it is justly due you in exchange for value received. Many correspondents make use of the argument that the firm is hard up.

We are going to be frank in telling you, wrote one wholesale house, that we need the money. You are only one of a large number of our customers who are back on their accounts and unless you remit at least a part of what you owe us, we may find ourselves in embarrassing circumstances.

The moment you write a man like that you let him know that you are in the same class that he is and you put a new excuse in his mouth that he may not have used on you before. If you think it advisable to talk at all along this line, do it without losing your dignity.

On the other hand it is equally important that you consider the debtor first of all as a customer, that his friendly patronage be retained if it is possible to do so and that he be granted any reasonable extensions in time that he may ask. A customers trade is valuable to you until he has shown by a persistent ignoring of your requests for settlement that he cannot or does not intend to voluntarily pay his bills. Under those circumstances his business is not desirable to you in the future and you are perfectly justified in a more stern demand for settlement or in taking any legal steps that may seem necessary.

Steering a middle course between these two principles a business-like consideration of the debt and endeavor to retain the customers trade the collection letter may be made as cordial and dignified a communication as any other kind of letter.

Ordinarily four letters gradually increasing in urgency are sufficient to determine any debtor position. When more than this number are used your efforts are spread over too much surface you run out of ammunition before you reach your climax.

A furniture house which had fears of hurting its customers feelings with too sudden a request for cash, got up a series of eleven collection letters. These letters increased in urgency from the first till the sixth then became timid again in the seventh and eighth and not until the eleventh did the process reach the legal stage. Now the trouble with this scheme was that once the customer caught on to the game, he never had any more fear of those threatening fifth and sixth letters. He deliberately waited until the ninth or tenth had come and then paid his bill, sixty days credit to the good.

The first letter should be courteous in tone, calling the customers attention to the fact that his account is somewhat overdue and requesting an early settlement. It is well to at least impress the customer with the fact that he has your confidence by mentioning that the bill has probably escaped his attention. This, as if you had forgotten that this were a collection letter at all, follow with some good selling talk, some intimate inquiry about the things that interest you both. In short, show your man that you think of him primarily as one of the firms valued friends.

You will be surprised to find how a little supplementary talk of this kind will bring in the customer who really wants to be square. And you can well afford to be cordial, for at this stage his future business is still valuable to you.

From the average careless but honest delinquent, a letter like this will pull a partial, if not a full payment of the account. Throughout it radiates only the good will of the house and from the man who intends to settle without difficulty, it is certain to appeal because of its evident fair play. There is a chance, too, that it will pull business as well.

The customers action in response to this letter will determine the whole nature of succeeding procedure. If he responds at all the chances are that a cordial personally dictated second letter will save the transaction any unpleasantness. Possibly without making settlement, he may order more goods. A Chicago silk house uses this situation as a lever and writes the customer in this manner:

Thank you for the order for which was received this morning. I was somewhat surprised, however, to find that your letter made no mention of settlement of your last account, regarding which I wrote you on the 10th. We appreciate the additional business you are giving us, but cannot very well allow the account to become any larger on our books. The goods you ordered are now being prepared for shipment, and they will go forward immediately upon receipt of check covering the earlier account.

If no reply to a courteous first letter is forthcoming within a reasonable time, a second and more urgent letter should be sent. How severe this should be will depend upon the debtors value to the house. If a customer of good reputation heretofore, he may still be brought around by your showing an intimate interest in a friendly adjustment of his relations, something after this manner:

You have not sent us an order in over a month. Was there something wrong with the last shipment, or is there an error in our statement of your account? If there is any fault in our service you know that we consider it a favor to be told about it.

I shall await your reply with interest.

If, however, your knowledge of the customers previous actions leads you to believe that his is deliberately ignoring your request, it is better to omit the conciliatory element entirely and write a brief, insistent request somewhat after this style:

You have not favored us with a response to our letter of ten days ago asking an early settlement of the enclosed account, which is now considerably over-due.

Please give this your immediate attention.

Beyond the second letter in either case sales talk is worse than wasted. Not only is the customer who fails to notice two such requests worthless for future business, but a drawn out letter robs the request of urgency. The third in the series therefore should be strictly a collection letter and should crystallize matters by setting a definite date on which settlement must be made. Here is a good form, for instance:

You have entirely ignored our two previous requests for payment of your overdue account. We are consequently compelled to believe that you are purposely neglecting settlement.

We must now insist upon this account being paid by.

_/_/_/_/_/_/_/_/_/_/ Begin Letter Illustration _/_/_/_/_/_/_/_/_/_/

Mr. Albert G . Green,

Randolph, N. C. Dear Mr. Green:

You have been so busy making your preparations for the Holiday trade, that you have doubtless overlooked the fact that your Account with us is somewhat overdue . You have settled your bills Promptly in the past and we feel confident that this reminder will Meet with an equally prompt remittance in this instance.

How is the Venetian Toilet Soap selling? Many of our Customers are finding this one of the best money-makers they Have handled, not only because of its real merit, but because Of the extensive advertising campaign which the manufacturers Are carrying on. As you know, we can give you an unusually good profit On this soap and it should pay you well to push it during the Holiday season. If you can use another gross of boxes we can Ship them on the day ordered.

With best wished for a good season, Very truly yours, Speer, Hammond & Co .

_/_/_/_/_/_/_/_/_/_/ End Letter Illustration _/_/_/_/_/_/_/_/_/_/

An example of a good first collection letter written by the correspondent of a commercial house to a customer who has fallen behind. Not how the selling talk introduced gives the letter a cordial, courteous tone that impresses the customer with his obligation and at the same time lays a basis for more business.

Many firms do not turn accounts over to an attorney until a collection agency has tried its methods on the debtor and failed. But if you do write a man that you will go to court, by all means, do it. In other words never put a threat into a collection letter that you do not intend to back up. Any debtor, who doesn't make at least an effort to settle after three requests, should be handled without mincing matters.

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 buyers 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 debtors 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.

Beyond this stage, procedure should be guided by surrounding circumstances. The buyer who appears at least to be perfectly honest and reliable should be given the benefit of the doubt and another courteous letter should be sent. One house writes to people of good standing in this manner:

We should dislike very much to believe that this delay is due to other than oversight because you were so favorably recommended to us by your bank. Still if a remittance is not received within a very few days, we shall have no alternative.

When such a letter gets no action, there is only one alternative left open to start procedure toward immediate collection of the whole amount that still remains due on the purchase.

There are two ways in which this may be approached. Either the customer may be given a cash up inducement, that is, a discount or some additional article free for an immediate settlement; or the account may be turned over to an agency or attorney. To cash up is always preferable, because it offers a chance to bring in the money at once and also to retain the good will of the buyer.

I am going to make one more effort, writes one collector for a publishing house, to reach an amicable agreement with you. If you will send me at once a check covering the balance due on your account with us, I will send you at absolutely no expense to you and as evidence of my appreciation of your fulfilling your part of the contract without unpleasantness, a copy of Woods Commercial Law, a volume which every business man should have upon his desk. Only an exceptional combination of circumstances enables me to do this and we have only a few copies of the book available. If you wish to take advantage of this offer, you should let me hear from you at once. Simply enclose your check with this letter and mail today.

If your delinquent accepts this offer, well and good. If he does not, your only open road is to go to court.

There are many instances of course, in which neither the cash up nor the court is feasible, because the amount remaining due is so small that it will not warrant the cost of either. In such cases, clever, personal appeal may do the business. Supposing of course that the debt is a just one, there is still a chance to touch the mans sense of respect for the square deal.

Remember always that most men want to pay their debts, and do not consider any man dishonest until he has proven himself so. Do not resort to threats or severity until conditions absolutely demand them. The debtor who has been harried and aggravated by the ordinary give me my money letter will have a pleasant surprise if you first show him a personal understanding of his case. And your cordial willingness to be reasonable will get your money while the man who flies to early threats waits for his.

The Deceptive Aggregate A DELINQUENT file of five hundred follow-ups a Monday morning stack of two dozen complaints makes up an aggregate of petty evasion of unreasonable demands that looms large to the desk man. But the debtor the complainant never sees that aggregate.

Sarcasm aimed at it will puzzle and anger him.

His need, his shortage, his annoyance, are what occupy his mind.

The letter that pulls must take his view, talk from his side, show under-standing of his trouble; and thus arouse his spirit of fairness.