Collection Department Flashcards
a term used by a business when referring to money owed to that business by a customer
Collection
When a customer does not pay the business within the terms specified, the amount of the bill becomes past due and is sometimes submitted to a _______
collection agency
The art of collection requires _____ and immense ______ on the part of the _______
tenacity, fortitude, collector
strategies, organization and procedures for recovery of receivables
Collection Program
Objectives of a collection program are:
- To reduce the amount of bad debt losses while controlling collection costs
- To reduce the company’s investment in accounts receivable
Responsible for monitoring and following up on receivables.
Collection Department
Types of Debtors according to paying habits
Prompt Payers
Delinquent Debtors
Pays their financial obligations on time without the need for their creditor’s reminders.
Prompt Payers
Individuals or firms who are unable to pay their financial obligations within the agreed time.
Delinquent debtors
occurs as soon as the debtor misses a payment on a loan, which can affect their credit score.
Delinquency
Kinds of Delinquent Debtors
- The Negligent
- The honest but confused
- The can’t be bothered
- Seasonal Delinquent
- Honest Late Payer
- Chronically Slow
- Twittingly Late
- The stretcher (Plastic Man)
- Habitual Discounter
- The tightrope walker
- The Braggart (Mayabang)
- The Vanishing (Houdini) Debtor
When an invoice is a month overdue
follow up with reminders to collect payment
After 60 days of invoice
a company needs to escalate the overdue invoice and the chances of it being paid have now significantly decreased.
After three months, an invoice is considered to be in severe delinquency.
Companies may take legal action to pursue payment or consider turning to a debt collection agency.
An invoice that has not been paid four months after the due date is the most severe level of delinquency.
Escalation should include a warning that once legal action is pursued, the delinquency is part of the customer’s credit report and updated in the databases of third-party credit report services.
Causes of Delinquency
- Financial Difficulties
- Disputes
- Creditworthiness
- Communication
- Unsystematic Collection Effort
- Cash Flow Management
a written notification to a customer or debtor who has not yet paid an outstanding invoice.
Notice or Reminder
A reminder should be ____, _______, and _____ to the point.
short, digestible, direct
Reminder must be written in a way that the message of the collection is ________ by the debtors.
clearly understood
The notice or reminder, to be effective, must be also designed with ______.
novelty
The color of the notice must be ______
colorful
It must contain an ______ object that can ______, _______, and ______ the debtor to react positively
eye-catching, motivate, command, prompt
It must be in _____ size
proper
used as a collection tool, reminding customers of the amounts they owe to the issuer.
Statement of Account
