Chapter 10: Collection Policies & Procedures

Vocabulary practice flashcards covering debtor classifications, collector traits, collection letter types, and bad debt policies from Chapter 10.

Collection Policies

An important phase of credit management aimed at securing and obtaining the money due to the company.

Good Payer

A debtor who pays their financial obligations promptly and religiously.

Slow Payer

A debtor who takes excessive time to pay and actively tries to avoid meeting their obligations.

Cooperative Debtor

A type of debtor who does not hesitate to settle their financial obligation.

Chronic Complainer

A debtor whose complaints and grievances are generally the product of their fertile imagination.

Politician Type Debtor

A debtor who does not deny the existence of obligations arising from previous transactions and does not shun the presence of a bill collector.

Uncooperative and Indifferent Debtor

A debtor who fails to pay on time because they find it difficult to part with their money.

Paranoiac Debtor

A debtor referred to by psychologists as 'Paranoid,' who feels on top of the world even when their world is crumbling to pieces.

Pugnacious Debtor

A type of debtor who consistently exhibits an aggressive air of defiance toward collectors.

Elusive Debtor

A debtor described as being as elusive as an eel and exceedingly difficult to locate.

Prompt Payors

A group consisting of individuals and business entities conscious of their obligations who settle debts promptly without needing reminders.

Delinquent Debtor

A customer who presents no prospect for business at all and tends to shun creditors out of personal embarrassment.

Fair Credit (UCC)

A delinquent debtor classification consisting of Unforeseen problem, Careless Borrower, and Complainer.

Unforeseen Problem (Delinquent Debtor)

A Fair Credit debtor experiencing sudden personal setbacks such as unemployment, shrunken income, or medical expenses.

Careless Borrower

A Fair Credit debtor who simply requires regular and consistent reminders to pay.

Complainer (Delinquent Debtor)

A Fair Credit debtor who invents or expresses grievances after falling behind on payments.

Slow Credit (PMC)

A delinquent debtor category consisting of Poor manager, Marital Problems, and Coward.

Poor Manager (Delinquent Debtor)

A Slow Credit debtor who struggles with personal finances and over-indebtedness.

Marital Problems (Delinquent Debtor)

A Slow Credit debtor dealing with domestic issues who may quit their job, skip town, or turn to alcohol ('hit the bottle').

Coward (Delinquent Debtor)

A Slow Credit debtor who is afraid to confront or face the creditor directly.

No Good Credit (LGC)

A delinquent debtor classification consisting of individuals who live beyond their income, gypsies, and crooks.

Lives Beyond His Income

A No Good Credit debtor with an unknown credit past who spends beyond their financial capability.

Gypsy (Delinquent Debtor)

A No Good Credit debtor who constantly changes residence or place of employment.

Crook (Delinquent Debtor)

A No Good Credit debtor who directly and intentionally attempts to defraud the creditor.

Industriousness (Collector Quality)

A vital attribute of a bill collector that brings commensurate rewards through diligent labor.

Persistence (Collector Quality)

The 'twin brother' of industriousness; the willingness to make repeat calls untiringly until the outstanding balance is settled.

Tact (Collector Quality)

The ability to avoid offending the delinquent debtor while securing payment for the company.

Resourcefulness (Collector Quality)

A collector characteristic synonymous with high need for achievement ($nACH$).

Three-Part Credit Extension Package

A bundled offering consisting of Credit, Supplies, and Knowledge that makes the collection effort easier.

Collection Letter

A formal written collection communication that is difficult to compose because offending the customer causes more harm than good.

Reminder Letter

A gentle collection letter sent to bring an existing past-due obligation to the debtor's attention.

Discussion Letter

A collection letter initiating an offer to help the debtor resolve their predicament by discussing details to avoid misunderstandings.

Appeal Letter

A letter appealing to human nature and the debtor's soft spot by highlighting the impact of delinquency on their integrity and reputation.

Demand Letter

A collection notice warning the delinquent debtor of the legal consequences that will follow if the case is taken to court.

Registered Letter

A formal and unusual piece of collection correspondence signaling that an account requires serious, immediate attention and action.

Telephone Calls (Collection Method)

An effective collection medium providing an opportunity to speak directly and personally with the debtor.

Telegrams (Collection Method)

Written debt communications requiring strict care to avoid legal liability under statutes against libel and blackmail.

Bad Debts

Accounts receivable that cannot be recovered despite all measures and efforts, eventually prompting an authorized write-off.