2. Inability to pay.
3. Unwillingness to pay.
Whatever may be the cause of delinquency, the credit man or the collection manager must ascertain what it is at the earliest possible moment, for upon this knowledge necessarily depends his selection of the remedy. Where mere carelessness is the cause, the right kind of pressure promptly applied will usually bring the money, accompanied by an apology for the oversight. If, on the other hand the customer is really unable to pay, it is evident that pressure is not the remedy to be applied. In that case, the solution of the difficulty may lie in the offering of additional credit with a view to enabling the delinquent to tide over his temporary difficulty. But where the real cause of the delinquency is unwillingness to pay, it is obvious that neither persuasion nor assistance will meet the situation. Here summary action—even drastic, perhaps—is demanded, and must be instituted without delay if the account is to be saved. The un willing debtor must either be forced to pay, or he must be made to suffer for his unwillingness.
Fortunately, only a small proportion of delinquents are of the unwilling kind, tho it sometimes happens that thru the creditor's faulty handling of the case, a debtor who originally was in class 1 or class 2 even tually drifts into class 3. This shows that early in formation as to the real cause of the delinquency and prompt action in accordance with the requirements of each case are the chief features in the formulation of an intelligent and effective collection policy.
3. The monthly common practice in a wholesale house is to send statements of accounts to all debtors on the first of the month, these statements serving as a reminder that the amount is either due or about to become due, and—where the account re mains unpaid—to send statements at regular intervals rubber-stamped with variously worded requests for an early remittance.
What is regarded as a better plan is to time the sending of the first statement so that it will reach the debtor a day or two before the account becomes due; and not to send any subsequent statements with re quests for payment. The arrival of the statement
just before the date of maturity, makes it impossible for the debtor to offer as an excuse for non-payment that he had "overlooked the matter." The arrival of the statement at such a time also plainly reminds him that the prompt payment of his bill is not a matter of indifference to his creditor. If this reminder goes un heeded, however, recourse should at once be had to other and stronger means.
4. Collection letter.—The next step usually con sists in sending a letter. Bearing in mind that the creditor's attitude toward a maturing account, as far as this attitude is observable by the debtor, should always be one of confident expectation of payment at maturity, and in view of the fact that this expecta tion now has been disappointed, a letter is immedi ately"sent to notify the debtor of the non-arrival of his remittance. Such a letter should reveal no un easiness on the part of the collection manager with regard to the debtor's omission, but should somehow convey the impression that the delay is causing some surprise and that it is interfering with the routine of the department.
To omit sending such a letter, even for a few days, suggests to the debtor that the creditor is not very much concerned over the delay in payment. If such a letter is not sent promptly, the debtor is led to in fer that the creditor does not need the money and that he is willing to have the debtor take his own time in making the payment. Once this impression is given—especially in the case of a new customer—it will generally be found that the debtor takes full ad vantage of the situation, and thereafter consults only his own convenience in making payments. He may even resent subsequent requests for payment, regard ing them as unwarranted and offensive reflections upon his ability and willingness to pay his just debts.