Professional Documents
Culture Documents
I. Collection Policy
Basically, collection policy is a guide that lays out a structured and repeatable
perspective on selling, as well as the rules, regulations, and processes that must be followed to
handle day-to-day operations.
a. Elements of Collection Policy
There are seven elements that form the structure of a sound collection policy
wherein the final element, if the other six have failed, is just to admit that the firm has a
collection problem in their hands. A collection policy must also be updated regularly and
made sure that it is still relevant and effective. It is recommended that this be done
once every year.
b. In-House vs. Outsourced Collections
In- house collection follows a procedure in that makes things like making a nice
phone call before the payment is due in an attempt to ensure prompt payment, and
even a stern letter after the debt becomes due easy to handle. However, there are
certain things that an outside collection company can do that would strain the time or
resources of many businesses. Meanwhile, outsourced collection is used for several
reasons, including the agencies’ experience specifically in debt-collection, notifying the
debtor that the company has escalated the debt collection process, spending time and
resources to continually contact the debtor with letters or phone calls and responding to
and locking down promises to pay, reporting the debtor to credit bureaus, and more.
II. Classification of Debtors
a. Types of Debtor
Debtors are classified and distinguished according to the attitudes and behavior
they manifest and display. We have a cooperative debtor who really try to find ways to
settle his financial oligations, a complainer who gives baseless complaints, a debtor who
has a lot of reasons why he cannot pay the debt, a person who just don’t want to pay
their dabt, a paranoiac and manay more.
b. Paying Habits
Another way of classifying debtors is according to their paying habits, that is,
upon their promptness in meeting their obligations. And by that we have: the prompt
payors who are conscious of their financial obligations which they discharge promptly
without the need of being reminded about them, and a delinquent debtor who is all too
likely to go from bad to worse as a credit risk.