1. What is the importance of Collection Policies in the success of Credit-Granting?

- Since collection policies is an important phase of credit this will help

ensure continuity in the department in the event that key personnel
leave the credit department. Assure that all consumers receive equal
treatment. Ensure consistent credit decisions are being made.
Collection policies ensure to protect accounts receivable and efficiently
collecting payment on current accounts receivable and past-due
accounts while maintaining positive customer relationship.
2. What is the main purpose of Sending Collector Letter to the Debtor?
- Debtor have two kinds, one is a good payer and the other is the slow
payer. The sending collector letter to the debtor is crucial. Furthermore,
collection letter is the most difficult part to write since it can offend the
customer who will receive it if the writer is not mindful. The purpose of
sending a collector letter to the debtor is to inform a consumer of his
due payments. The letter may include reminders, inquiries, warnings or
notification of possible legal actions.
3. How “Bad Debt” affects Credit?
- If you have a lot of bad debt this will affect your credit score. Bad debt
also can affect your credit score if the debt becomes seriously past
due. Also, an unpaid charge-off can harm you when you want to make
a major purchase using credit, rent an apartment or apply for a job.
Avoid having a long-term unpaid credit account.