Credit and Collections

Collectors are not allowed

to:
 Harass debtors on the phone or
in person
 Use obscenities or profanity
 Call debtors at work or late at
night
 Misrepresent the legal status
of the debt
 What is required?

Collectors are required to:

 Specify the amount of the debt and the name of
the creditor
 Specify that the debtor has 30 days to dispute
the validity of the debt.
 Offer to provide the name and address of the
original creditor, if the debtor asks for it, and
if the collector is not the original
creditor
Announcements

Announcements, like invitations, usually have

business promotion as their objective.

Your announcements, like your invitations, should

do these things:

 Be specific about place, time, benefits,

actions, or other appropriate facts.
 Be as newsy and exiciting as the occasion
dictates.
 Recognize the reader’s uniqueness; treat him
as an individual.
Refusing Credit

Buffer of appreciation
Explanation
reason is omitted entirely
Insufficient information
Factors considered in
evaluating credit are given
End on pleasant close
Collection Appeals

Positive Appeals focus on cooperation, fair

play, and pride.

 Cooperation Appeal
 Fair Play Appeal
 Pride Appeal
Cooperation appeal

This is the mildest appeal,

caters to one’s desire to be
considerate of others--loyal
to the creditor who has
been courteous and friendly
in asking for what is rightly
due.
Fair-Play Appeal

This appeal is usually developed by

reviewing the facts--how long a
payment has been pastdue--and
showing that since the creditor has
carried out his or her part of an
agreement, the debtor (customer)--to
be fair and honest--should keep his
or her promise and pay.
Pride appeal

This appeal should be subtle, not a

high-pressure tactic. You can
develop this appeal in various ways
by referring to what you know the
customer is proud of--a good credit
rating, items bought, or the respect
and good reputation enjoyed in the
community.
Negative appeals

Self-interest appeal: Two objectives

Show value of the advtgs. Customer has,

and

Convince customer that further delay may

cause them to lose advtgs.
Negative Appeal

Fear:
Stresses the loss of benefits (good
credit standing or possessions).

Past-due acct. will be reported to the

credit bureau or turned over to
attorney or collection agency or
debtor taken to court
Collection Stages

Reminder Stage:
 Assumption: Oversight
Plan: routine direct request
Number: varies; 1-7
Appeals: none, usually
Collection Stages

Discussion Stage:
Plan: Persuasive request (modified)
Assumption: Something unusual
happened
Number: Varies; 2-5 or more
Appeals: Positive
Collection Stages

Urgency Stage:
Plan: Persuasive request (modified)
Assumption: Debtor may need to be scared into
paying
Number: Usually 1 or 2
Appeals: Negative; sometimes also a positive
appeal
Collection Messages

Collection messages have an

important two-fold purpose:

1. Get the money

2. Keep customer goodwill
Reminder Stage

Messages in the reminder stage aim

to jog the customer’s memory. They
are direct requests, ranging in
number from one to six or seven.

The statement(s) following the first

one might include rubber stamped or
handwritten messages that say
“Please” or “Perhaps you have
forgotten.”
Discussion Stage

In this stage you usually personalize

your messages by using an inside
address and a salutation with the
customer’s name.

Your purpose now is to get the

debtor to send the payment or at
least an explanation--if there is a
reason for not paying.
Urgency Stage

These messages follow the persuasive

request plan and use the strongest negative
appeal--fear.

A telegram or mailgram is used in the urgency

stage. Companies using mailgrams report
collection efficiency improvement of up to 70
percent.
Collection Rule

If you’re too lenient, some

individuals may pay other bills that
seem more pressing and you lose out

If you threaten or harass customers,

they may not pay either.
Recommendation Letter

To include or omit negative material?

Only mention a weakness if:

1. Info is pertinent to the job
2. Sufficiently serious to affect the person’s
probable fitness for that responsibility
3. Info is true (not hearsay, personal vendetta)
4. Incident occurred often enough to be worth
mentioning
5. Info answers a specific question asked or
implied and you mention it in the spirit of
goodwill.
Crisis Communication

Two Types:
Tell it all and tell it fast
Say and do nothing
Crisis Communication

A company without a crisis

communication plan in
place takes 2 1/2 times
longer to recover than a
company with a firm plan in
place.
Major Crisis in the
1980s/1990s

Mad Cow disease (1996) Texaco racial slur (‘96)

TWA Flight 800 (1996) Ford Recall (‘96)
Disney Aladdin (1995) Intel design (‘95)
Jack in the Box (1993) DowCorning (‘92)
Sudafed cyanide (1991) Perrier benzene (‘90)
Exxon Valdez (1989) Pan Am-Lockerbie (88)
P&G satanic logo (1986) Regency walkway (85)
Union Carbide explosion-India (1984)
World Trade Center, NY (93)
Oklahoma bombing, OC bankruptcy, GM, Audi….
What to include in a Crisis
Plan

A list of whom to contact in an

emergency
An Approach to Media Relations
A Strategy for Notifying Employees
A Location to Serve as Crisis
headquarters
A Description of the Plan
Communicating during the
Crisis

Get control of the Situation

Gather as much info as possible
Set up a centralized crisis management
center
Communicate early and often
Understand the media’s mission in a crisis
Communicate directly with affected
constituents
Remember that business must continue
Make plans to avoid another crisis
immediately
Writing Assignments

Task 1.
You have been contacted by a former
employee to recommend him for a job with
Company Quest, a competitor. The former
employee was let go because of excessive
tardiness due to an alcohol-related problem.
He now wants you to give him a
recommendation and pleads with you not to
mention the “problems” he had while
employed at your company. He then hands
you a recommendation sheet to fill out and
return to Company Quest.
Task 2. Writing
Assignment

Your task is to handle a major crisis

that has just erupted at your
company. The word is out that your
company has a number of
restaurants that do not meet the
health standards and has paid off
several officials for their silence. A
news station has filmed the
unhealthy conditions that exist in a
number of your restaurant kitchens.
Task 3. Writing
Assignment

You have a number of delinquent

accounts which have not responded
to your willingness to discuss their
late accounts. Write a letter to
these customers and advise them of
the results of ignoring paying their
bills. Use the urgency stage and an
appropriate appeal in an attempt to
get the desired response.