COLLECTION OF POLICIES AND

PRACTICES•Credit problems

•Collection policies

Cause of delinquent accounts

The debtor who misunderstands the credit terms

The careless debtor

The debtor who ignores small bits

The debtor who is good but temporarily out of funds

The chronic slow debtor

The unethical unfair debtor

The insolvent debtor

The dishonest debtor

Importance of prompt collection policy

Requires less working capital tied up in receivables

Reduces the loses of bad debts Decreases the probability of of expensive

legal action Reduces the costs of correspondence,

book keeping and collections Discourages poor risks from costumers Reduces loss of sales

Principles of a sound collection policy--Bases

The creditor should inform the debtor

The creditor should enforce the credit terms

When an account becomes overdue, the collection machinery

shouldbe started at once

It is useless to undertake prompt collection action

unless the follow up actions are just as prompt

The regularity and timing of steps in collecting is important

End of presentation!!