The Collection Series [1949]

While waiting for Owen to complete a karate lesson this morning, I went to a used book sale and spent $1 to acquire a copy of Effective Business English, an attractively bound 850+ page volume by Alta Gwinn Saunders, the "Late Chairman of Division of Business English" at the University of Illinois. It was published in 1949.

I wondered what Alta Gwinn might have to say about getting deadbeats to pay bills:

The Collection Series: The collection procedure divides itself into roughly six stages. In the first three stages, the collection correspondent is working on the assumption that the debtor intends to pay. The solicitations gradually rise through statements, reminders, and stronger reminders, to a climax, which is called the discussion stage. In this stage, the fourth, the collection manager divides the attention between securing immediate payment and breaking the silence of the debtor. In the fifth stage, the urgency stage, the collection correspondent assumes that he must use strong persuasion to make the debtor pay. In the sixth stage he uses the threat of forcible collection.

[Some boring stuff on "Stage 1," the "Notification Stage" deleted here. This is just sending out normal statements in the first month...]

(Stage 2): Reminder Stage: At the beginning of the second month, a printed enclosure such as the following may accompany the statement:

It is especially important to seek goodwill in reminders. The type of first reminder that collects 90 percent of the revenue is likely to be the kind that gets the money but drives the customer away. It is better that the first reminder be 50 percent efficient and keep the customer

[...]

(Stage 3): Stronger Reminders: The creditor usually assumes that the debtor has some justifiable and perhaps unusual reason for not paying—dissatisfaction with goods or service, illness, or absence from home or office, and that payment will be forthcoming as soon as this difficulty is removed.

The collection letter in this stage excludes sales material in order to etch more sharply on the debtor's message one thought: "You owe an account which you should pay." The attitude is friendly, the tone frank, the request for payment, direct. The following example suggests "talking it over," a technique useful in writing to a good customer who is "touchy" about being asked for money:

We recently sent you a statement of your account which amounts to $_______.

Not having received your check, we wonder if there is something in connection with the charges you would like to discuss.

If there are no corrections to be made in your account, won't you assist us by sending us your check today?

(Stage 4): Discussion Stage: In the discussion stage, the object is to procure payment if possible, but if not, to induce the debtor to explain his attitude toward his account and tell the creditor when to expect payment and in what amounts. The discussion letter which succeeds is is using the right motive for inducing payment, and which has this motive presented in a sincere, vivid, concise and friendly way. There is psychological value, moreover, in reviewing the collection effort, which means mentioning the number of statements, reminders, and letters; the definite date on which each was sent; and the changes in the attitude of the creditor toward the debtor...

(Stage 5) Urgency: When the credit or collection manager has given the debtor customer ample opportunity either to pay or to explain why he cannot pay, then he must make a new assumption. In the urgency stage, he assumes that the customer does not recognize the importance of meeting his obligations; that he is apathetic, indolent, or stubborn; that the creditor has to say or do something forceful enough to arouse him to act. From this point, back of every letter he writes is the thought: "You must pay."

An example of a strong appeal to self-interest, presented from the customer's point of view, is the following:

(Stage 6) Action Stage: A usual type of force is a letter from credit manager, treasurer, or president on his official stationery imforming the debtor that the firm will start legal proceedings unless he pays or makes satisfactory arrangements.

From the archives: Repeat, Reassure, Resume (how to handle customer complaints, or alternatively, their objections when you're trying to sell them something—scroll down a bit).