Collection Processes Outlined
"I don't do much letter writing anymore," notes Jan Perlman, credit manager for Medo Industries, Inc. (Tarrytown, N.Y.). But when her other efforts to make contact with a delinquent customer have failed, she will sometimes send a certified letter--to make sure it is received--and follow up with a phone call.
She cites a recent situation with one long-term customer. Medo's experience with this company had been very eventful. After satisfactory relations for several years, credit privileges had to be suspended when they ran into severe financial problems.
"We had no alternative," she recalls. "They understood we had to do it, and we did recover all that was due us."
Medo ceased doing business with the company for a year. Then the customer's controller called Perlman to tell her that they were back on their financial feet. His contentions were confirmed in Medo's routine annual review of all accounts--active and inactive.
"We began selling to them again on open account," she says. Then, six months ago, payment problems began anew. "This was really troubling," she says. "I thought we had established an open and honest relationship."
More troubling still was the fact that now she could not reach the controller by phone. So out went a certified letter detailing the condition of the account and reviewing her attempts at trying to reach him.
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"We must discuss this situation if we're to continue doing business with you," she wrote. "If I do not hear from you, I will have to refer your account to our attorney."
The controller called to apologize and explain that they were in discussions with potential new credit facilities. "He's now keeping in touch with me weekly," says Perlman, adding, however, that credit privileges have again been suspended.
"At this point they're still sending in orders, and he understands that I can't provide credit," she says. "We're doing business on a cash-only basis." She emphasizes, however, that she is more than ready to reestablish credit when the customer's financial situation warrants it. "We're very flexible," she says. We're willing to work with customers through temporary cash-flow problems. But they have to communicate with us openly and honestly."
Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter.
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