as, for example, in case of the Cuban Sociedad en Comandita, where the liabilities of the general partners must not exceed the amount of their respective investments in the business, whereas the liabilities of the special partners equal all of their outside resources in addition to the sums invested in the business. Obviously, many legal complications will arise out of an attempt to enforce payment by legal means, unless much thought has been given to the exact legal status of the various members of the delinquent firm prior to such action.

Foreign commercial laws are so numerous, bulky, inadequate from the standpoint of protection to the creditor, and changing so frequently that it becomes rather difficult to keep so well informed of the proper steps to be taken in enforcing payment by legal pressure as to cause one to doubt the wisdom of attempts to collect accounts in this manner.

In view of the foregoing, it is advisable to secure a settlement through amicable means by compromising with the debtor, not necessarily as to the amount of the bill but also in regard to terms or the time of payment. Once a willingness on the part of the seller to compromise is evidenced, it is said that in most cases it will result in the payment of the bill and in the retention of the customer's good will and patronage.

SELECTED REFERENCES

BEEBE, D. E.: "Retail Credits and Collections," Pt. IV, chaps. 12,13, and 14; Pt. II, pp. 90-103.

CASSELL, R. J.: "Constructive Collecting," chaps. 3, 5, 6, 9, 10, 35, and 37. ETTINGER, R. P., and GOLIEB, D. E.: "Credits and Collections," chap. 14. GARDNER, E. H.: "New Collection Methods."

HAHN, LEW, and WHITE, PERCIVAL, ed., "The Merchants' Manual," chap. 18. POOLE, G. C.: "Export Credits and Collections," chap. 14.

SKINNER, E. M., WHITE, R. S., and KRAMER, H. E.: "Credits and Collections," chaps. 8, 9, 10, 11, and 13.

WALTER, F. W.: "The Retail Charge Account," chap. 7.

WYMAN, W. F.: “Export Merchandising," chap. 35.

CHAPTER XXII

COLLECTION CORRESPONDENCE

GENERAL PRINCIPLES

Assumptions. When payment is not forthcoming on the due date, the first assumption to make is that the indebtedness has escaped the customer's attention. He is, therefore, entitled to courteous reminders, in which he is at the same time requested to verify the correctness of the bill. Failing to receive a reply to the reminders, it is natural to assume that the customer is in financial difficulty. Accordingly, he should be sent letters of discussion in which he is requested to point out the reason for the delay in making settlement. He is also impressed with the seriousness of the situation and with the reasons why payment should be made immediately. If no explanation is forthcoming after several attempts to secure one have been made, it is natural to suppose that the customer is unreasonable and unwilling to meet his obligations. At this point friendly relations may be ruptured and the customer made to feel that his obligations must be met, otherwise he should be prepared to suffer the consequences of more drastic measures taken against him.

Tone in Collection Letters. Within the limits of the above assumptions there is, no doubt, room for the greatest variety of letters. It is important, however, that the sequence of these assumptions should not be reversed. After a customer has been threatened, or his obligation urged, it is too late effectively to assume a friendly attitude and offer assistance. Accordingly, friendly relations should not be broken until all reasonable. means of bringing about an amicable settlement have been exhausted.

Collection letters when improperly used can easily result in serious injury to the collecting house. If they are too harsh in tone, many customers will be repelled. It is also much less difficult to secure payment from delinquent debtors by courteous, tactful, and friendly collection letters than by harsh and sharp

ones. Writers of collection letters often produce a sharp effect when they mean to be courteous and mild, because they fail to realize the effect of the expressions they employ, as when they unintentionally use the words "must," "demand," "insist," "require," "be compelled to," "delinquent," etc. This is accentuated by the fact that many customers are only too ready to read into a letter meanings that the writer did not intend. Consequently, every collection correspondent should keep in mind those phrases which always produce a sharp effect, and carefully guard against ambiguous statements or unpleasant implications. Sharp language should be reserved till more courteous methods have failed. This is so because the aim of collection letters, as of the collection system in general, is to accomplish not one but two definite objects. They must bring previous transactions to a satisfactory conclusion and at the same time retain the good will of the customer and pave the way for continued profitable business relations. Good collection letters are not only money-getters but are business-builders as well.

The tone of a collection letter should be dignified and courteous. Undignified language and methods invariably result in lowering the reputation and standing of the creditor in the eyes of the customer. Furthermore, statements which are merely insulting are ineffective because they arouse anger and destroy the value of whatever appeal is made in the letter. Accordingly, correspondents should refrain from the use of statements which in any way imply that the customer deliberately delays remittance or refuses to reply to previous communications or that his credit standing is inferior. Discourteous language when written is far more stinging than the same language spoken. It is much more effective to assume that he intends to pay and to emphasize the desirability of his paying immediately.

Avoid Excuses. An apologetic or begging tone seldom produces results. To offer excuses for requesting payment of overdue accounts implies that promptness is illogical. Furthermore, excuses often produce a bad effect upon the customer, resulting in a loss of respect for the house. In writing letters to delinquents, no apologies need be made for seeking settlement. There is nothing to beg and nothing for which to apologize. The money is due and should be paid without further delay.

The debtor knows that and excuses simply weaken the creditor's demands and encourage undue procrastination.

It should be understood at the time credit is first granted that the terms agreed upon are to be maintained and that the creditor will follow up any delinquency with regularity and promptness. A creditor need, therefore, ask for no favor from the debtor. It is an obligation which a customer has assumed voluntarily, its payment is necessary in order to obtain further credit from the house, the bill is due for value rendered, and the creditor needs the funds for the conduct of his own business. These are sufficient reasons for demanding payment of an overdue account. They can be effectively stated in the letters and thus provide the correspondent with adequate material for his correspondence that is logical and requires no apologies.

Flexibility. No set of collection letters will serve for all customers, at least not beyond the point of formal notifications and reminders. Some customers must be coaxed, some cajoled; others require an appeal to self-interest; while still others can be talked into making remittance by playing upon their sense of business fairness. Some letters require "jogging," while others demand "dunning." Some debtors are sensitive and must be handled with the utmost care, while others are negligent and indifferent and will respond only to unusual treatment. Because of this, a correspondent, before commencing to write any of the personal appeal letters, should carefully study his debtors individually. Good collection letters are original, and carry with them a living and personal message. Writing a letter merely as a communication, without thinking of the objective, will defeat its very purpose. To be successful and accomplish the object intended, the letter must establish a point of contact with the recipient.

To accomplish this end, a correspondent should have before him a complete record of the case, showing the history and development of the account and the number and kind of collection efforts that have already been made. He should at this time. recall his impressions of the customer when met personally on a previous occasion, and should also gather all possible information concerning his characteristics and idiosyncrasies through the salesman who had the opportunity of knowing and meeting him on the ground. All this information will safeguard him from making serious mistakes in the treatment he accords the

delinquent debtor in the collection letter that he writes. With all facts before him, he can definitely decide upon the choice of the appeal to be used and the degree of persuasiveness and diplomacy that should be injected.

Personality. Every collection letter of the personal appeal type should express the personality of the writer, if it is to establish a point of contact. A common defect of many letters is that they lack the grip of personality. Consequently, they do not sound natural nor anything like the spoken language used by the correspondent. Unfortunately, too many letter writers indulge in expressions not characteristic of them and which they would not use when the debtor is personally before them. Instead, they should make letters personal, write in such a tone as befits a man of responsibility and conservative character, and avoid, wherever possible, stilted or conventional phrases or long, involved sentences.

Component Elements.-In every collection system, of which collection letters naturally form an important part and to which they necessarily must conform, there are at least three variable elements. The first deals with the time taken for the complete operation of the system, as well as the time that is allowed to elapse between any two steps in the series of collection efforts. The second element deals with the number of notices and letters to be sent and other steps to be taken. The third element has to do with the kind of appeals and nature of consideration and treatment to be accorded various classes of delinquents.

Obviously, all three are interdependent, each one varying in accordance with the nature of the other elements. The time allowed to elapse between any two notices or letters to be forwarded, for example, varies directly with the nature of the risk. Not only is the interval between any two efforts shorter when collecting from the poor risk, but the time taken for the complete operation of the system until the climax is reached is correspondingly brief. Again, fewer notices or letters are generally sent to the poor risks than to otherwise prompt-paying customers.

Stages in Collection Correspondence.-It is not intended to convey the impression that every account in the collection process necessarily passes through the various stages to be presently discussed. The particular circumstances of a given account may, for example, justify a prompt transition from the