BUS 204 Credit & Collections Spring 2006, sjh.

The ABC’s of Collections

It’s your money…just ask for it!

(But follow the law)

Three Easy Steps to In- House Collection

1. Have a Written Credit Policy

2. Know Your Responsibility as a Collector

3. Customize and implement an effective collection system

The end result is increased cash flow AND customer retention!

Choose your Methods

1. Cash

2. Check

3. Money Order/ Cashiers Check

4. C.O.D

5. Credit-card

6. Terms (in-house credit)

If you are charging a finance charge on the unpaid balance notification should be printed on your invoice/or statement.

Unfair Practices

You MAY Not add any fees unless agreed upon from the beginning of the debt.

You may accept a post date check up to five days in advance. (if longer, you must notify the debtor3-10 days before cashing the check)

You may not initiate collect calls or telegram fees.

Fair Debt Collection Practices Act

Know your rights and the consumer’s rights

The Act is intended to prohibit abusive practices by debt collectors

The Act has specific details regarding communications with the consumer and what is considered harassment.

www.ftc.govwww.lawdog.com

Fair Debt Collection Practices Act

Prohibited Practices:• Early morning or late night calls]

• Failure to cease communication upon request

• Causing a telephone to ring continuously• Communicating with consumers at their

place of employment

Fair Debt Collection Practices Act

Prohibited Practices:• Contacting consumer known to be

represented by an attorney[6]

• Communicating with consumer after request for validation

• Misrepresentation or deceit• Publishing the consumer's name or address

Fair Debt Collection Practices Act

Prohibited Practices:• Seeking unjustified amounts• Threatening arrest or legal action • Abusive language • Communication with third parties• Contact by embarrassing media • Reporting false information on a consumer’s

credit report

Fair Debt Collection Practices Act

Required Conduct:• Identify themselves and notify the consumer• Give the name and address of the original

creditor • Notify the consumer of their right to dispute

the debt• Provide verification of the debt• File a lawsuit in the proper venue

When Collecting Your MoneyFollow the Four P’s

I. be Professional

II. Patient (it is a virtue, after all!)

III. Polite and courteous

IV. Persistent (within the law)

When & Why to Use a Collection Agency?

Collection agencies know the laws and methods.

They normally will take 50% of the total collected.

You don’t have to be the “bad guy”

Statistically at 6 months past due you will lose 65 cents on the dollar.

It often makes sense and cents.