How To Collect Debts

"The man who is in debt carries a world of trouble." - Burke.

HOW TO COLLECT DEBTS.

Pay as you go, or a strictly cash business, is the best and safest method of doing business.  But certain conditions or customs in trade make this sometimes impractical or impossible and credit must be given.  Under this method dishonest, careless or unfortunate people contract debts, then refuse, neglect or are unable to pay them, and collections, peaceable or forced, become a necessity.

The requisite steps to collect such debts are a matter of great importance and should be understood by everybody, but they are not, and much unpleasantness and heavy losses are often the result.

Methods by Which Debts are Contracted

Goods are bought on credit, to be paid for at a definite or indefinite future time.  Labor is employed, to be paid for at certain periods.  Lands, houses and other property are purchased under contract of future payment.  Money is borrowed, under notes, mortgages or other securities, and many other transactions in business and trade call forth occasions or present temptations to contract debts.

Suggestions for Avoiding Debts

1. Do a Strictly Cash Business. — Better small profits and quick sales, than large profits and long credits.

Mark your goods as low as possible and adhere unswervingly to your cash principle. This is best for buyer and seller. It avoids collections and prevents losses. It saves the time and labor of keeping accounts. This enables the seller to sell cheaper and the buyer to buy for less than on credit.

2. Cautions. — Goods sent abroad should be paid for before the purchaser takes possession.

The time of credit should be as short as possible and the bills collected when due.  When working for others collect your wages weekly or monthly, in accordance with the agreement to pay, unless your employer is quite responsible, thus making your dues safe.

In renting lands or houses, a duplicate lease should be made, one for each party, the rent paid promptly when due, at the house or business place of the landlord, and the payment credited on the back of the lease.

In receiving or making payments, a receipt should always be made out; it is a voucher and may save trouble.

Hotel and boarding-house keepers cannot be too prompt and strict in collecting their dues, as their customers are mostly transient, making forced collections sometimes impossible.

Never loan money without requiring a note or a duebill, if the amount is small; this is safest even between the most trusted friends.

When the loan is large, have the note secured by a mortgage on real estate; but see to it that the same is not encumbered by previous claims, which would render your security worthless.  It is safest to require an abstract of title and then have your mortgage recorded immediately.

This precaution should also be observed where a chattel mortgage is taken on personal property.

If a small amount of money has been loaned without security and it can apparently not be collected without legal process, it may be best to drop the matter and consider the loss so much paid for a lesson in business prudence.

First Steps in Making Collections 

These depend very much on circumstances.  The debtor may have met with reverses or a misfortune, rendering him unable to pay at the time specified, and deserving of patience, others may be careless and need a sharp reminder, a third party, inclined to be dishonest, may need close watching.  Thus discretion is necessary as to the form and tone of the letters requesting payment.

The composition of a letter requesting payment of an account is often a perplexing task, particularly if the person or firm is capable of paying, but careless about it. Such a letter, to be perfect, must not only obtain the money due, but do so without giving offense. Such letters should not, as a rule, be blunt or abrupt, but should courteously and clearly state the reasons for the request. If it becomes necessary to suggest placing the account in the hands of a collector, the suggestion should not be put in the form of a threat but in such language as will show your reluctance about using such means.

Generally speaking, a statement of the debtors account is usually all that is necessary to remind him that payment is expected when due.

If necessary to request prompt payment, something similar to the following may be used:

                                                                                             New York, N. Y.,  May 1, 1916.

Mr. D. C. GOWAN,
         Oswego, N. Y.

Dear Sir:—Inclosed please find statement of your account for April, which we trust you will find correct.

We would appreciate it if you will kindly check same at your earliest convenience and send us a N. Y. Draft for the amount.

Yours truly,

Smithson & Dewsnap.

If the debtor is tardy a second request might be worded as follows:

Mr. J. G. Homes,
          Newark,  N.J.

Dear Sir:— We respectfully call attention to your account, which is now some time past due, and ask if you cannot favor us with your check by return mail.

or

Not hearing from you regarding the amount of your account, now past due, we take the liberty of drawing on you at three days' sight, and trust that you will kindly honor the draft when presented.  
Thanking you in advance, we are,           Yours truly, 
                                                               Connor & Blaine. 
 

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Writing Business Letters, Continued; Opening Letters; Rules for Writing a Postal (Postcard).

 

Opening Letters

Letters are properly opened by inserting a knife or other convenient instrument under the flap at the end and cutting across the top of the envelope.

SOME SPECIAL POINTS IN BUSINESS LETTERS.

1. Be brief and to the point without being blunt or offensive.

2. Be courteous in your requests and polite in your demands.

3. Never write a letter with a lead pencil; always pen use and ink.

4. Avoid the use of flourishes.

5. Blots and errors due to slovenliness are inexcusable.

6. Avoid interlining; rather rewrite your letter.

7. Aim to write as legibly as you know how.

8. Never discuss or refer to matters of a social nature in a business letter.

9. Never write a letter when angry or vexed.

10. Write on one side of the sheet only.

11. When requesting information always enclose stamp for reply.

12. If your letter contains money or an enclosure always state the amount, or what the enclosure is.

13. Take a copy of all letters containing matters of importance. It may save you trouble.

14. Be prompt in acknowledging the receipt of a business letter, mentioning its date.

15. Never write an anonymous letter; it is the coward's weapon.

16. See that your letters are divided into paragraphs and properly punctuated.

17. Write as though your correspondent was at your side and you were talking to him.

18. Letters ordering goods should state plainly the articles wanted, giving full directions for shipping, and the name and address of the person ordering.

19. Money should be remitted by draft, P.O. order, express order or registered letter.

20. Money orders or other enclosures should be folded in the letter; not put in the envelope separately.

21. Do not use figures in the body of a letter, except to denote sums of money, dates, street or P. O. box numbers.

22. Do not forget to sign your name. 

23. &c means “and so on in the same manner.” Etc. is entirely different and means “and other things.” Use them only in their correct sense.

24. In requesting payment of money due you, avoid being offensive. Remember, it is better to have a person a friend, than an enemy.

25. Do not mix up an order for goods in the body of a letter. Either use a separate sheet, or make it a separate part of your letter with only one style or kind of goods on a line.

26. Use care and neatness in addressing your envelope, and if writing a number of letters be sure that John Smith's letter does not go in Tom Brown's envelope.

27. Never write a dun, or any matter of importance, on a postal card. To make a threat of any kind on a postal card renders it unmailable, and to use indecent language thereon is a criminal offense, under the laws of the United States.

28. A prompt acknowledgment of the receipt of an order for goods is a commendable practice.

29. Avoid abbreviations and the use of postscripts.

30.  Never write a threatening letter; in most of the States it is made a criminal offense by statute.

RULES FOR WRITING A POSTAL

1. A card should be dated either on the upper right-hand corner, or on the lower left-hand corner.

2. Always sign your name in full.

3. If you wish an answer, give your full post office address, unless it is well known by the person to whom you are writing.

4. Never write a demand or a request for on a postal. It is disrespectful to the person receiving it.

5. Never write an invitation on a postal. Society prescribes polite forms for this purpose.

6. Do not important matters to a postal card, for it is open to inspection, and the law does not provide for its return to the writer if it fails to reach its destination.

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BUSINESS CORRESPONDENCE

The Materials.-- Good pen, ink, and paper. For business correspondence three styles of paper are in general use, viz.: commercial note, about 5x8 inches; pocket note, about 5½x8¾ inches, and letter paper, which is usually 8½x11 to 13 inches. The smaller sizes for short letters and the larger for long ones.

The envelopes most commonly used are Nos. 6 and 6½.

Parts of a Letter. -- for convenience in explaining the form of a letter we call the different parts by the following names:

1. Heading (Place and Date). 4. Body of Letter.
2. Address. 5. Complimentary Closing.
3. Salutation. 6. The Writer's Signature.

The following diagram will show clearly their position.



Heading.-- The heading indicates where and when the letter was written and should contain information the person written to will need in directing his reply. It should be written to the right-hand side of the sheet and about two or two and one-half inches from the top. There is no objection to using two or more lines for the heading if required.

The Address of a letter consists of the name and title of the person or firm to whom you are writing, the residence, or place of business, as the case may be, to which the letter is to be sent.

The inside address, as this may be called, will be the same as the address on the envelope, excepting that on the inside address the city and state may be written on the same line. Begin the address on the left-hand side of the sheet, one inch from the edge of the paper and on the line following the one on which the heading is written. The second line of the address should begin an inch farther to the right than where the first line is begun.

The Proper Use of Titles.-- Two titles of courtesy should not be joined to the same name; as, Mr. John Hartley, Esq.; nor should a title of courtesy be used with a professional or official title: as, Mr. J.B. Wilson, M.D., or Hon. Henry Weston Esq. One exception to this rule, however, is permitted where a clergyman's initials or first name is not known, to write Rev. Mr. (----), giving only the surname.

The Salutation is the complimentary form used to begin the letter. The forms most in use are Sir; Dear Sir or My Dear Sir. In addressing a firm, Sirs, Dear Sirs, Gentlemen or My Dear Sirs. If the person addressed be a lady, Madam, or Dear Madam. If she be a young, unmarried lady, Dear Miss, or it is quite correct to omit the salution where doubt exists as to whether she be married or not, or if the writer has no acquaintance with her.

Follow the salution with a comma and dash, and never write Gents for Gentlemen, or Dr for Dear, etc.

The Position of the Salutation depends somewhat on the number of lines in the address. The examples on next page will illustrate this and the form of letters in general.

The Body of the Letter is that part which contains the message or information to be imparted. In this, good form, penmanship, spacing and paragraphing should receive due care.

The body of a business letter should begin on the same line following the salutation.


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Origin and Nature of Credit.

Origin and Nature of Credit. — There can be no system of credit until there has been a considerable accumulation of capital; for, when capital first begins to be accumulated, those who possess it apply it directly in aid of their own labor. As a country increases in wealth, many persona acquire capital which they cannot employ in their own business, or can only employ by offering inducements to purchase in the shape of deferred payments. As soon as a sufficient capital exists, a system of credit has a natural tendency to arise, and will continue to grow with the increase of capital, unless it be checked by a general insecurity of property, by imperfect legal securities for the payment of debts, or by a want of confidence in the integrity of the parties who desire to borrow. When the society and laws of a country are in a sound state, and capital is abundant, credit comes fully into operation.

In a recently published article, the Hon. George B. Roberts, Director of the United States Mint, thus lucidly discusses the nature and value of credit as a substitute for money:

"There is a very common misunderstanding of the meaning of the word 'credit' when used as a banking term. Some people associate it wholly with advances of money or goods upon time, but credit is also a substitute for money in cash transactions. When a customer gives a merchant a check for a bill of goods and the merchant deposits the check for his own bank account and simultaneously draws against it, credit is being used, and a great convenience and economy are effected over payments of money from hand to hand. When payments are between distant localities the advantages are obviously greater. The great bulk of the payments between the East and West are accomplished by offsetting the purchases they make of each other. The great bulk of the bank deposits of the country are created in this way, and not by passing money over the counter. All of this involves the use of credit. This method of doing business will not be changed. The public will not go back to a greater use of money from hand to hand; on the contrary, it is certain that the various forms of bank credit will more and more become the means by which payments are made."

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