Debts And Collections
( Originally Published 1918 )
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, be-come a necessity. This is the most unpleasant feature of any business.
The requisite steps to collect such debts are a matter of great importance and should be under-stood by everybody, but they are not, and much unpleasantness and heavy losses are often the result.
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 future 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.
Henry R. Raymer is to be the general partner, and contribute to the capital $4,000. He is to have charge and management of the business and devote his time and attention to it, and use his best exertions to make it profitable. He is to keep correct and proper books of account, in a proper manner, to show all the partnership transactions, which are to be open for examination to said Werner at all times, and shall communicate to said Werner, from time to time, all information that he may desire as regards the business.
Charles B. Werner is to be the special partner, and, at the time of executing these articles, has contributed to the capital eight thousand dollars ($8,000) in cash to the common stock.
From the profits, if any, each partner is to receive the interest upon his contribution to the capital, and the residue of the profit is to be divided between them. An accounting is to be had once in six months, the profits and losses ascertained, and the losses, if any, are to be borne by the partners in proportion to their respective contributions to the capital.
HENRY R. RAYMER, [SEAL]
CHARLES B. WERNER. [SEAL]
Executed and delivered in the presence of
H. R. BURROWS,
To Avoid 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 unswerving 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 due-bill, if the amount is small; this is safest 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 as so much paid for a lesson in business prudence.
First Steps in Making Collections
These depend very much upon 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.
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 col-lector, 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 debtor's account is usually all that is necessary to remind him that payment is expected when due.