Business Letter Writing - Installment Accounts

( Originally Published 1918 )

Different Treatment Required.—Installment accounts present different conditions that call for different treatment. Instead of dealing with business men and firms, they are, for the most part, individual accounts, back of which there is little, if any, financial responsibility, outside of the hold that the house may have, by contract of conditional sale, chattel mortgage or the like. This means that in many cases all that can be recovered is the merchandise, and that is the worse for wear.

Hence there is not present the idea of patron-age to be saved as well as money to be collected. If the money is obtained, that is about all that can be expected. The problem is, therefore, to get the money.

City Collections.—The city installment houses rely largely on their collectors who make their calls upon the customers from week to week or month to month, and especially on those who have been in the habit of paying by mail or at the office and who have become delinquent.

It is frequently the case that delinquent customers are difficult to reach by personal calls. The collector may make a number of calls, only to be told the party is not home. Then the mails are used and the notice first sent out is usually in the following form :

Perhaps you have forgotten that in quite some time there has been nothing paid on your account with us.

We feel sure it has been merely an oversight on your part, but we wish you would give the matter your immediate attention.

Where the collector has seen the customer and has obtained a promise that the account will be taken care of on a certain basis, and then default has been made, a letter like the following should be sent:

Our collector reports that you have promised to pay on the 1st and 15th of the month. As we have received no payment from you since the first of last month, we must insist that you pay not less than $4.50 each time in order to make up the arrears and keep the payments up without any further lapses.

If you will do this promptly, we will be able to retain your name in our first class rating on our books.

If the merchandise be furniture, something that would work a hardship if it were removed, and especially if any considerable part has been paid it is very effective to refer to the contract of sale or the terms of the chattel mortgage as to the right to retake it and to hold what has been paid as liquidated damages for the failure to make the agreed payments. Such a letter might read:

When you undertook to purchase the bed room suite from us, you signed a legal contract or chattle mortgage which gave us a lien upon the furniture for the unpaid balance and contained a clause that made all of the unpaid and future payments instantly due in case you defaulted in your regular payments.

As you know, you have made such a default in your payments—in fact you have paid nothing for the last four weeks—and that we have the right to remove the goods and sell them for what they will bring and hold you for any balance there may be, including costs.

We have no disposition to take such action un-less you compel us to by your continued refusal to make your payments. It is squarely up to you to fix our course of action.

Possibly you do not realize the number of delinquent accounts we are carrying, money with-held that rightfully belongs to us, like the overdue payments of yours. We must, in justice to all our customers, insist that these be paid so that we can continue to render service to all.

In many cases there is some good reason for suspending payments. If you can show us such a reason and can make satisfactory arrangements for an early resumption, we will gladly carry the account until you can get on your feet. But you must come and see us at once. Your neglect of this letter will force us to take the action indicated.

Notes-(1) Here is a plain statement of the legal nature of the papers signed and the rights and remedies of the house. This is usually sufficient to make the customer stand in dread of what may follow.

(2) The statement that what action the house may take will be determined by the customer's attitude, in most cases loosens the purse-strings. It refutes the suggestion that the house is grasping and exacting.

(3) There is an appeal to the sense of fair play in the reference to the number of delinquent accounts carried, and the necessity of collecting the accounts in the interest of a common merchandising service.

(4) The intimation that there might be a good reason why payments had been allowed to lapse and the assurance that if they be told and some reasonable arrangement made to take care of the payments as soon as possible, shows a spirit of fairness that wins except with the hardened "beat" who is entitled to no consideration.

(5) Such a letter as this, however, should be reserved for one of the last steps before legal action.

Out-of-Town Collections. — Here the mails must do the work of the city collector, and the letters should be in series, progressing in urgency and severity, much the same as those in mercantile collections. There must always be borne in mind the fundamental difference between the two classes-that installment collections are with individuals who buy from installment houses because they are unable to pay cash locally or meet local requirements as to settlement in full within a 30 or 60 day period.

There are many articles sold this way that the purchasers want to return when pressed for payment, so the duty of the collection department is often to resell the goods and induce the customer to keep them and pay for them. Returned goods always represent a loss two ways-transportation charges and profits on the sale and generally damage to the goods themselves. Hence the necessity of confirming the original desire to have them.

Installment Series. The usual practice is to send two or three "reminder" letters before beginning to apply pressure. The first should be :

We would call your attention to the fact that your payment of $12 on your account is now past due, and we would thank you for a remittance at your earliest convenience.

How you will send us this past due amount promptly, it will be so much easier to take care of the other payments without having one come so closely on the heels of the other.

The second letter would follow along these lines :

Evidently you laid our former letter aside in-tending to send us the amount, and then something came up that claimed your attention, and it was forgotten.

Now only a week will elapse before another payment will be due, and the longer you delay, the heavier will be the burden of catching up.

While it is fresh in your mind, just make out a check or send us a money order for the $12 and send it to us in the enclosed stamped and ad-dressed envelope, and then it will be off your mind and ours. Once caught up, it will be so much easier to keep caught up. We find it so.

The third letter should make reference to the obligation the customer assumed and express surprise that it should be so lightly held, and substantially as follows :

We cannot quite understand how a person can make a definite promise to pay certain sums at specified times and then permit them to remain unpaid for so long a time, without even any apparent effort to keep faith.

You know we relied entirely upon your word and sent you the goods without delay. It seems to us that you have not been entirely fair with us, first, in failing to keep up your promised payments, and, second, in ignoring our requests for remittances.

If matters have come up that make it impossible at the present, for you to make these payments as agreed, be free to write us and tell us what is the trouble. You will find us more than reasonable. Whatever the situation is, tell us about it. Delaying only makes matters worse and may be putting you in a false light. Kindly let us hear from you at once.

Usually by this time the customer has made some reply, in which event, further correspondence should conform to the situation as disclosed in his letter. It should be remembered that it is nothing against a man that conditions have arisen that interfere with his keeping up his payments according to a schedule made in good faith and without anticipation of subsequent difficulties. Of course he owes it to the house from whom he bought to be frank and explain the situation, but pride keeps many a pen out of the inkstand and as the days go by and no response is made to the collection letters the house does not know that the customer is trying to get the money, but on the contrary is justified in its assumption that the intention is to avoid payment entirely.

Collection managers know this, and that is why the chief aim in this or any series of letters is to induce the person addressed to say something to reply. Then the individual angle can be determined and the case dealt with intelligently. In the case of installment letters particularly, shame or fear are the chords played upon with the best effect to produce the reply.

Premium Offer. — Some installment houses make effective use of a premium offer as an extra inducement to pay the account, using it as the third or last letter before placing the account with the collection agency or their attorneys. It is the old appeal of something extra, something that is not paid for, that so often works like a charm.

This type of a letter takes a form something like this:

By your refusal to keep your solemn agreement to make the stipulated monthly payments, and by your ignoring of our letters to you regarding the account, you are forcing us, very much against our will, to class you among those who make it a practice to evade their just debts and obligations.

We have had such cases in the past and know how to deal with them, yet before turning your case over to our attorneys we are going to give you one last chance to make an amicable settlement. In fact, we are going to make it a decided object to you to send us the entire account, which as you know, amounts to $43.57.

If you will send us check or money order for this amount, we will send you, absolutely free, and by prepaid express, a handsomely bound volume of over 300 pages—"The World at War," profusely illustrated with more than 100 reproductions of paintings, photographs, charts and diagrams, the text rewritten from the published accounts of the most famous war correspondents who viewed every battle from the trenches, air-planes and on the sea. Of all of the books on the war none possesses half the features that make this volume one of the most valuable and most prized works to be found in any library or of such stirring interest not only to the present, but to future generations as well. It is not to be found in any of the stores, but has been reserved for sale by subscription, and we were fortunate enough to secure a limited quantity for our customers, and it will be necessary for you to act promptly, if you want your copy FREE.

Don't even write a letter. Just pin your check or money order to this letter and return it to us, and the. same day it is received, your copy of "The World at War" will be started on its way to you with our compliments.

Don't let this opportunity slip by. Remit today.

Notes—(1) The opening paragraph puts the responsibility upon the customer for the estimate in which he is held by the house, and which he must admit, is justified.

(2) The reference to familiarity in dealing with such cases is suggestive of harsh measures taken by lawyers who are devoid of sympathy, while at the same time, showing a way out to the customer's decided advantage.

(3) The next paragraph makes the offer and proceeds to sell the book just as earnestly as though it were a regular sales letter. Had the inducement been anything else, it would have been handled in the same way, the object being to create the desire to possess it to such a degree that the entire balance of the account—which the customer realizes must be paid anyhow—will be remitted. The statement that the books cannot be purchased in any store, but are sold on the subscription plan, tends to enhance their value, while the fact that the house has only a limited quantity, furnishes an additional incentive to act promptly.

(4) The whole thing is made very simple. The customer does not even have to write a letter—does not have to tell why he has not paid sooner. All hehas to do is to pin his check or money order to the letter and mail it in, and the book will be on its way the same day.

House Collection Agencies.-In many instances installment houses maintain their own collection agencies, operating under some agency name, and having a different address, so that the connection between the two will not be recognized. These agencies handle the accounts referred to them just the same as an outside agency would do, and make one or two attempts to collect without actually bringing suit. The first letter is along the following lines:

The Webster Mercantile Corporation of St. Louis has placed in our hands for collection a claim against you amounting to $43.57.

While our instructions are to bring suit upon this account, we much prefer to give you an opportunity to make an amicable settlement that will save you the expense and unpleasantness of a law suit. If you have any good reason why this account has been allowed to stand or should not be paid, write and tell us. We would rather assume that you have such a reason than other-wise.

You should appreciate that this is a courtesy to you on our part and accordingly give it prompt attention by way of a remittance or at least some definite assurance as to when settlement can be made.

Notes--(1) The letters that are given here are "form.

But how have you treated us? You have ignored our letters and shown no intention of doing the right thing. If you have any reason for withholding your payments, you have not told us, so we must conclude you have none.

This situation cannot continue. We feel that we are justified in saying to you that unless we hear from you by Monday of next week, we shall be obliged to take the matter up with your employers, and if necessary, garnishee your wages, as provided by law. The matter is entirely in your hands, and no one will be to blame but your-self.

Don't let things go to that length. Do the manly thing-come in and see us and we should be able to get together and continue our business relationships in the spirit of friendship. We are not unreasonable. Prove it.

Notes—(1) The tone of the first paragraph is intended to make the employee ashamed of himself and his treatment of the concern which he owes.

(2) The second paragraph is to impress upon him the fact that business obligations must be met, and that if they are not, then the creditor will be forced to take action to se-cure such payment, even to attacking his wages. It is added that the employee has it in his power to regulate and control such action by his own conduct.

(3) An appeal to self-interest is made in the third paragraph, coupled with one to his manhood. The door is left open for the reestablishment of cordial relations, if the employee will only enter.

(4) The whole letter is a skillful blending of firmness, tempered with kindness.

If the employee is so indifferent and callous as not to respond, the next step is the letter to the employers, in substantially the following form :


IN RE: Your employee,

We very greatly regret the need of taking up with you a matter of seemingly small consequence, but having failed to obtain results by writing direct to your employee, we deem it advisable to kindly ask for your cooperation.

Our local branch some time ago opened an ac count with the above employee, who, for some reason or other, has failed to live up to this agreement to pay up his account.

As the balance still due does not amount to much, we are writing to inquire if you would kindly have someone in authority speak to him about this matter.

We know what it means to have employee's wages garnisheed and we greatly dislike using this means if the same result can be obtained through other methods.

We do not reflect on this party's character, but in view of the fact that he has failed to respond or even acknowledge our letters, we feel it most advisable to take the matter up with you.

Thanking you for any efforts you may extend in our behalf, we are,

Very truly yours,

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