Credit and Collections

1. Credit and Collections Collectors are not allowed to: Harass debtors on the phone or in person Use obscenities or profanity Call debtors at work or late at night Misrepresent the legal status of the debt

2. What is required? Collectors are required to: Specify the amount of the debt and the name of the creditor Specify that the debtor has 30 days to dispute the validity of the debt. Offer to provide the name and address of the original creditor, if the debtor asks for it, and if the collector is not the original creditor

3. Announcements Announcements, like invitations, usually have business promotion as their objective. Your announcements, like your invitations, should do these things: Be specific about place, time, benefits, actions, or other appropriate facts. Be as newsy and exiciting as the occasion dictates. Recognize the reader’s uniqueness; treat him as an individual.

4. Refusing Credit Buffer of appreciation Explanation reason is omitted entirely Insufficient information Factors considered in evaluating credit are given End on pleasant close

5. Collection Appeals Positive Appeals focus on cooperation, fair play, and pride. Cooperation Appeal Fair Play Appeal Pride Appeal

6. Cooperation appeal This is the mildest appeal, caters to one’s desire to be considerate of others--loyal to the creditor who has been courteous and friendly in asking for what is rightly due.

7. Fair-Play Appeal This appeal is usually developed by reviewing the facts--how long a payment has been pastdue--and showing that since the creditor has carried out his or her part of an agreement, the debtor (customer)--to be fair and honest--should keep his or her promise and pay.

8. Pride appeal This appeal should be subtle, not a high-pressure tactic. You can develop this appeal in various ways by referring to what you know the customer is proud of--a good credit rating, items bought, or the respect and good reputation enjoyed in the community.

9. Negative appeals Self-interest appeal: Two objectives Show value of the advtgs. Customer has, and Convince customer that further delay may cause them to lose advtgs.

10. Negative Appeal Fear: Stresses the loss of benefits (good credit standing or possessions). Past-due acct. will be reported to the credit bureau or turned over to attorney or collection agency or debtor taken to court

11. Collection Stages Reminder Stage: Assumption: Oversight Plan: routine direct request Number: varies; 1-7 Appeals: none, usually

12. Collection Stages Discussion Stage: Plan: Persuasive request (modified) Assumption: Something unusual happened Number: Varies; 2-5 or more Appeals: Positive

13. Collection Stages Urgency Stage: Plan: Persuasive request (modified) Assumption: Debtor may need to be scared into paying Number: Usually 1 or 2 Appeals: Negative; sometimes also a positive appeal

14. Collection Messages Collection messages have an important two-fold purpose: 1. Get the money 2. Keep customer goodwill

15. Reminder Stage Messages in the reminder stage aim to jog the customer’s memory. They are direct requests, ranging in number from one to six or seven. The statement(s) following the first one might include rubber stamped or handwritten messages that say “Please” or “Perhaps you have forgotten.”

16. Discussion Stage In this stage you usually personalize your messages by using an inside address and a salutation with the customer’s name. Your purpose now is to get the debtor to send the payment or at least an explanation--if there is a reason for not paying.

17. Urgency Stage These messages follow the persuasive request plan and use the strongest negative appeal--fear. A telegram or mailgram is used in the urgency stage. Companies using mailgrams report collection efficiency improvement of up to 70 percent.

18. Collection Rule If you’re too lenient, some individuals may pay other bills that seem more pressing and you lose out If you threaten or harass customers, they may not pay either.

19. Recommendation Letter To include or omit negative material? Only mention a weakness if: 1. Info is pertinent to the job 2. Sufficiently serious to affect the person’s probable fitness for that responsibility 3. Info is true (not hearsay, personal vendetta) 4. Incident occurred often enough to be worth mentioning 5. Info answers a specific question asked or implied and you mention it in the spirit of goodwill.

20. Crisis Communication Two Types: Tell it all and tell it fast Say and do nothing

21. Crisis Communication A company without a crisis communication plan in place takes 2 1/2 times longer to recover than a company with a firm plan in place.

22. Major Crisis in the 1980s/1990s Mad Cow disease (1996) Texaco racial slur (‘96) TWA Flight 800 (1996) Ford Recall (‘96) Disney Aladdin (1995) Intel design (‘95) Jack in the Box (1993) DowCorning (‘92) Sudafed cyanide (1991) Perrier benzene (‘90) Exxon Valdez (1989) Pan Am-Lockerbie (88) P&G satanic logo (1986) Regency walkway (85) Union Carbide explosion-India (1984) World Trade Center, NY (93) Oklahoma bombing, OC bankruptcy, GM, Audi….

23. What to include in a Crisis Plan A list of whom to contact in an emergency An Approach to Media Relations A Strategy for Notifying Employees A Location to Serve as Crisis headquarters A Description of the Plan

24. Communicating during the Crisis Get control of the Situation Gather as much info as possible Set up a centralized crisis management center Communicate early and often Understand the media’s mission in a crisis Communicate directly with affected constituents Remember that business must continue Make plans to avoid another crisis immediately

25. Writing Assignments Task 1. You have been contacted by a former employee to recommend him for a job with Company Quest, a competitor. The former employee was let go because of excessive tardiness due to an alcohol-related problem. He now wants you to give him a recommendation and pleads with you not to mention the “problems” he had while employed at your company. He then hands you a recommendation sheet to fill out and return to Company Quest.

26. Task 2. Writing Assignment Your task is to handle a major crisis that has just erupted at your company. The word is out that your company has a number of restaurants that do not meet the health standards and has paid off several officials for their silence. A news station has filmed the unhealthy conditions that exist in a number of your restaurant kitchens.

27. Task 3. Writing Assignment You have a number of delinquent accounts which have not responded to your willingness to discuss their late accounts. Write a letter to these customers and advise them of the results of ignoring paying their bills. Use the urgency stage and an appropriate appeal in an attempt to get the desired response.