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Unformatted text preview: e aging
shows that most accounts are collected in about 35 days and a few accounts are
way past due, then the firm should analyze and pursue collection of those specific
past-due accounts. Popular Collection Techniques
A number of collection techniques, ranging from letters to legal action, are
employed. As an account becomes more and more overdue, the collection effort
becomes more personal and more intense. In Table 14.4 the popular collection
techniques are listed, and briefly described, in the order typically followed in the
collection process. 620 PART 5 Short-Term Financial Decisions TABLE 14.4 Popular Collection Techniques Techniquea Brief description Letters After a certain number of days, the firm sends a polite letter reminding the customer of the overdue account. If the account is not paid
within a certain period after this letter has been sent, a second, more
demanding letter is sent. Telephone calls If letters prove unsuccessful, a telephone call may be made to the
customer to request immediate payment. If the customer has a reasonable excuse, arrangements may be made to extend the payment
period. A call from the s...
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