Pamantasan ng Lungsod ng Maynila

PLM Business School

A.Y. 2020 - 2021 First Semester

FIN 3104: CREDIT MANAGEMENT AND COLLECTION POLICIES

MODULE 4: Collection Development and Management

CHAPTER 10: Collection Objectives and Structure

TOPIC OUTLINE:
• Role of Collections
• The Collection Process
• Best Practices in Collection
• Additional Collection Concern
• Collection Cost Analysis

OBJECTIVES:
• To be able to know the principles of collection
• To understand the collection objectives
• To learn the collection procedure
• To grasp information on how to improve collection

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 Introduction

After establishing a good credit policy and gaining borrowers, then it is time to collect your
money back, it is best to know a well-thought-out collection plan. With this, you can maximize the
potential that you can collect all past due accounts that you have. Although this can include lots of
complicated procedures, everything will be worth it if you succeeded in collecting everything in
your list.

I. THE ROLE OF COLLECTIONS

According to Ecollect, credit collection is the “general debt recovery process of

reimbursing unpaid and past-due credit loans from the costumer in debt, on behalf of the lender.”
This means that collection is the main process where lenders get back the money lent to borrowers.
This process is normally conducted by specialized DRAs or Debt Recovery Agencies, as requested
by the lenders to provide them the service in collecting their money, according to their policy and
procedure.
Collections is a term used by a business when referring to money owed to that business by
a customer. When a customer does not pay the business within the terms specified, the amount of
the bill becomes past due and is sometimes submitted to a collection agency. Collection is vital for
every company as much as a positive cash flow. The role of credit collection may include:

1. Generation of positive cash flow as recovering debt means money is flowing back into the
company.
2. Slowing down the company’s cash outflow. The money to be collected can be used to
finance the company’s operations instead of disbursing more money from the capital.
3. Reduction of business risks of incurring losses.

A. Collection Department
The role of the Collections Department in a company is to collect the product of sales owed
by its customers. It includes monitoring the daily and monthly volumes of collections and
maximizing efforts to collect receivables in due time (in agreement to the payment terms), the
reduction of outstanding payments, bad debt, and write-offs. These functions shall be performed
while keeping excellent relations with customers and treating them fairly, in accordance with the
company policy. Additionally, the main objectives of the collections department are the following:
a. Customer’s satisfaction and retention
b. High level of cash-flow from customers
c. Reduction of outstanding debts
d. Reduction of bad debt and write-offs
e. Reduction of the level of credits granted to customers due to poor quality assessment

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 f. Trustworthy accounts information and collection service, produced in real-time to internal
and external customers
g. Reduction of the cost of collections

B. The Principles of Collection

Certain principles have been found especially useful in the field of collection and may be
grouped into the following areas:

• Collect the money

The primary job of the person responsible for collections is to collect the money as
close to the terms of the obligation as possible. There should never be any doubt as to why
the individual is engaged in this particular task. The debtor has an obligation to pay within
the terms of the agreement. It is the job of the collection person to make sure that this
obligation is met. The tone may be indulgent at first, but should be intensified and
accelerated as much as necessary to ensure payment by a debtor.

✓ Systematic follow-up
After the initial contact with the delinquent customer, it is important to keep
additional contacts on a strict schedule. If the collector, for example, is told that a check
will be mailed in a few days, it should be noted. If the check is not received at the promised
time, a follow-up is essential, otherwise the collection effort will become ineffective. A
systematic follow-up of accounts, even those which cannot pay immediately, reinforces the
serious nature of the outstanding debt and emphasizes the importance attached to it by the
creditor. That in itself is an important collection advantage.

✓ Discussing the account

Once the collector gets the customer to talk about the delinquent account, the
collector is well on the way to receiving payment. That is why emphasis is placed on
inviting the debtor to talk. The object of the discussion is to get the debtor's explanation of
the delinquency. It may be a question of a dispute; it may be due to a temporary shortage
of funds; or the customer may intend to hold off payment so the creditor's money can be
used in its own business. During the discussion, the collector may begin to see the debtor's
situation more clearly. If the slow payment is the result of a temporary cash flow problem,
tolerance of slower payments may be accepted, but it should be emphasized to the customer
that the new schedule of payments must be completed.

✓ Preserve goodwill
Even though the customer may be experiencing some difficulty in meeting
payments, it does not preclude them from becoming a good customer in the future.
CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 Therefore, it is important to preserve goodwill while pressing for collection. This requires
not only tact, but knowledge of the customer and industry. One of the advantages claimed
by specialized collection personnel is that they can develop these techniques to their fullest.
On the other hand, the team concept presents the opportunity for credit and customer
service personnel to better understand the relationship of the customer to the industry and
overall marketing objectives of the company.

C. Collection Objectives and Structure

Once credit or a loan is extended inevitably the responsibility to collect ensues. The need
for a collection system is more acute in the Philippines at this present age and time since, as earlier
discussed, "the responsibility to collect is greater than the responsibility to pay." In other words,
one has to run after his peso to be able to collect. A sale is not complete until the last peso is
collected. It is therefore imperative that a collection system should be set up if a company is to be
assured of efficient collection.

The specific objective of collection management is to see to it that the unit or department
tasked with the responsibility to collect is able to obtain payment promptly at a minimum cost and
to maintain the goodwill of the customer or client at the same time. Payment should be obtained
promptly for any delay may jeopardize not only the liquidity of the firm or bank but also may
increase cost of money and other operational costs.

Of course, the cost of obtaining the payment must be maintained at a minimum, otherwise,
profitability of the business would suffer. This is especially true for financial institution, like banks
and finance companies which depend entirely on interest or finance charges for its income.
In the course of collecting the accounts, the credit man must be careful not to antagonize the
customer or client, lest goodwill is shattered. The easier way out would be to adopt stem measures
to collect but what good will this do if in the process the goodwill of the customer or client is
alienated, and thus lose him altogether?

The first task of top management is to determine the individual or section or department
(depending on the volume and size of the receivables portfolio) which shall be responsible for
collection. An inquiry made of many medium-sized and larger enterprises reveals that this
responsibility is normally delegated to the same individual section or department that carries the
responsibility for approval of credit sales. This arrangement is based on the theory that credit
approval of an account includes assumption of responsibility to collect. In larger companies,
though, sometimes the section or department is divided into two (2) distinct units, the credit unit
and the collection unit, in which case, the responsibility to collect is directly lodged on the
collection section.

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 Usually, however, for greater coordination efficiency and to avoid "buck-passing," both
units or department are placed under one common head.

While it may be true that the responsibility to collect is normally given to the credit and
collection unit, it must be emphasized that the actual collection or duty to make collection is a task
which must be shared by the other personnel in the organization. The following, especially, have
a duty to share responsibility in the collection function:

1. The Salesman — He should be constantly informed of the status of the accounts of his
customers. This way he could help in the collection efforts or at least participate in the
collection efforts in an advisory manner. Furthermore, he will know how to deal with his
customer on future orders. A customer who is paying his bills is in a position to place more
orders. On the other hand, an account which is delinquent not only prevents competitors
from soliciting additional business, but from a credit standpoint, is also may be a hindrance
not to qualify for a shipment even if an order was obtained. The salesman is kept informed
by furnishing him with a copy of all statements, collection letters or other correspondence
sent by the collection unit. The salesman should be consulted when some problems on the
account arise, like discounts, price differences, returned goods, quality of merchandise
sold, repairs and maintenance, even the creditor of the customer's business and any other
abnormal circumstances, since he is the person with the most frequent contacts with an
established customer. Sometimes in order to get the "cooperation" of the salesman in this
collection effort, it may be necessary to withhold payment of commission until collections
are affected.
2. The Accounting Department — In most companies, to save on overhead, the Accounting
Department prepares and maintains the account ledgers of the customers/clients. If this is
the situation, then the collection section has to maintain very close coordination with the
Accounting Department since invoicing, customer's ledger recording, preparation of
statement of accounts, debit and credit memos are techniques of collection and the end
product of the functions are tools for collection.
3. Other Department and Executives — Under some circumstances, other departments or
other members of the organization may be involved in the collection function. This is
frequently true where difficult collection problems are being faced or substantial amounts
are involved. For example, the President, the Treasurer, or, perhaps, the Controller or the
Chief Auditor, may enter a difficult collection problem to add a note of authority, a greater
depth of experience or simply the dignity of his position. Most commonly, such
participation takes the form of advice behind the scenes rather than direct contact with the
account. This may lead to periodic review of collection efforts and problems, a re-appraisal
of attitude, policy and technique, or contribution of new ideas, a fresh approach of helpful
encouragement.

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 II. THE COLLECTION PROCESS

What would be an ideal collection system or procedure? Illustrated herein is a graphic presentation
of the collection process which must be undertaken if one is to successfully operate a collection
system. It is to be noted that the key word is regularity. In other words, to be successful, the
collection efforts must be implemented regularly and systematically.

COLLECTION PROCESS FOR DELINQUENT ACCOUNTS

Days Delinquent:
0 30 60. 90. . 120. 180. Over
1Computer-Generated 1. Telegrams for now 1. Final Collection Referrals: 1. Continuation of 1.Reserved
1st (6th day) delinquent accounts efforts: 1. To lawyer-secure collection efforts- 2.Written-off
2nd (11th day) reminders (30th day) a. Telephone call accounts- for accounts not
3rd (21st day) 2. Collection Letters b. Final demand replevin/ referred
(45th day) letter-warning of litigation 2. Litigation by
2 Telephone calls 3. Attorney’s Letter- litigation 2. To lawyer/ lawyers
45th day 2. Extrajudicial collection agency- 3. Collection efforts
4. Field Visit foreclosure/ Unsecured accounts by collection
repossession of agency
secured units.
1.Reminders/Letters 1. Telegrams for now 1. Final Collection Referrals: 1. Continuation of 1.Reserved
1st (6th day) – statement of delinquent accounts efforts 1. To lawyer-secure collection efforts- 2.Written-off
accounts (30th day) a. Telephone call accounts- for accounts not
2nd (11th)- reminders 2. Collection Letters b.Final demand replevin/litigation referred
(45th day) letter-warning of 2. To lawyer/ 2. Litigation by
3. Attorney’s Letter litigation collection agency- lawyers
45th 2. Extrajudicial Unsecured accounts 3. Collection efforts
4. Field Visit to 60th foreclosure/ by collection
repossession of agency
secured units.

From the foregoing diagram, the following collection efforts form part of the entire collection
system:
✓ Statement of Accounts
✓ Collection Reminders
✓ Collection Letters
✓ Telephone Calls
✓ Personal Calls
✓ Dunning by Wire
✓ Use of Registered Letters
✓ Use of Collection Agencies
✓ Use of Attorneys
✓ Suing the Debtor/Foreclosure

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 A. Collection Reminders and Letters

Should the sending of statement of account prove unproductive, then a collection reminder
should be sent; at first, mild, even humorous, becoming more forceful in the succeeding ones.
Some helpful tips in the preparation of such reminders and letters:

• Be brief — Use no more words than it takes to put your message across in the tone of
businesslike friendliness. Tact and courtesy call for brevity as well as feeling for the other
fellow's point of view. Even at the demand stage, a letter can be polite and still be brief —
as a matter of fact, especially at the demand stage, the fewer words the better. Go through
all your "stock" letters and eliminate old-fashioned beat-around-the-bush introductory and
closing paragraphs. Too many words make your letters weak. To the reader, a wordy letter
reflects a man unsure of himself, one who can put off with excuses. Don't be taken for a
pushover. Decide what to say, and get on with saying it.
• Make your position clear — Never say anything that would in any way be construed as
willingness to negotiate settlement — you have the right to prompt payments. Although in
settling the tone of your collection letters, you leave the customer an "out" a means of
saving face — you nevertheless establish in the very first notice the simple fact that you
have the upper hand. The whole cycle of collection letters rests on the simple foundation
that the customer is obligated to pay, and that the creditor has the right to collect. Say what
you want the customer to do; be specific — From the first stage of collection, your primary
objective is to get the account paid in full. Tell the customer in exact amounts what you
expect of him. Give him both "when" and "how to" — Don't expect every customer to sit
right down and write out a check for the specified amount unless you ask him to do just
that.
• Use simple language — Every branch of management has its own special jargon or unique
use of words. Don't be too sure of your customer's understanding you if you ask them to
"ascertain the correctness of the adjustment on the invoice and remit the remainder
outstanding." Reduce every statement to familiar terms, and you'll communicate with your
customer. Nearly everybody understands "Please pay now." Make it a firm rule to use the
simple word any time you have a choice between a simple and a high sounding word.
• Play it straight — Humor sometimes works in collection letters, but it must be simple,
straightforward humor. Avoid sarcasm, angry tones. Never give a customer a reason to put
off paying you. A common reaction to sarcasm or cuteness is "I'll show that smart-aleck."
• Give the customer a good reason to see things your way — Persuasion is still the best
collection technique available. Making the other fellow want to see things your way —
that's persuasion. You can't persuade by shoving facts down the other fellow's throat. You
persuade by giving subtly reasons why the other fellow should agree with you. The best
reason of all is "It will do you good" and in collection, the "good" the customer gets out of
paying usually falls under one of these headings:
CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 ➢ It builds his reputation as a successful businessman
➢ It improves his credit standing in the trade
➢ It supports his self-esteem as a responsible citizen.
➢ It establishes him as a solid, fair-playing customer
Show your late-paying customer how they will benefit from paying now is just another
way of saying "appeal to the customer's sense of pride, of duty, of self-interest."

B. Hints For Improving Your Collection Letter Technique

There are as many good collection letters as there are collection situation, but they all fit
neatly into three categories:
a) Reminders
b) Polite requests or appeals
c) Demands

Each category requires a technique of its own, but they are all simply variations of the
golden rule of writing: simple, straightforward communication. The words and their arrangement
are unimportant in themselves. The projection of ideas is all that matters. Make your ideas come
alive in your reader's mind, and your letters will be perfect.
➢ Keep your letters simple and sincere — Despite all the lampooning it gets, sincerity
remains the best-selling tool, the best public relations tool in business.
➢ Letters and other communications — especially those dealing with credit and collection
— can make or break a company's reputation for sincerity, or to phrase it differently, for
plain old-fashioned honesty. Letters that try to obscure honest business motives in
sentimental mumbo jumbo are obviously insincere. They do more harm than good. Nobody
objects to letters that come right out and ask for money, as long as the requests are
courteous and congenial. And courtesy needs no bouquets of flowery adjectives. Courtesy
takes only enough restraint to let the other fellow know that you're giving his feelings and
his rights, honest consideration.
➢ Stick to a familiar format - In some quarters, salutations and complimentary loses have
been dropped from business letters because they're "useless." In many cases (such as
printed notices and obvious form letters and in some retail situations), they can be properly
dispensed with. But in commercial credit and collection correspondence, tradition is a part
of courtesy, and unless you're dealing with individuals you know personally and well, it's
a good idea to stick to the familiar, the conventional, the expected "mode," "very truly
yours" and similar phrases of the same vintage, may sound old-hat and useless, but they
serve to connote respect and consideration, therefore, they're still good.
➢ Individual Letters Make Them Individual — For your form letters and your standard
reminders, you want to use tasteful, up-to-date style and formal. But for individual letters,
there is one sound rule for good writing: Construct your letter to appeal to the person to
whom it is addressed.
CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 If you know the person you are writing to, you've no worry. But you don't have to "know"
him to write a letter particularly to him. If you have a letter or two from him in your files, you can
see what he considers appropriate for written communication. The better you can appropriate it,
the better your chances of making yourself understood. The least you could do is to put your letters
into a form familiar to him. The most and the best you can do is to "speak" to him in his own
language. Don't talk down to him. Put yourself on his level and talk with him.

When you write to a debtor, don't try to impress him with your facility with words. Try to
get your ideas into his mental pattern. Try to make him see what he'd do if your positions were
reversed. Try to make him want to send you a check. Make it brief and personal and he'll see your
point.

Horace Mitchell, a printer of Kittery, Maine, was cited by Business Management Magazine
as an outstanding writer of short and personal collection letters. Two examples of Mr. Mitchell's
letters are as follows:

- To an overdue customer:
Dear Mr.
Like everyone, we have outstanding bills we must pay, and it has be-come necessary for us to have
as much as you can spare of the P2,000 outstanding by next Tuesday noon at the latest.
Thanks so much.

- To an important customer, you don't want to risk offending:

"If you care to settle your account before next Tuesday, this note will serve as my authorization
for a 10% discount on your next order."

Know your customer — It can't be said too often that getting through to the customer is the
only important mission of a collection letter; it requires words that the customer appreciates and a
tone that he respects. Especially where sizeable amounts are involved, it's seldom advisable to
stick doggedly to your own rhetorical standards, to current or part-styles in expression. If you know
your customers, you can sense the right approach.

- To a small town retailer who has failed to reply to several reminders:

Dear Mr.
While we can appreciate that you are likely experiencing difficulty in collecting your outstanding
accounts, the fact remains that when we shipped you the two cartons of chocolates in December,
we did so with the understanding that we would be paid within our terms of sale-discount within
15 days, 30 days net.

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 It is quite apparent from our sales representative's reports that you expect us to wait until you
collect from your customers. This we have been doing since January: a point has now been reached
where we must have our money.

Might I suggest that you go to your bank for a temporary working capital loan (which is good
business) for until this past due account is paid, we will be unable to accept and ship further orders
on an open account basis.

Will you be good enough to let me hear from you this coming week?.
Thank you.
Very truly yours,

- To a businessman known personally to the writer

Dear Mr.

In looking over our accounts receivable trial balance, I noticed that you are still owing us for a
shipment made to you in February amounting to P2 ,000. 00.

Our accounting department has called this to your attention on a statement each month, but
apparently, for reasons best known to yourself, the account is still unpaid.

If there is any question on the amount, write or call me immediately. Otherwise, would you see to
it that a check in the gross amount is sent in to us pronto?

Very truly yours,

***IMPORTANT NOTE: Suite your complimentary close to the content of each letter. Don't be
chatty and informal and then suddenly revert to "Very truly yours." Conversely, don't be stiffly
courteous and formal and then shift to "Cordially." A few years ago, some authority with good
intentions suggested the switch from "Your very truly" to "Cordially" as a means of making letters
sound less formal. It works when the body of the letter is cordial But taking "Cordially" into a
heavy-handed demand letter — as many credit managers do today — is more than incongruous;
it's flagrantly insincere.

When you've had social as well as business contact with the person to whom you're , it's
always appropriate to end your letters with "Kindest personal regards" or some similar statement,
and an informal complimentary close. "Sincerely" and "Sincerely yours" are in good taste under
any (except the most formal) circumstances.

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 ➢ Collection is communication, pure and not-so-simple — You can sell anybody,
anything; it's all a matter of communication. When the prospect visualized himself
benefiting from a product or service, ideas are set in motion and he'll get the salesman's
message; he'll readily agree to part with future money for present enjoyment. When it
comes to collecting, it's the same story. You have to make the other fellow see benefits for
himself in paying now. It's a little more difficult to get the Technicolor images in motion,
but it has to be done.

C. Use of Telephone
By far, the most important and most widely used collection tool is the telephone. As a
collector, you will spend a good deal of your time on the telephone trying to bring delinquent
accounts current. Collecting accounts using the telephone is a skill that can be learned, developed,
and refined with practice. As you now realize, there are some telephone strategies that bring better
collection results than others. The purpose of these notes is intended to provide you with a fairly
comprehensive strategy for getting the most out of your telephone collection calls.
It is fairly detailed strategy that will take some time to understand and to master. Yet, even
if you are an experienced collector, you could gain ideas for polishing your own collection skills.
These are eight key actions involved in a good call:
1. Identify yourself and your company
2. Give the reason for the call
3. Make strategic pause
4. Ask fact-finding questions
5. Present your proposal
6. Overcome objections
7. Obtain commitment from the customer
8. Close the call

• Steps 1, 2 and 3 — As you can see, these first three steps — identifying yourself and your
company, giving the reason for calling and making a strategic pause of about six seconds
— are the same steps you prepared during the pre-call planning phase of your strategy. At
this point, during the actual telephone conversation they are implemented.

• Step 4 — Ask fact-finding questions — During your strategic pause, if the customer
neither offers to pay nor gives specific reasons for the delinquency, you should move on to
your fact-finding questions that have been prepared prior to the actual telephone call. The
facts you learn from these questions will help you determine whether the preliminary
proposal you outline prior to the call will be acceptable to the customer. If the information
revealed through your fact-finding questions indicates your proposal is not realistic, you
should be flexible and prepared to abort it to meet the needs of this changing situation.
CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 Your primary concern is, of course, that your revised solutions brings the account up-to-
date, conforms to your company policy and at the same time is realistic and practical from
the customers point of view.

• Step 5 — Present your proposal — With your tentative proposal as a backdrop and with
the answers to your fact-finding questions now available, you can proceed to present your
suggested plan to the customer. For example, your tentative proposal might have been to
obtain an agreement that this month's payment (already 20 days overdue) be submitted by
next week. However, when you asked why the tardiness occurred, you discovered that your
customer is paid only once a month and that the loan payment is due at an inconvenient
time, making it clear that the appropriate approach would be to get the payment date of the
loan switched to a more convenient date. In still other cases, for serious delinquencies who
are more than one payment overdue, your plan might be to schedule and gain commitment
from the customer on specific dates when payments will be made.

• Step 6 — Overcome objections — Objections are almost always attempts to gain

postponements — customers know that the creditor will not forget about repayments.
Objections, therefore, usually take the form of reasons for not agreeing to the plan of
payment now. To overcome customer objections: determine specifically what the customer
is objecting to; obtain agreement on the parts of your plan to which there is no objection;
and work out an agreeable solution for those parts of the plan to which the objection applies.
Remember, while it is easy to argue with the customer who raises an objection, such
arguing usually does little to help your cause; avoid it whenever possible and focus on the
three points mentioned above.

• Step 7 — Obtain commitment from the customer — One of the most essential steps of
any collection call is to obtain agreement and commitment from the customer. You have
suggested specific dates when payments should be made; you now review them with the
customer and get a sincere commitment to your suggestion. In most cases, gaining real
commitment will require some additional probing to find out more about the customer's
flow of money to assure the promise is realistic. You could ask, for example, when the
money will come from to make the next payment. You could also stress that it is the
payment to your company that should be made prior to any other payments. In other words,
getting commitment requires more than simply getting an agreement from the customer to
comply with your request for payment. It requires that you find out whether the customer
can comply with your plan by probing to assure that the necessary financial resources are
available and that high priority will be given to the obligation to your company.

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 D. Handling Disputes and Cash Flow Objections
Disputes refers to a disagreement, argument, or debate on a certain topic. In the case of
credit and collection, it is one of the most common reasons for non‐payment. When a customer
raises a dispute, it is important to listen to their story before responding and act quickly to resolve
the matter. Quick attention to a dispute is key to maintaining customer goodwill and to getting
paid. The more quickly you respond, the more quickly you will be able to determine if it is just a
stall tactic or a valid claim.
If the customer’s claims are valid, you may decide to make a reasonable modification to
the invoice while clearly explaining future policy or pricing. If the dispute is not valid, calmly
explain your position and request payment.
Cash flow problems regularly arise in businesses from time to time. Your willingness to
work with them during these times can lead to a good long‐term relationship. The goal is to validate
the customer’s claims so you can work toward a solution that is fair and reasonable to you both.

During the conversation, allow them to propose a workable payment solution that includes
the details of where this money will come from. If the timeframe is reasonable, then accept the
plan and confirm it in writing. Ask that they acknowledge the plan by signing it as well. Once you
feel satisfied that you have the details, it is time to validate your customer’s story by talking to
other creditors and evaluating their merchant statements.
If you conclude that your customer really has no money (or a minimal amount) to pay you
and if you believe there is a strong likelihood that your customer will not be able to honor an
extended payment plan financially, then it is time to consider a settlement. Once your customer
realizes this is the action you plan to take, it may be motivation enough for your customer to clear
your debt with whatever limited funds they have or can muster up by some other means.
While taking a settlement is not the best scenario, it is not the worst, either. The worst case
would be not getting paid anything. And we would all agree that getting paid something is always
better than getting paid nothing.

E. Skip Tracing
As defined by Parrick (2020), skip tracing is the process of locating a debtor who has
“skipped” or left town. Skip tracing is the pursuit of an individual. Commercial Collection
Agencies aren’t just looking for individuals. They are typically in pursuit of companies, instead.
Therefore, a more appropriate term would be investigating.
In doing so, we start with a simple Internet search for the most basic of information: names,
addresses and phone numbers for the company in question. This information will be used in
contacting the Secretary of State that can help determine whether the company is a sole
proprietorship, a partnership, or a corporation. In the investigation, we set out to learn the following
five things about the company:
CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 a. Names of officers and directors. Find the decision maker which are usually the officers.
b. Name of the registered agent. Every company has one and they are the ones responsible
for the legal documents.
c. All known addresses. The branch headquarter location is the main address we want to
obtain.
d. Present status. Are they active or dissolved? If active, the individual has the corporate
veil of protection. If the debt was incurred after dissolution, it becomes a sole
proprietorship and therefore, collectible from the individual.
e. Date of incorporation. If the debt was incurred before the date of incorporation, it
becomes a sole proprietorship and therefore collectable from the individual.
F. Managing the Litigation Process
The first that should be avoided in the collection process is a litigation. The litigation
process is a series of fits-and-starts that are counterproductive for both the company (creditor) and
the customer (borrower). In this situation, the customer’s money goes to clearing their name in the
court of law instead of being used to pay the debt. In cases where litigation is inevitable, it’s
important to know what to expect. C2C resources provided an approximate estimation of the stages
the parties go through in the litigation process, and it is as follows:

• 30 days Attorney review, make demand, prepare suit

• 15-45 days Serve the debtor on first attempt

60-90 days If more attempts are necessary

• 30 days Time for debtor to answer

File/Receive default Judgment if debtor does not answer suit, then

• 60‐150 days proceed to Execution Stage
90‐120 days File/Decision for Summary Judgment if debtor does answer suit

• 90-120 days If Summary Judgment Denied then Continue Discovery, Mediation,

wait for Trial date

• 60 days Judgment Granted/Appeal

• 60-120 days Execution if assets identified

• 60‐120 days Post Judgment Discovery if assets not identified, then Execution once
assets identified

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 Assuming the customer has identifiable assets and a default judgment route is an option,
the process can still take 9 months up to a year to complete. If you go to trial, the best‐case scenario
will probably take about a year and a half. It would be tough to keep this chapter reasonable if we
were to outline all the possible ways that litigation can be delayed. Every action or inaction on the
customer's part can add its own set of paperwork and delays. In conclusion, the best way to avoid
this complicated situation is to work and communicate with the customer in every way possible to
come to a resolution BEFORE considering litigation.

III. BEST PRACTICES IN COLLECTION:

A. How to Improve Your Accounts Receivable Collection
Even with steady sales and growth, if the company experiences continual cash flow issues
due to lack of accounts receivable management, it could slow or stop your company's growth.
Having ample cash flow allows the business to continue expanding, whether to buy a company
building to generate another stream of income instead of renting or upgrading the company's
technology and needing cash to lease equipment. To achieve such, there are some proven ways on
how to collect credit faster and more efficiently.
1. Create an Accounts Receivable Aging Report and Calculate ART
The first step to take control of the collections efforts is to determine the current payment
status of all your accounts receivable by creating an accounts receivable (A/R) aging report,
which will track and measure all customers' payment status.

The accounts are broken out by the number of days since the invoice was issued. The report
also lists the amounts due. If this report is updated and reviewed on a regular basis, it can
help to address any potential problems before the bill becomes past due.

0-30 days 61-90 days

31-60 days More than 90 days
A helpful tool to assess company’s performance in collection is to calculate the Accounts
Receivable Turnover (ART) ratio, or the number of times per year that your business
collects its average accounts receivables. This ratio evaluates your company’s ability to
issue credit and collect funds in a timely manner.
Net Annual Credit Sales ÷ ((Beginning Accounts Receivable + Ending Accounts Receivable) / 2)

A high ART ratio can indicate that your company has an efficient accounts receivable
collection process while a lower ratio can signal the need to reassess your collection
strategy as well as to evaluate what customers you are extending credit for longer periods
of time.

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 2. Be Proactive in the Invoicing and Collections Effort
An essential way to ensure on-time payment is making sure all parties are on the same page
regarding payment deadlines, amounts owed, and payment methods. It is important that
customers are aware of when payments are due and that it is the responsibility of the
company to make it easy for customers to pay invoices. For example, make sure that the
invoices are clear and complete, with no missing information that might cause the
customer’s accounting department to kick it out of the system for further review.

3. Move Fast on Past-Due Receivables

As studies have shown that the longer receivables go uncollected, they are less likely to be
collected; the company will have the best chance of collecting if they are aware of any past
due receivables and can act quickly.

As soon as the first day of non-payment, customers must be immediately contacted and
remind them of the penalties, if the company has a policy, that they might face for late
payments. Having an open conversation with clients will not only result to a stronger
customer relationship for the company but also allow you to understand why the payment
was late and avoid it in the future.

4. Consider Offering an Early Payment Discount

Another way for customers to make prompt payments is a 2/10, net/30 discount, where
customers receive a 2% discount if they pay within 10 days, instead of 30.
Still, it is important to seek advice from either banking professionals or industry
professionals to assess whether this is a viable option for the company to implement, based
on the specific industry.

5. Consider Offering a Payment Plan

For instance, a past-due customer may inform you, after a few payment reminders, that
they are having cash flow challenges and need an extension to pay their bill. If this happens,
consider offering the client a payment plan for their outstanding balance.
Having a payment plan and being flexible in the collection procedure is helpful, especially
when it comes to long-term customers in terms of building loyalty. It is also important to
put the plan, and its terms in writing and have both parties sign it. Also, make all future
sales cash on delivery (COD) until the past-due amount is paid in full.

6. Diversify the Client Base

Small businesses often come out on the short end of the stick when it comes to accounts
receivable collections — especially when they are doing business with large corporations
that stretch out their payment terms to vendors and suppliers — sometimes for up to 90 or
even 120 days. While working with large retailers can be great, client diversification is
important.

If you have a few large customers who typically pay outside of a 30- or 45-day window,
focus on acquiring additional smaller customers and ensuring they pay on time to ensure
healthy cash flow while waiting for the longer-term payments.

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 7. Consult your Bank about Cash Management Tools
Banks offer a wide range of cash management services that can help you improve
collections and better manage your cash-flow cycle.

One way to avoid the "check is in the mail" excuse is to implement electronic payments
for your clients through Automated Clearing House (ACH) so they can pay electronically
and boost your cash flow immediately.

Another tool for cash management is a wholesale lockbox, in which customers mail checks
to a special post office box monitored by the bank, which collects and deposits them
immediately.

To better fit the needs of the customers, it may also help to consider talking to the bankers
or others in the industry about the cash management tools that would work best based on
the current customers and the company's business model.
By implementing cash management tools that allow you to better track accounts receivable,
you can create more efficiency throughout your business, saving you and your employee’s
time.

III. ADDITIONAL COLLECTION CONCERNS

Collection is participated by two parties: yours and theirs. Problems and concerns may
occur to you, especially to the borrowers in which you cannot control. This why problems may
occur even if you already have a well-established collection process. The collection problem
should be analyzed and the collection policy defined in accordance with such objectives as:

• The policies of the selling division involved with the problem. Before establishing a credit
policy and collection process, it is best to coordinate with the selling department first to avoid
clashing of policies.
• The economic climate in general. The economy can very well affect the performance of a
borrower in payment, especially if it’s too unavoidable.
• The importance of the customer. As much as you want to be strict in implementing rules,
you might want to consider weighing the importance of the customer or borrower in your
company, especially if its existing borrower and had already set an outstanding performance
in its past accounts.
• The effect of the combination of money and number of customers delinquent on the entire
receivable portfolio. One borrower’s delay payment can highly affect your receivable
portfolio. This often happen for borrowers with large amounts on their account.
Points to consider:

Our attention is caught by the exceptions, those who do not exhibit the expected pattern of
behavior. In evaluating a delinquent customer (or the portfolio of delinquent customers),
several factors should be taken into consideration.
CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 • Amount Owed – the company can afford to devote more time and effort to the collection
of large balances than it can to smaller ones. Two pitfalls to be mindful of in this connection
are:
o the willingness to write-off small balances (which can add up over a year)
o obstinate, imprudent collection efforts (holding on to the collection for too long).

Either situation can lead to an unprofitable operation, the former through direct credit losses
and the latter through a more insidious rise in the costs of recovery. The time to terminate
a collection effort is crucial. The decision can make or lose money. Possibly outsourcing
of collections based on dollars of exposure should be considered to control collection costs.

• How long has the item been unpaid – consideration of the age of the item is important. The
value of the receivable falls rapidly as a function of time, and the longer the debt has been
owed, the less likely you are to be paid.
• Pattern of payment – note whether there have been partial payments or any effort to settle the
debt. Has the customer made any sincere effort attempt to take care of the obligation?
• Customer relationship – how long has you been dealing with the customer? If the customer is
new, you owe it to them and your company to make your policy on collections clear from the
start. Neglecting delinquency at this time is inviting problems forever with the account. If it is
an old customer, how has the payment pattern been? How have any delinquencies been
cleaned-up in the past? Is there a problem with the product or service?
• Previous dealings with the customer – how have the customer lived up to its commitments in
the past. Has the account ever been closed and reopened?

A. Collection Agencies

Despite having reliable in-house collection policies set in the company, some inevitable situation
still calls for a need of a collection agency. To define, a collection agency is a 3 rd part entity used
by lenders and creditors to recover debt that are way past due, or accounts that are in default. Most
of the time, collection agencies come into picture after the company has made several failed
attempts to collect (Investopedia, n.d.).

• How Collection Agency Works

When the customer defaults on their debts or fails to pay outstanding debt, the
creditor will report this negligence to a credit bureau. Then, not only will their credit history
be tarnished, but also their debt will be passed on to a collection agency within three-to-six
months of default. The debt collectors employed by the agencies only make money when
they collect on the debt. As a result, they are single-minded, persistent, and highly
motivated. Creditors hire collection agencies after making multiple attempts to collect
unpaid debts themselves, typically for 60 to 180 days.

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 • When the Customer Pays
If the customer pays their debt due to the collection agency's efforts, the company
should pay the collection agency a proportion of the money that it recovers. Depending on
the original agreement entered into with the creditor, the customer may have to pay the
amount of the debt all at once or a portion of it at a time.

• When the Customer Does Not Pay

If the borrower still will not, or completely lost the capacity to pay the debt, the
collection agency can update the customer's credit report with a "collection" status, which
leads to a drop in the entity's credit score. A low credit score can affect a person's chances
of obtaining credit in the long term, as an account under debt collection can remain on their
credit report for up to seven years.

• Legally Allowed Strategies of Debt Collectors in Collection of Debt

✓ Calling the debtor’s personal and office telephones
✓ Mailing numerous late-payment notices to the debtor
✓ Contacting a debtor’s family, friends, and neighbors to confirm the debtor’s contact
information
✓ Appearing at the individual’s front door

B. Factors to Considering in Choosing the Debt Collection Agency

It may be tempting to opt for the collection agency offering the lowest charge but it must
always be kept in mind that if the debt collector is unable to collect, the outcome is zero with a
negative fee on the company’s part. The most important factor to consider in choosing the best
collection agency is not the rate they charge – but their recovery rate on the debts. Other factors to
consider in choosing the right debt collection agency for the company are the following:

• Licensing – Agencies that are licensed are held to a high standard of conduct and operate
within the boundaries of the law. They also invest in the resources it takes to monitor their
collectors. This is added protection for the company. As licensing is not cheap, there are time
and money involved in the process of obtaining and maintaining this. This is the most important
qualification that a company must look at in choosing an agency. There are a number of reasons
why this is true. Let’s start with the most important one:
1. It is a requirement of the law – There are some laws designed to eliminate
abusive practices in the collecting of debt as well as to protect the money that
the agency collects on the company's behalf. These laws ensure that agencies
operate in a professional and ethical manner and a license is only given to those
who are qualified.
CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 2. Company’s reputation is at stake – The agency the company associates with
becomes a reflection of the company. Licensed companies conduct their
collection process with respect and courtesy in the course of collecting a debt
on your behalf.
3. Risk of being liable – Agencies that do not adhere to the laws become a major
liability. If a legal issue should arise with the customer, they can sue the
company based on the actions of the collection agency. Without licensing, there
is no one monitoring and ensuring that the agency ‘plays by the rules’.
To make sure that the agency is licensed, ask them for a copy of their state-issued
certificate. States with licensing requirements issue them to compliant companies, so providing
a copy of it should not be a problem to the agency. Partnering with a licensed agency is one
important way to have a safe transaction.

• Experience – Collectors equipped with years of experience produce a more profitable and
consistent outcome for their clients. They have long since learned what works and what does
not, which saves time and gets clients paid. Experienced collectors may charge more, but the
return is further guaranteed.

▪ What is the experience level of their collectors?

• Account Management – An agency that has a dedicated team that focuses on small balance
accounts and limits the number of accounts a collector works is an agency worth considering.
They’ve learned that by working small accounts with efficiency, they have a better overall
relationship with their client.

▪ How do they handle small balance accounts?

▪ How many collectors touch each account?
▪ How many accounts are assigned to each collector?

• Remittance – The ideal agencies are those that remit quickly. If the collection agency takes
too long to remit the money, they should be charged with interest. Collection agencies that
remit the collected amount immediately may cost higher, but they are more efficient.
▪ How often do they remit?

• Communication – Keeping the client informed is critical to the process of collections.

Agencies that invest in personnel and technology are more capable of delivering a high quality
of communication. Software and personnel cost money, but it is another important and crucial
expense for an agency.

▪ What are their communication policies?

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 V. COLLECTION COST ANALYSIS

➢ Credit and Collection Measures

1) Collection Effectiveness Index (CEI). This percentage expresses the effectiveness of
collection efforts over time. The closer to 100 percent, the more effective the collection effort.
It is a measure of the quality of collection of receivables, not of time.

Beginning Receivables + (Credit Sales/N*) - Ending Total Receivables

X 100
Beginning Receivables + (Credit Sales/N*) - Ending Current Receivables
*N = Number of Months or Days

2) Days Sales Outstanding (DSO). This figure expresses the (aggregate) average time, in days,
that receivables are outstanding. It helps determine if a change in receivables is due to a change
in sales, or to another factor such as a change in selling terms. An analyst might compare the
days' sales outstanding with the company's credit terms as an indication of how efficiently the
company manages its receivables.

(Ending Total Receivables)(Number of Days in Period Analyzed)

Credit Sales for Period Analyzed

3) Best Possible Days Sales Outstanding or Average Terms Based on Customer Payment
Patterns. This figure expresses the best possible level of receivables. It should be used together
with DSO. The closer the overall DSO is to the Average Terms Based on Customer Payment
Patterns (Best Possible DSO), the closer the receivables are to the optimal level.

Current Receivables x Number of Days in Period Analyzed

Credit Sales for Period Analyzed

4) Sales Weighted DSO. This figure expresses the (aggregate) average time, in days, that
receivables are outstanding.
((Current Age Category / Credit Sales of Current Period) + (1 to 30 Day Age Category / Credit Sales of
Prior Period)+(31 to 60 Day Age Category / Credit Sales of 2nd Prior Period) + (61 to 90 Day Age
Category / Credit Sales of 3rd Prior Period) + (91 to 120 Day Age Category / Credit Sales of 4th Prior
Period) + (etc.)) x 30

5) True DSO. The accurate and actual number of days credit sales are unpaid.

Number of days from invoice date to reporting date x (invoice amount/net credit sales for the
month in which the sale occurred) = True DSO per invoice.

The sum of True DSO for all open invoices = True DSO per total accounts receivable.

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 6) Delinquent DSO or Average Days Delinquent. This figure expresses, in days, the average
time from the invoice due date to the paid date, or the average days invoices are past due.

Day Sales Outstanding – Best Possible Day Sales Outstanding

7) Days Average Collection Rate. This figure expresses, in days, the average time from the
invoice date to the date paid.
Total Flow of Funds
Total Funds Applied

8) Prior Month's Past Due Collected. This percentage expresses the amount that has been
collected in the current month of the prior month's past due amount.

Current Months Past Due Age Categories

1-
Beginning Receivables of Prior Month

9) Percent Over 61 Days or Percent of Any Age Category. This figure expresses the percentage
of Total Receivables that is 61 Days or more past due.
Sum of the 61 Days and Older Categories
Total Receivables

10) Bad Debt to Sales. This expresses the percentage of credit sales that were written off to bad
debt. A lower percentage signifies that effective credit policies and procedures are employed.

Bad Debt Net of Recoveries

Credit Sales

11) Active Customer Accounts per Credit and Collection Employee (Total Department). This
figure represents the total number of active accounts per department employee. Generally, the
higher the number of accounts per employee, the more efficient the use of technology and
people. (This is a departmental measure.)

Number of Active Customer Accounts

Number of Total Department Employees

12) Active Customer Accounts per Credit Representative or Collector. This figure represents
the total number of active accounts for an individual credit representative or collector.
Generally the higher the number of accounts per employee, the more efficient the use of
technology and people. (This is an individual measure.)

Number of Active Customer Accounts

Number of Total Credit Representatives or Collectors

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 13) Operating Cost per Employee. This figure represents the total dollars spent per employee.
The lower the cost, the more effective use of technology and people.

Departmental Operating Costs

Number of Department Employees

14) Cost per Sales Peso. This calculation relates peso spent in the credit and collection effort to
credit sales generated, or how much it cost the company to process each dollar in credit sales.
A higher percentage signifies that a more effective operation is employed. This measure is
relative. It could be answered by benchmarking with other organizations or measuring itself
against its own past performance.

Departmental Operating Costs

Credit Sales

15) Cost of Collections. This percentage represents the cost of collecting the collectable amount
of Bad Debt. The lower the percentage, the more effective the attorney(s) or agency(s)
employed.

Amount Paid to Attorneys and Agencies

Collected Amount

➢ Here’s a quick breakdown of how debt collection agencies usually charge—and why
you may even find yourself getting your debts collected for free.

• A debt collection agent won’t work for you for free. However, it is true that your business may
not have to absorb the cost of your debt collection activity, as you can legally insert clauses to
recover all fees into your terms of trade.

• Many debt collection agencies offer a ‘no recovery, no fee’ service, meaning you only pay if
the monies are recovered, with the fee deducted from the recovered debt. This is a particularly
attractive option in cases where you are considering writing off a debt.

• If you need regular assistance from a debt collection company for either slow payer
management or debt recovery, it may make more financial sense to enter into an annual fee or
ongoing service arrangement.

• This will obviously depend on the size and number of debts outstanding, however paying a
debt collection agency an annual fee typically entitles you to a lower percentage commission
for each debt collected. Depending on your unique situation, a professional debt collection
company will advise the best course of action that will make it economical for both parties –
as their main objective is to get your bad debts recovered as fast as possible.
CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 • Prices range greatly and will depend on factors like the size and age of the debt, which will
determine the percentage of the debt the company will charge.

• Typically, smaller debts attract higher fees as the amount of time spent chasing the debt may
well be the same as it would be for a large debt but with less reward for the agency.

• Long outstanding debts also attract a higher fee as the chance of recovery is lower, but the
effort expended to collect is not. Delaying debt collection becomes expensive and industry
reports suggest the overall success rate of collecting on a debt declines more than 1% each
week it remains outstanding.

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 REFERENCES :
Apollo, Jose T. Credit and Collection Management in the Philippine Setting 2nd Ed. National
Book Store, 2004.
Accounts Receivable Turnover Ratio. (n.d.). [Illustration]. WallStreetMojo.
https://www.wallstreetmojo.com/accounts-receivables-turnover-ratio/
CLB Solutions. (2016, November 6). Why is Debt Collection Important? – Tips from CLB
Solutions | CLB Solutions. https://www.clb-solutions.com/news/why-is-debt-
collection-important-tips-from-clb-solutions/

C2C Resources © 2012, Credit and Collection Handbook. Retrieved from

http://c2cresourcesblog.com/wp-content/uploads/2012/03/Credit-and-Collection-
Handbook-1.pdf

City National Bank (2019, Sept. 2). 7 Tips to Improve your Account Receivable Collections.
Retrieved from https://newsroom.cnb.com/en/business/finances/accountsreceivable-
collection.html
Credit Research Foundation. (n.d.). Performance Measures for Credit, Collections and Accounts
Receivable. CRF Online. Retrieved January 19, 2021, from
https://www.crfonline.org/orc/ca/ca-7.html
Definition of Collections: Collection Process Defined. (2020, July 17). Retrieved January 16,
2021, from https://www.patriotsoftware.com/accounting/training/definition/collections/
Freeman, M. (2019, November 13). How much does debt collection cost. Marshall Freeman
Blog. https://www.marshallfreeman.com.au/blog/how-much-does-debt-collection-cost/
Heath, R. (2020, November 5). What Is Debt Management?
Bankrate. https://www.bankrate.com/debt/debt-relief/what-is-debt-management/

Investopedia. (n.d.). Collection Agency. Retrieved January 18, 2021, from

https://www.investopedia.com/terms/c/collectionagency.asp#:%7E:text=A%20collection
%20agency%20is%20a,attempts%20to%20collect%20its%20receivables.

McGew, M. (2017, September 26). Definition of Credit and Collections.

Bizfluent.http://www.ehow.com/info_8195853_definition-credit-collections.html
Parrick, M. (2020, March 23). Debt Collection Tactics: What Is Skip... Brown & Joseph, LLC.
https://brownandjoseph.com/blog/what-is-skip-
tracing/#:%7E:text=Skip%20tracing%20is%20the%20process,return%20repeated%20cal
ls%20and%20emails.

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD
 Principles and Method of Collection. (n.d.). Retrieved January 16, 2021, from
https://www.crfonline.org/orc/cro/cro-5.html
The Credit Research Foundation. (n.d.). Principles and Methods of Collection.
https://www.crfonline.org/orc/cro/cro-5.html

Acknowledgment to the following:

Tricia Guevarra FM 3-1

Patricia Nicole Aquino FM 3-3

Avelyn P. Dela Cruz FM 3-2
Jeannel Domanais FM 3-4

CMCP Adviser: Prof. Ragrciel Grafil Manalo FOR CLASSROOM AND READING PURPOSES ONLY
AND STRICTLY NOT FOR PUBLIC UPLOAD