Type of Collection Efforts
The second aspect of collection policies relates to the steps that should he taken to collect overdues from the customers. A well-established ·collection policy should have as to the sequence of collection efforts. After the credit period is over and payment remains due. the firm should initiate measures to collect them. The effort should in the beginning be polite. but. with the passage of time. it should gradually become strict. The steps usually taken are (i) letters. including reminders. to expedite.payment, (ii) telephone calls for personal contact: (iii) personal visits: (iv) help , of collection agencies; and finally. (v) legal action. The firm should take recourse 10 very stringent ‘measures. like legal action. only after all other avenues have been fully exhausted. They not only involve a cost but also affect the relationship with the customers. The aim should he to collect as early as possible; genuine difficulties of the customers should he given due consideration.