The Department of Commerce, in a late survey, affixes the resulting
losses from delinquent accounts on the graph below:
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This chart is used by many
accountants and statisticians as a base for appraisals in evaluating
accounts receivable. It shows what your accounts would be worth
if offered as collateral. An account one year past due has Lost
Value at the rate of six percent per month. Neglect or a “too
liberal” credit policy develops a situation where your chances
of collection are about 30%.
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ESSENTIAL EXTERNAL
"THIRD PARTY"
INVOLVEMENT IN YOUR COLLECTION CYCLE
The customer that is 60 or 90 days past due on your account is also
60 or 90 days past due with many other creditors. This customer is deciding
each month who to pay by comparing the nature of their creditors’ communications.
Until you command their attention, outlining your serious intentions,
they have no reason to pay.
A customer will give excuses to keep their account in your Internal
Collection Cycle, having realized if it remains internal they will
be able to continue delaying payments.
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