General Suggestions On The Collection Of Debts

How To Collect A Debt. What To Do When Necessary To Settle An Account By Legal Process. Outline Of Proceedings

ALTHOUGH an earnest effort be made to do business upon a strictly cash basis, debts will be incurred which dishonest, careless, improvident and unfortunate people will neglect to pay. To understand the necessary steps to be taken in the collection of such debts is a matter which, while it concerns all, is nevertheless understood only by the few; and, thus lacking acquaintance with the course which should be pursued, vast numbers of people are defrauded of their hard earnings and honest dues, and themselves frequently thrown into bankruptcy, when prompt and decisive measures pursued in the collection of debts would have saved to them fortune and independence.

Indebtedness having occurred, and the party owing the same neglecting to pay, what shall be the first step taken in its collection? Naturally that will very materially depend upon the nature of the indebtedness and the circumstances under which the debt was made. To illustrate, the following are among the various means by which debts are incurred :

How Debts Are Made

By buying goods to be paid for when convenient.

By buying goods on credit, settlement being made at certain times.

By employing service, to be paid for at certain stated periods.

By obtaining the use of lands, houses and other property, and contracting to pay for the same as per agreement.

By purchasing houses, lands and other property, giving a mortgage on the same as security for balance unpaid.

By borrowing money; usually secured by note and mortgage, or responsible indorsement, as the case may be.

General Suggestions

To avoid any of these various classes of indebtedness, the following safeguards can be used :

First, do a strictly cash business. Mark goods in the beginning as low as you intend they shall be sold, and then part with them only for cash in hand, unless in cases of emergency. This is the best way to obviate all necessity of collecting, and is by far the best course to pursue alike for the buyer and the seller.

By adopting the cash system as the method of dealing, the price would rule much lower, and yet the merchant would suffer no loss, while the customer would thus be enabled to buy much cheaper, and paying for everything at time of purchase, would buy more sparingly, more economically, and hence would save and lay up money.

Precautionary Measures

Send goods abroad only to be paid for when taken.

If goods are bought on account, to be paid for at stated periods, let such period be as short as possible, and collect promptly at the time specified.

If engaged in the service of others, secure payment if possible once a week, unless engaged in working for a strictly responsible firm who make it a rule to pay monthly.

If furnishing boarding-house or hotel accommodations, make it a positive rule to collect all bills at periods not exceeding a week apart. To do otherwise is almost certainly to meet with loss, though there are exceptional cases with strictly responsible parties who may arrange to pay monthly.

If renting houses, lands or other property, always have leases made in duplicate, one of which should be kept by the landlord, and the other by the tenant; the wording of the lease being specific as to the conditions of payment, and forfeiture, (see "Landlord and Tenant," elsewhere) if payment be not made promptly. In cities it is customary to have rent paid weekly or monthly, in advance. The payments should always be made at the landlord's residence or place of business. Acknowledgment of the payment should be made on the back of the lease when rent is paid.