Collections vary so much in character, size and surrounding conditions that anything like a general rule cannot be prescribed. Classified as to size, the following methods may be considered representative:
Where one or a number of small collections are outstanding, a statement is first sent to each debtor, followed in five days by a personal letter, either with or without notice of draft to be drawn in a specified time. After draft is drawn and refused send collection to Justice of the Peace if delinquent lives in small town or in the country. Justices of the Peace commonly are very thorough in their collection methods, are usually well acquainted in their district and rarely if ever misappropriate funds, while their charge is nominal, often being but 10 per cent, where an attorney would charge several times that sum. Banks often effect small collections, but seldom do more than notify the delinquent. Bank charges on a collection are uniformly reasonable. Collection agencies using the "letter system" should be used sparingly if the trade of the delinquent is a consideration. The "letter system," in which a series of letters threatening suit, attachment, and the like are mailed the delinquent, are peculiarly effective for a list of country collections, the cost averaging probably 50 per cent. Small collections not closed off by the above method may be considered practically worthless. Where trade is to be retained, tactful personal letters following a statement are best.
Accounts of this size may be handled either as given above or through the local bank. Where parties are good but slow, bank methods are usually satisfactory.
To get immediate results turn over to a collector, preferably one connected with or vouched for by the house. Where a debtor is in danger of becoming insolvent a bank or attorney will often protect local creditors against enforcement of claims of an outside house. A collector may often make a settlement by being on the ground and obtaining security and so protect his house from an assignment or failure of the debtor.
Collections of this size and importance require personal attention. If the debtor is within a reasonable distance, by telephoning the correspondent of the house or a bank, information can be obtained, often more valuable than would be written, and the condition of the debtor can be judged accordingly, and the campaign mapped out to conform to conditions reported. A rule in all collections should be to get the cash- if not, then unquestionable security, security that may be banked at not to exceed 10 per cent discount.
City collections are materially different from country collections, as the percentage of losses is much larger, from removals and the better facilities afforded the dishonest or careless to avoid their obligations. An energetic and tactful collector will affect the largest share of city collections when the amounts are small. When large collections come slow, a careful investigation should be made to determine the cause.
Suit as a rule is not advisable, except in certain cases, as when a debtor has the reputation of not paying back accounts except when sued; when a debtor has property which may be reached by an attachment, etc.