DEPARTMENT OF TECHNICAEDUCATION

ANDHRA PRADESH
Name : A.Ram Reddy
Designation : Lecturer
Branch : D.C.C.P.
Institute : SRRS Govt. Polytechnic, Sircilla
Year/Semester : IV Semester
Subject : Business Correspondence
Subject Code : CCP-404
Topic : Collection Letters
Duration : 50 Minutes
Sub Topic : Different types of Credit Customers
Teaching Aids : PPT
CCP404.26 1
 OBJECTIVES

On completion of this period, you would be able

to:

 Explain the meaning of Collection letters / Dunning

letters.

 List the different types of credit customers.

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 Meaning of Collection Letters

 Letters written to collect amounts from customers to

whom credit sales are made are Collection letters.

 These are also called Dunning letters.

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 The Collection System

The main objectives of collection letters are :

 Collection system aims at prompt collection of debts:

 with minimum incidental expenses

 Making the best efforts to retain customer.

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 Types of Credit Customers

 Customers who are willing to:

 pay and have money to pay but forget to pay.

 pay but do not possess ready funds to pay immediately.

 Those who deliberately postpone, if not avoid payment.

 Those who try to evade payment altogether.

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Customers who evade payment
altogether

 Some Customers try to avoid the total payment.

 They always think how to avoid the payment totally.

 They do not want to pay the amount at any time.

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Customers willing to pay and have
money to pay but forget to pay

 Some Customers are ready to pay money for the goods

received.

 They will have the sufficient money to pay.

 But for one reason or other they forget to pay the same
in time.

 Their intention is not to evade the payment.

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Customers who are willing to pay but do not
possess ready funds to pay immediately

 Some Customers are ready to pay the due amount.

 But they do not have the sufficient money to pay
immediately.
 Their intention is not to avoid the payment.
 They are always ready to pay the amount soon after
getting the sufficient amount.
 They do not pay the debt immediately though they are
ready to pay the amount, because
 They may suddenly become victim of unforeseen rough
weather.

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Customers who postpone, if not avoid
payment.

 Some Customers want to avoid the payment temporarily.

 They want to postpone the payment.

 They do not want to avoid the payment totally.

 They want to drag the matter as far as possible.

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Customers who evade payment
altogether

 Customers are not interested to pay the dues.

 They want to avoid the total payment.

 They play the tricks by being sincere in the beginning

and show their true colour of credit evasion later on.

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Collect dues and retain customer
 While writing the Collection Letters, keep in mind
customer’s reaction
 A harsh letter to a regular customer makes him cut of
his/her further business transactions.
 A mild letter to a die-hard evader of dues will have no
effect.
 Time tested policy of collection of dues in a
competitive market is
 “to collect the dues and keep the customer”.

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Collect the dues and keep customer

• The method of writing letters “to collect the dues and

keep the customer” i.e.,

• Collection of dues without losing the customer

• Is called ‘Collection Series’

• This method will help the seller to keep the old customer
and to continue the regular business.

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SUMMARY

So far we have discussed about:

 Meaning of Collection Letters:
 These letters are written to collect the amounts
from the customers.
 Objectives of Collection Letters.
 Collect the dues and keep the customer is the
main objective of this letter.
 Different types of Customers.

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QUIZ

1. Collection Letters are also called as

(a) Recommendation Letters.

(b) Circular Letters.
(c) Dunning Letters.
(d) Enquiry Letters.

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 QUIZ

2. Collection Letters are written

(a) To get the information about the trade.

(b) To ask for pending dues.
(c) To send the goods.
(d) To claim the compensation.

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 QUIZ

3. Collection Letters are written by:

(a) The Sellers.

(b) The Purchasers.
(c) By the Third Party.
(d) None of the above

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Frequently Asked Questions

1. Define Collection Letters?

2. State the objectives of Collection Letters ?

3. Explain the different types of Credit Customers ?

4. What is meant by Collection Series?

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