COLLECTION SYSTEMS
In the successful handling of collections, a requisite is promptness. There must be a system that will insure bringing collections to notice at the right time. Without attempting to lay down specific systems for individual concerns, detailed descriptions of systems that have been found satisfactory in different businesses are given herein.
Duplicate Invoices. The tendency at the present time is to regard each invoice as a separate account, and to regard each as due at the end of the time specified—thirty, sixty, or ninety days. An exception is found in the accounts of city customers. A wholesale merchant may have customers in his own city who buy in small quantities, placing orders nearly every day. The usual rule is to regard these as monthly accounts, the account for one month being due the 15th of the following month. For out-of-town customers, however, the first plan is found more satisfactory.
A certain large manufacturer, whose business is world wide, treats each invoice as a separate account, and handles the collections in a very simple manner. All invoices are made in duplicate, the original going to the customer. From the duplicate, all entries are made on the books. If special terms are granted, these terms are stamped on the back of the duplicate invoice.
Fig. 14. Collection Card for Each Invoice]
When it has served the purpose in the accounting department, the duplicate invoice is returned to the collection desk. Here it is filed under the date on which it is due.
The file is a simple arrangement of pigeon holes. A case containing sixty pigeon holes, large enough to hold invoices laid flat, is used. These pigeon holes are divided into two sets of thirty each, one above the other, and each set is numbered from 1 to 30. This number provides for filing ahead sixty days, which is the longest credit term allowed.
In operating the filing system, the two sets of pigeon holes represent alternate months. During January, bills due in March are filed in the upper pigeon holes; in February, bills due in April are filed in the lower case. Each day the bills due are removed from the file for attention, leaving the pigeon hole empty for filing bills due sixty days ahead. On March 10th, for instance, bills are removed from the No. 10 pigeon hole of the upper case; the current day's bills, due May 10th, are then filed in the same pigeon hole.
Fig. 15. Card Tickler for Collections
When bills come out for attention, they are referred to the accounting department to find if they have been paid. For those not paid, statements are prepared and returned with the bills to the collection desks. The usual letters are written, and all past due bills are held in a desk tickler, that they may be followed up from day to day by the collection clerk.
This system can be operated with the regular tickler file, but for a large number of bills the pigeon holes are more convenient. A modification is necessary, also, when the bill and charge system is used. In that case, an extra copy of the invoice should be made for the use of the collection clerk.
IN THE GENERAL OFFICES OF CORBIN CABINET LOCK COMPANY, NEW BRITAIN, CONN.
Card Tickler. A very convenient method, where it is not deemed advisable to use duplicate invoices, is to fill in a collection card for each invoice.
A card, printed similarly to the form shown in Fig. 14, is filed under the date on which the account is due. Each day, all cards filed under that date are removed for attention. The first step is to compare the cards with the ledger accounts. If the account has been paid, the card is destroyed; if not, a statement is sent and the card filed ahead to the next follow-up date. All letters written and all steps taken are noted on the card, so that in the end it presents a complete history of the efforts made to collect the account.
Fig. 16. Collection Card for Alphabetical Cross-Indexing
A slightly different form of card, which is used in the same manner, is shown in Fig. 15.
Cross-Indexing. The same objection exists in regard to the use of the tickler card for collections as for other follow-up purposes, which is the difficulty of finding the cards. Every time a card is removed from the file it is necessary to compare it with the ledger to find if the account has been paid.
To overcome the difficulty, a card with an alphabetical tab is used to good advantage. Such a card is shown in Fig. 16. It will be noted that this card bears a tab printed with the letter G. A card with this tab is used for every name that commences with G, and as all G tabs are in the same position on the card, they will be in direct line from front to back of the file.
The cards are filed by dates, but each day all remittances are sent to the collection desk, that the cards representing accounts that have been paid may be removed. All cards may be found by name, by referring to the lettered tabs, thus Brown's card will be found in the row of B tabs.
Fig. 17. Collection Card for Cross-Indexing by Date
Another method of cross-indexing the collection file is to have the numbers from 1 to 31, representing the days of the month, printed across the top of the card, as shown in Fig. 17. To indicate the due date a metal tab is placed over the proper number, a red tab being used for succeeding months and a black tab for the current month.
The cards are filed alphabetically by name, or subdivided by states and towns, so that any desired card can be found instantly. Each day all cards having tabs over that date are removed for attention. On the first of the month those bearing red tabs are referred to, and if due in the current month, black tabs are substituted.
Monthly Statements. In some houses, it is the practice to follow up collections on the basis of the monthly statement, instead of treating each invoice independently. When this is done the collection record must include a synopsis of the entire account. The card shown in Fig. 18 is used for following collections on such accounts. This form shows the date and amount of statements, with interest added, date and amount of drafts, and dates and amounts of payments. Other columns are provided for a record of letters, promises, extensions, etc.
Fig. 18. Collection Card Showing Synopsis of Entire Account
This card is handled in exactly the same manner as it would be if used for a single invoice. While the card shown is used in a tickler, it would be improved by the addition of the numbers across the top, which would permit of alphabetical indexing.
Local Collections. Collections from local customers are usually made by collectors. In handling such collections, a system that will enable the office to keep track of the work of each collector is necessary.
Fig. 19. Triplicate Statement
for Collectors
One large mercantile concern has solved the problem by using the following system. This concern has a large number of customers who make frequent purchases. For convenience, the city is divided into four sections, one for each week in the month. Each section is divided into five parts, representing the days of the week from Monday to Friday, inclusive. One collector covers the entire city, calling on each customer once a month.
Arrangements are made with the customers in each section to pay their bills at a certain time each month—the bills of all customers in the first section are collectible during the first week in the month. Each customer knows, also, on what day of the week he is to expect the collector.
Statements are made Saturday morning for all accounts to be collected the following week. These statements are made in triplicate, as shown in Fig. 19. Two copies are given to the collector, who arranges them in a file according to his daily routes. One copy is kept in the office, filed by routes.
When the collector makes his call, he receipts one copy of the statement and delivers it to the customer. The second copy is kept by the collector and turned in with the collection. If the customer is not found, or if he fails to pay, both copies of the statement must be turned in by the collector.
Each morning the collector makes his report for the previous day. The cashier compares the collector's report with his copies of the statements, and, as the collector must turn in both of his copies when no payment has been made, a safe check is had on the collector. To make the check more positive, it is the custom of the cashier to mail a copy of the statement to those customers who have made no payments, or partial payments, requesting them to compare with their records and advise if any discrepancies are found. This makes it impossible for the collector to hold out collections without detection.
Collecting from the Ledger. In many houses having no organized credit department, the collections are handled by the bookkeeper. When this work is added to his many other duties, the bookkeeper is obliged to devise some scheme that will eliminate detail—he has no time to make additional records. His method is to follow up collections direct from the ledger.
But there must be some method of bringing the accounts to notice when they require attention—an automatic system. The most simple scheme is shown in Fig. 20. Across the end of the ledger sheet—which is loose-leaf—- numbers representing the days of the month are printed, and metal markers, or tabs, are attached over the due dates.
To represent different stages in the collection of the accounts, different colors are used. When a charge is posted to the ledger sheet, a black tab is placed over the date on which the bill falls due. When payments are posted the tabs are removed, provided the account is paid in full; otherwise it is moved forward to the next due date. After the day's remittances are posted, all sheets with black tabs over the current date are referred to, and statements made. At the same time, white tabs are substituted for the black.
Fig. 20. Loose-Leaf Ledger Cross-Indexed for Due Dates
Fig. 21. Quadruplicate Draft Form which Includes Letters of Advice to Bank and Drawee
The next step is to make drafts for all accounts on which white tabs have appeared ten days, that is, on the 10th drafts are made for all accounts with white tabs over the 30th. Blue tabs are then substituted for white. If the draft is returned, a red tab is substituted. The red tabs indicate accounts past due, which are subject to such action as may be considered advisable. This ledger sheet, with the adjustable tabs, insures attention to collections, regardless of the method of filing.
Handling Drafts. When drafts are used extensively, considerable detail is involved in handling the records. Any method that will reduce this detail means a material reduction in the expense of conducting the work of the collection desk.
The usual method is to write the draft and register it in a draft record book. Then the necessary record is made on the collection card. A draft register is used that there may be a record showing the aggregate of drafts outstanding, and the number and amount in the hands of each bank—where drafts are sent direct, instead of through a local bank. The next step is to write a letter of advice to the bank. This method necessitates writing the names of the bank, the drawee, and the amount of the draft three times—on the draft, letter of advice, and draft register.
By the use of properly designed forms, this duplication can be avoided. Fig. 21 shows a set of forms designed for the purpose. A is the original draft, B is the letter of advice to the bank, C is a letter of advice to the drawee, and D is the office record. The draft, A, is attached to the letter of advice, B, and is detached by the bank. The four forms are so printed that the date, name of the bank, amount, and name and address of the drawee register perfectly. The blanks are properly spaced for use in a typewriter, and all copies are made with one writing.
Copies A and B are mailed to the bank, and C to the drawee. From copy D the record is made on the collection card, after which it is filed in a card tray, under the name of the bank. This keeps copies of all drafts sent to each bank together, and the total of all drafts outstanding is quickly obtained on an adding machine. When payments are made, or drafts are returned, these copies are removed from the files. Frequent reference to the file insures the necessary follow-up on banks that are slow in reporting.
Installment Collections. Probably the most difficult class of accounts to handle from a collection standpoint is installment accounts. Payments are quite irregular, both as to time and amount, and frequent changes of address make it difficult to keep track of debtors.
Fig. 22. Contract for
Installment Sales
The collector of installment accounts must have the faculty of meeting and satisfying all sorts of people. He is obliged to listen to hard-luck tales without number, and while sympathizing with the customers, must be patiently persistent. If unable to collect the dollar due, he will accept a half-dollar to keep the account active. So long as he collects something, each time a payment is due, he is in a position to make the debtor feel the importance of the contract, but let one or two collection days go by without a payment, and the debtor has the upper hand. He then feels that he can stand-off the collector whenever he happens to have other uses for his money, a condition which becomes increasingly frequent.
An installment dealer will nurse an account to the limit, rather than take back the goods he has sold. Once he has collected the cost of the article, he will accept payments of almost any amount, but it will not do to let the debtor know how lenient he is prepared to be; at least a semblance of enforcing the contract must be kept up.
Fig. 23. Installment Contract Register]
The most familiar branch of the installment business is the sale of house furnishings and pianos. The sale of house furnishings on the installment plan is rapidly increasing, and probably more pianos are sold on this than any other plan. Furniture dealers who formerly sold only for cash or on approved credits, are finding profitable business among the better class of installment buyers.
Installment sales are made on contracts, or leases, which provide that title to the goods shall be held by the seller until all payments have been made, and that the right of possession shall be forfeited by the buyer if he fails to make any payment when due. When the contract is folded, the outside shows a form printed as in Fig. 22. This particular form is used by a musical instrument house.
At the head of the form is shown the contract number, amount, date of contract and collection date, name and address of the buyer, and the name, number, and make of instrument. Below is space for a record of payments, divided as to principal and interest, with the names of the collectors. When a sale is made, a contract is made in duplicate, the original remaining in possession of the seller and the duplicate being given to the purchaser.
Fig. 24. Ledger for Installment Accounts
Installment Register. All contracts are registered in numerical order, in an installment register ruled as shown in Fig. 23. One line is used for each contract, the particulars recorded being the date and number of the contract, name and address of the buyer, and the amounts to be credited to the different sales accounts. It is not necessary to list the articles sold, as a complete list will be found in the contract.
The footings of the money columns are carried forward to the end of the month, when the totals are credited to the sales accounts in the general ledger. The footing of the total column, which is the total of all installment sales, is posted to the debit of an installment contract account in the general ledger. This is a controlling account of the installment ledger accounts.
Installment Ledger. Installment accounts necessitate a form of ledger differing from that used for ordinary accounts. The special requirement in such a ledger is space for recording a large number of payments. Fig. 24 shows a form of loose-leaf ledger sheet designed for installment accounts.
Fig. 25. Special Cash Receipt Book for Installment Collections
One of these ledger sheets is used for each installment contract. The particulars of the contract are recorded at the head of the ledger sheet, above the name and address. The particulars recorded are the number of the contract, the amount and date, amount of payments, collection day, and whether payments are to be made weekly or monthly. The body of the form is ruled for a record of payments and balances.
The ledger sheets are arranged in alphabetical order, about five-hundred sheets in each binder. Each alphabetical section is separately indexed to afford quick reference to all accounts. If the contract number only is known, reference is had to the installment register, where all contracts are recorded in numerical order.
Cash Receipts. For installment collections, it is well to provide a special cash receipt book. Such a form is shown in Fig. 25. This form is used exclusively for installment receipts, and payments are posted direct to the installment ledger. The total cash for the day is entered as one item in the general cash book.
Statement of Installment Ledger. From an accounting standpoint, installment accounts present certain difficulties not experienced in the handling of other classes of accounts receivable. There is always a question as to the real value of the accounts outstanding, a doubt as to the advisability of including the total balances in a statement of assets. A live account—one on which payments are being made regularly—is legitimately considered as good an asset as any other account receivable, but the value of the delinquent account—when payments are past due—is questionable, and if included in a balance sheet, the nature of the asset should be clearly stated.
That the actual condition of these accounts may be shown on the general ledger, it is the better practice to carry two accounts, representing live and delinquent accounts. Installment sales should be charged to an Installment Accounts Receivable account, and payments credited to the same account, which then becomes a general ledger controlling account of the live accounts in the installment ledger. Another account should be opened in the general ledger under some such caption as Installment Accounts Delinquent. When accounts become delinquent, they should be transferred by journal entry to this account. The journal entry would be:
Installment Accounts Delinquent
Installment Accounts Receivable
This transfer may be made daily, weekly, or monthly, but the period between transfers should never be longer than one month. Delinquent accounts may be indicated in the installment ledger by placing a metal tab of some distinctive color on the ledger sheet or card, or they may be segregated by transferring them to a special delinquent binder or file.
Fig. 26. Daily Report of Installment Accounts for the Credit Man
When a payment is received on a delinquent account, that account immediately becomes live, and the amount should be transferred by journal entry to Installment Accounts Receivable. The journal entry would be:
Installment Accounts Receivable
Installment Accounts Delinquent
Each day, the amount of accounts revived—delinquent accounts on which payments have been received—should be ascertained. If it is desired to save the labor of making journal entries daily, a memorandum of these amounts may be kept and a journal entry made at the end of the month.
When a delinquent account reaches the condition where it is considered worthless, the amount should be charged to profit and loss, by the journal entry:
Profit and Loss
Installment Accounts Delinquent
This should be done whenever the credit man carefully examines all delinquent accounts, which should be not less frequently than once a month. When payments are received on these accounts, they should be treated as revived accounts, with proper credit to profit and loss, if revived during the current fiscal period; but if, in the meantime, the books have been closed, they should be treated as new accounts.
It is quite necessary for the credit man to know every day how the installment accounts are running. That he may do this, a daily report, as shown in Fig. 26, should be made by the installment collection clerk. The report form should be in loose-leaf, and if the installment sales are divided by departments, the necessary number of columns to accommodate the departmental records may be provided.
The report is headed with the amounts of accounts outstanding, divided as to live and delinquent. New accounts opened and delinquents revived are added in the live column, and delinquents revived are deducted from the delinquent column. Cash collections, discounts and allowances, and delinquents today are deducted separately from the live accounts, and delinquents today added to the delinquent column. Then the delinquents charged to profit and loss are deducted from the delinquent column. The balances represent the net amount of outstanding accounts, and must agree with the two controlling accounts, Installment Accounts Receivable and Installment Accounts Delinquent.
Fig. 27. Front and Back of Collector's Card
A CORNER IN THE STENOGRAPHIC DEPARTMENT
Weis Manufacturing Co., Monroe, Mich.
Such a report enables the manager or credit man to keep in touch with the actual condition of installment accounts. As a rule, three copies should be made, one for the manager, one for the credit man, and one to be kept on file by the collection clerk.
Filing Contracts. Some houses follow the practice of allowing the collector to carry the original contracts, and in such cases the contracts are filed according to the dates on which payments are due. It is claimed that it is necessary for the collector to have the contract, as the customer is quite liable to lose the duplicate and may ask for particulars about the items purchased.
This plan is not advocated on account of the liability of loss of contracts. If it is desirable for the collector to carry the contract, a third copy should be made for that purpose. Original contracts should be kept in a fire-proof safe, and should be filed in numerical order. The most convenient file is a document file, in which contracts can be filed folded.
Collector's Card. The most convenient method of handling collections is to supply the collector with cards as shown in Fig. 27. On the face of this card is a record of particulars, similar to that shown on the outside of the contract, while the reverse is ruled for a record of payments.
Since all contracts call for payments on certain days of the week or month, it is very necessary that the collection cards be brought to notice on the collection days. A simple method of providing for this is to use a card file equipped with a set of thirty-one numbered guides to represent the days of the month, or a set of guides printed with the days of the week. The cards are filed back of the guides which represent the collection days.
It is customary to divide the city into sections, assigning a collector to each section, the number depending on the size of the city and the number of accounts. It is necessary to use as many files as there are collectors, with an office file added for those who prefer to pay at the office.
Every morning each collector is given the cards on his route, on which payments are due. On his return, he turns in all cards to the cashier with the amount collected. If a back call is necessary, the card is filed ahead a day or two.
The cards in the office file are placed on the cashier's desk each morning and payments are recorded as made. Those on which no payments are recorded are kept on the desk, and after a reasonable time are given to a collector to follow up.
When payments have been recorded in the cash book, all cards are again placed in the files under the next collection dates. They are then ready for the collectors.
Fig. 28. Receipt for Installment Collections
Collector's Receipt. Some method is, of course, necessary for checking up the collectors, and to insure the turning in of all money collected. A very satisfactory plan has been devised by the cashier of a western music house, in the form of a duplicate receipt as shown in Fig. 28. These receipts are bound in book form and numbered in duplicate, the original being perforated.
The receipt is especially convenient for the customer, as it shows exactly how the payment is to be credited. For the same reason, it is equally convenient for the cashier. All of the numbered receipts must be accounted for; if one is spoiled, it must be turned in, which provides an effective check on the collector.
Mail-Order Installment Collections. An increasing volume of installment business is now done by mail. An established principle of the mail-order business is that customers must be given an opportunity to inspect the goods before they can be expected to make a binding contract for their purchases. Beginners in the mail-order field are quite likely to look on this as an impractical plan, fearing the loss of goods, but experience soon teaches them that it is the only plan on which the business can be successfully conducted.
When experienced mail-order men, with the courage to try out a new idea, experimented on the plan of allowing customers to return goods, they found that the more liberal the offer, the more business they did. This led to the giving of an absolute guaranty, offering to ship goods on approval with the privilege of return for any reason within certain time limits.
As the fear of loss of goods became less pronounced, it was argued that more liberal terms of payment could be granted with safety—if goods could be sold successfully on the installment plan to local customers, why not by mail? A trial proved the plan to be practical, and now many articles are sold by mail on the installment or easy payment plan. Goods are even shipped without an advance payment, either the goods or the first payment to be returned within a certain time limit.
In selling goods by mail on the installment plan, it is necessary to secure a binding order, in which the customer agrees to return the goods within a certain number of days, or make the payments as specified, with an agreement that title to the goods shall be held by the seller until all payments have been made according to contract. The contract must also give the seller the right to recall the goods whenever the customer shall fail to make a single payment as agreed.
The success of the mail-order installment business depends largely on the manner in which collections are handled. Not having the advantage of personal contact with the customer, the collector is obliged to depend on the knowledge of the man which he gains from references and the correspondence of the customer. But the shrewd collector soon learns to read his man from the general tone of the correspondence, and sometimes from the absence of communications from the debtor. When he has learned the character of the man, he can handle each account independently; until then, he is obliged to follow the same line of action in all cases, depending on the law of averages to prove the correctness of his theories.
Fig. 29. Loose-Leaf Ledger for Mail-Order Collections
Too great emphasis cannot be placed on the importance of studying the character of the man. It is only by paying special attention to this point that the collector can learn to treat each account individually. In the first place, the class of goods sold largely governs the class of customers from a credit standpoint. The men who buy sets of business books are, as a rule, safe credit risks. Their training and environment have a tendency to teach them the importance of fulfilling an obligation; appreciating the necessity of maintaining their credit standing, they will make every effort to carry out the terms of the contract, or give a valid reason for asking an extension of time. Illustrating the opposite extreme is the class who will sign a contract for the purchase of a cheap musical instrument, at a high price, to gratify a desire to outdo a neighbor, without regard to their ability to make the payments as agreed. Such people trust to luck, and expect to pay in promises if they do not happen to have the money. For this reason, the percentage of profit that must be added to cover the cost of collection increases, as the quality of the goods and the standard of the credit risk decrease.
The Account. Accounts with mail-order installment buyers are handled in a similar manner to those of local buyers. All contracts should be numbered as received, and registered in numerical sequence. The form of register already shown answers the purpose very nicely.
Fig. 30. Mail-Order Collection Card
After registering, the particulars of the contract should be entered in the ledger. A form of ledger sheet used by a publishing house is shown in Fig. 29. This is loose-leaf, and does not differ in form from the ordinary balance ledger, except in the particulars given at the head of the sheet. Here is shown the name and both residence and business address of the customer, number of contract, monthly payment and due date, references, source of order, price and name of books, and date of shipment. These sheets are filed in post binders, five-hundred sheets to the binder, and indexed alphabetically.
The next step is to enter the contract on a collection card. A satisfactory form is shown in Fig. 30. This is a card 4×6 inches in size, and is practically a duplicate of the ledger sheet. The card is filed in a chronological file under the due date—that is, if payments are due on the 24th of the month the card is filed under that date. Except when removed from the file for the use of the collector, or to enter payments, the card is always filed under the same date. If it becomes necessary to have an account brought to notice on other than the regular collection dates, a memo is made on a separate card and filed in a special tickler.
Should it become necessary to refer to a card on other than the regular collection dates, reference to the ledger—indexed alphabetically—gives the due date, by which it is quickly located. Sometimes, however, it is desirable to refer to all contracts in a given territory. To make this possible, a card file with indexes printed with the names of states and cities is provided. For each contract a plain 3-×5-inch index card is used, the name, address, and contract number only, being entered. This provides a complete set of indexes—alphabetical in the ledger; numerical in the register; by due dates in the collection file; geographical in the card file.
When a payment is received, it is entered in the cash book and posted to both the ledger and the collection card. Every card must be located at the time payments are entered in the ledger, or the customer will very likely receive notices after he has made the payment.
The Collection Follow-Up. The promptness of the follow-up on this class of collections is of the greatest importance—the debtor should not be given the excuse that he failed to receive a notice. Though not provided for in the contract, the debtor expects a notice of every payment due.
When the goods are shipped, a formal notice of shipment should be mailed, and if the first payment has not been made, it should be requested. In ten days, or after the approval time limit has expired, a second notice should be mailed, provided no payment has been received. This can be a formal notice, and should assume that the goods are entirely satisfactory, and at the same time calling attention to the fact that the first payment is past due. If this does not bring a remittance within ten days, it is well to send a draft notice. This notice should go into the conditions of the contract in some detail, and, without assuming a threatening attitude, it should assume that if payment is not received within five days it is the desire of the debtor that a draft be made. Either the notice or the draft will usually bring the first payment, or the return of the goods.
Fig. 31. Attorney's
Collection Register
Each month, a formal statement showing the exact condition of the account should be mailed a few days before the due date. It is well, on this statement, to make an offer of a discount for cash to pay the account in full. A discount of 5% on an account that has several months to run will often be accepted, and is profitable to both parties. This statement should be followed in ten days by a second notice, also of a formal nature.
All notices up to this point may be printed, but further requests should be in the form of letters. Except when it has been found that an account should be handled in a special manner, form letters will be found most satisfactory. The letters should start out mild in tone increasing in insistence as the series is extended.
When persuasion fails, the debtor should be notified that the account is being placed in the hands of an attorney, or a collection agency. But before suit is actually started, it is well to investigate the probability of collecting a judgment. If a man is judgment proof, it is much better to take the necessary steps to secure the return of the goods. This is usually accomplished by requesting the express company to call on the debtor for the package.
Every debtor has his vulnerable point; if that point is reached, the money can be collected. The most successful collector is the one who finds that point in the largest number of cases.
Collections by Attorneys. The handling of collections constitutes an important part of the practice of many attorneys. It would naturally be supposed that attorneys handling collections for their clients would have an efficient system of records, but unfortunately this is not the rule. Except in offices handling a large number of claims the methods are very lax—there is an entire absence of a system that will reveal the exact status of every claim. And yet to install a system that will give just the information desired is very simple, and the operation requires less labor than to handle the claims in a haphazard way.
Fig. 32. Attorney's Collection Card
When a claim is received by an attorney, it should be given a number, and registered in numerical order. The register should be a book—either loose-leaf or bound—with headings for the date received, names of debtor and creditor, amount of claim, amount collected, fees, amount remitted, and date remitted or returned, as shown in Fig. 31. This is not intended as a complete history of the claim, but merely as a permanent record.
The papers in each claim should be placed in a folder. The old method was to use a manila jacket or document envelope, to be filed in a document file. The objectionable feature of this method is that the papers must be unfolded for reference. A better plan is to use a correspondence folder, such as is used in the vertical file, in which the papers can be kept flat.
Whatever style of folder is used, all papers should be fastened—either pasted, or by means of a paper fastener. On the outside of the folder should be written the names of debtor and creditor, and the number of the claim. The balance of the space on the folder can be used for recording special information about the claim from time to time. These claim folders should be filed numerically, according to claim numbers.
Fig. 33. Back of Attorney's Collection Card
For a convenient record for daily reference, giving a brief history of the claim, a card is found very satisfactory. The folders are somewhat bulky and inconvenient for quick reference, and, except in special cases, it is not necessary to refer to all of the papers. Brief notes, which can be made on a card, will answer every purpose.
A convenient record form is shown in Fig. 32, which is printed on a card 4×6 inches in size. This gives the particulars of the receipt of the claim, the amount, date, and number, with a record of collections, fees, and remittances. A card is made for each claim, and filed alphabetically under the name of the debtor. The reverse of the card is printed as shown in Fig. 33. This shows the different steps taken to enforce collection.
The card file provides an index to all debtors against whom claims are on file, while both the register and the file of folders provide numerical indexes. But it is the creditor who is the client of the attorney, and it is very necessary that he be in a position to refer to or report on all claims received from any client. This necessitates another index to creditors, which is provided for in the card form shown in Fig. 34.
Fig. 34. Index to Creditors for Attorney
The card is headed with the name and address of the creditor, below which is a list of all claims filed by him. When a claim is returned—paid or unpaid—the date is entered on this card, so that the record shows only unpaid claims. These cards are filed alphabetically, under the names of the creditors.
A follow-up of the claims is provided by a plain index card on which is written the name of the debtor and number of the claim. This card is filed in a tickler, under the date on which it is desired to follow up the claim. This serves as a memorandum only, all records being made on the claim card or the folder.
A SCENE IN ONE OF CHICAGO'S BUSY FREIGHT YARDS, SHOWING AN OUTBOUND FREIGHT HOUSE