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Credit and Collection > Collection Department > Flashcards

Collection Department Flashcards

1
Q

a term used by a business when referring to money owed to that business by a customer

A

Collection

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2
Q

When a customer does not pay the business within the terms specified, the amount of the bill becomes past due and is sometimes submitted to a _______

A

collection agency

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3
Q

The art of collection requires _____ and immense ______ on the part of the _______

A

tenacity, fortitude, collector

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4
Q

strategies, organization and procedures for recovery of receivables

A

Collection Program

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5
Q

Objectives of a collection program are:

A
  • To reduce the amount of bad debt losses while controlling collection costs
  • To reduce the company’s investment in accounts receivable
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6
Q

Responsible for monitoring and following up on receivables.

A

Collection Department

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7
Q

Types of Debtors according to paying habits

A

Prompt Payers
Delinquent Debtors

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8
Q

Pays their financial obligations on time without the need for their creditor’s reminders.

A

Prompt Payers

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9
Q

Individuals or firms who are unable to pay their financial obligations within the agreed time.

A

Delinquent debtors

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10
Q

occurs as soon as the debtor misses a payment on a loan, which can affect their credit score.

A

Delinquency

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11
Q

Kinds of Delinquent Debtors

A
  • The Negligent
  • The honest but confused
  • The can’t be bothered
  • Seasonal Delinquent
  • Honest Late Payer
  • Chronically Slow
  • Twittingly Late
  • The stretcher (Plastic Man)
  • Habitual Discounter
  • The tightrope walker
  • The Braggart (Mayabang)
  • The Vanishing (Houdini) Debtor
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11
Q

When an invoice is a month overdue

A

follow up with reminders to collect payment

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12
Q

After 60 days of invoice

A

a company needs to escalate the overdue invoice and the chances of it being paid have now significantly decreased.

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13
Q

After three months, an invoice is considered to be in severe delinquency.

A

Companies may take legal action to pursue payment or consider turning to a debt collection agency.

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14
Q

An invoice that has not been paid four months after the due date is the most severe level of delinquency.

A

Escalation should include a warning that once legal action is pursued, the delinquency is part of the customer’s credit report and updated in the databases of third-party credit report services.

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15
Q

Causes of Delinquency

A
  • Financial Difficulties
  • Disputes
  • Creditworthiness
  • Communication
  • Unsystematic Collection Effort
  • Cash Flow Management
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16
Q

a written notification to a customer or debtor who has not yet paid an outstanding invoice.

A

Notice or Reminder

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17
Q

A reminder should be ____, _______, and _____ to the point.

A

short, digestible, direct

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18
Q

Reminder must be written in a way that the message of the collection is ________ by the debtors.

A

clearly understood

19
Q

The notice or reminder, to be effective, must be also designed with ______.

A

novelty

20
Q

The color of the notice must be ______

A

colorful

21
Q

It must contain an ______ object that can ______, _______, and ______ the debtor to react positively

A

eye-catching, motivate, command, prompt

22
Q

It must be in _____ size

A

proper

23
Q

used as a collection tool, reminding customers of the amounts they owe to the issuer.

A

Statement of Account

24
Q

possess the respect of both the creditor and debtor, which can be established through their reputation as an __________ or ____________.

A

experienced attorney, reputable collection agency

25
Q

a tool used for debt collection and are typically written by a collection agency or an attorney on behalf of a creditor.

A

Third Party Letters

26
Q

can provide legal expertise and a proven track record in debt collection matters, which can inspire trust and confidence in both parties.

A

experienced attorney

27
Q

with a solid reputation for fair and professional practices can command respect.

A

Reputable Collection Agency

28
Q

prohibits financing and lending companies (along with their third-party service providers) from engaging in abusive practices such as harassment, threats, misrepresentation, and unfair communication methods.

A

Securities and Exchange Commission (SEC) Memorandum Circular No. 18 Series of 2019

29
Q

process of managing and collecting payments due on outstanding debts by sending text messages. This is becoming increasingly popular as it allows debtors and creditors to communicate directly

A

Telegrams/ Cables/SMS (Text Collection)

30
Q

The art of preventing the occurrence of, and bringing about prompt and satisfactory conclusion to problem account situations

A

Remedial Account Management

31
Q

Strategies and activities that compromise an overall rehabilitation plan to help the client meet its maturing obligations and improve lender’s chances of recovery

A

Remedial Measures

32
Q

Any change in the principal terms and conditions of the loan in accordance with a restructuring agreement setting forth a new plan of payment on a periodic basis

A

Loan Restructuring

33
Q

Covers lump sum payment either through cash payment and generally includes penalty changes

A

Compromise Settlement

34
Q

Involves the provision by the borrower of services and/or goods as loan settlement

A

Off-setting/Linkage

35
Q

Involves the securing of additional collateral to secure the loan and/or continuing Guaranty and/or JSS by a more viable and/or acceptable party as further security of the loan

A

Strengthen Collateral Credit Position

36
Q

Involves the assumption of mortgage by a third party

A

Assumption of Mortgage

37
Q

Procedure by which mortgaged property is sold upon default of a mortgage in satisfaction of mortgage debt

A

Foreclosure

38
Q

It is an integral part of a total system for managing the credit portfolio.

A

Credit Review

39
Q

2 Major Credit Aspects

A
  • Portfolio Quality
  • Process Quality
40
Q

This is principally evaluated using a
quantitative assessment of the
portfolio mix and past due rate

A

Portfolio Quality

41
Q

This is an assessment of the
procedures in the marketing and
administration of accounts based on
established credit policies and
procedures.

A

Process Quality

42
Q

Categories of Process Quality

A
  • Target Market
  • Credit and Initiation Analysis
  • Loan Documentation and Disbursement
  • Credit Administration and Documents Management
  • Problem Recognition
43
Q

This aspect of the review
establishes the
appropriateness of the
organizational set-up in
terms of staff adequacy,
work experience, delineation
of functions, account
assignment, among others

A

Organization and Deployment

44
Q

The review determines the
availability and effectiveness
of training programs and
other coaching tools in the
delivery of functions.

A

Coaching and Training

45
Q

This is an evaluation of
the processes in the
administration of
problem accounts. The
review deals basically
on the credit monitoring
and supervision
activities, anticipation
and recognition of problem

A

Normal Management

46
Q

Major Aspects of Loan Recovery

A
  • Remedial Management
  • Normal Management

Credit and Collection (8 decks)

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