Collecting Subscriber Bad Debt

About every three months for the past year and a half, Mrs. Jones orders the newspaper. Sometimes she is solicited by telemarketing, sometimes she calls the order in herself. After each order, her request is verified for authenticity and her delivery is checked after her first week of service. Mrs. Jones will receive seven weeks of service and two invoices. Her service will stop after the seven-week grace period if she does not pay her bill.

The subscription history shows no delivery complaints, no vacation stops, and contains four memos in which she has promised to pay for the service she has received. Her account has been started six times, and yet, there are no payments on her account.

Like so many other customers, Mrs. Jones has figured out that a customer can tell a soliciting office almost anything and have her account restarted without paying. Think back to the motto of any service industry - the customer is always right.

Continually ordering the paper and never paying for it can occur for many reasons, but the bottom line is that accounts like hers can put you over the 4% ABC allowance for bad debt, cause carriers to take matters into their own hands and basically end up costing your company money in newsprint and delivery fees that will never be recovered.

So what can be done about it? Do we try to collect the money or just write it off as a bad experience? It’s a tricky situation but one that can result in a payment if handled correctly.

First and foremost, develop a system of verifying the following information during the beginning of service – correct name, address and phone number, service requested and start of service.

Make sure that this information is recorded in your database. Second, verify that the customer has been invoiced for the service. If the resources are available, a phone call one week after the invoice is mailed is always helpful. Sometimes one invoice isn’t enough, so you may want to send the customer two or three invoices during their initial grace period.

If the customer has not paid by the end of the grace period, give them a call. If they tell you they didn’t get a bill, let them know what the balance is and send an additional invoice or offer to take a credit card payment over the phone. If they tell you they had severe service problems offer to restart the paper for two weeks only and remind them to call in when they experience poor service. This should be offered to a customer only once.

After all these efforts and precautions, there will still be several customers who don’t pay. What can be done about these subscribers with spotless service histories yet no money in their account? Your customer service office may not have the resources to continually call or make contact with these customers, but an outside agency might. In fact, a letter or a phone call from a collection agency may be just the key to getting the bill paid.

Is this method a little drastic for a .25¢ newspaper? Some may think so, but a 25% collection record that brings your subscriber bad debt below the 4% ABC allowance will speak for itself. Will it anger some of your subscribers? It certainly will, but if measures to ensure that the customer ordered the paper, received that paper and was invoiced for services received are in place, the debt will be legitimate. Your customer service center will still have to hear another rendition of "My Neighbor Stole My Paper Everyday" followed by a rousing chorus of "I Never Ordered That Rag Sheet," but that is to be expected. In addition, a collection agency does not have to report uncollected debt to a credit bureau, you may simply employ them to collect the debt for a fee.

Gray is budget and systems manager in the Circulation Department of The Washington Times.