The talking machine world (July-Dec 1924)

20 THE TALKING MACHINE WORLD December 15, 1924 How, When and to Whom to Grant Credit Need of Credit Department in Retail Music Stores Emphasized by N. E. Woodford, Credit Manager of the Yahrling-Rayner Co. Despite the fact that the great majority of talking machines are sold on an instalment basis, which means that the question of credit has become a distinctly important and, in fact, vital factor in the business, there are many dealers who regard the credit department as merely incidental to the general business and do not give it the attention which it deserves. Emphasizing the value of a credit department in the retail music store, N. E. Woodford, credit manager of the Yahrling-Rayner Piano Co., of Youngstown, O., which is also a large dealer in talking machines, not only outlines the functions of a credit manager, but offers some interesting information regarding what constitutes a good credit risk as follows: <?oya Lrorjie" 1 V. KING OF ALL J \ The Loud Speaker Unit With the Acoustic Control Without touching the dials, you can adjust the volume of reception to the taste of the listeners and the size of the room. The control knob on the back of the Koyalfone Unit permits a full range of adjustment from very soft to very loud without a trace of muffling, blare or any distortion. Makes a high class loud speaker out of any phonograph or horn, at a minimum cost. D * heavily nickel plated nozzle I llCc and ample connecting cord i.00 (poy/Jtrotye V» KING OF /ILL m/ HEADSET Greater distance by using the Koyalfone Headset because It reproduces the faintest signals your set can detect. LIST PRICE $4.50 A Real Sales Appeal Features sell a product. What greater feature can you offer your customers In a loud speaker unit than a volume control which makes the loud speaker adjustable to individual acoustics the same way as a phonograph? Install a Koyalfone Unit on your demonstrating set and let your customers show you the profits in this Item. Send a trial order TODAY Whatever your sales of loudspeaker units and headsets may be, give the Koyalfone Unit and H end net an opportunity to show you gTeater profits. Send your order Now. Royal Electrical Laboratories NEWARK NEW JERSEV DEPT. T.W. "Now, having considered the importance of credit and the relation of the credit department to the rest of the store, let us consider some methods of credit granting which make for the successful operation of a credit department or, in other words, let us consider "credit risks' and how to sort the good from the bad. Methods of Granting Credit "I have with me some statistics relative to customers as a class. What I mean by this is how do farmers pay as compared with mechanics or professional men and so on. I have selected the main classes from which we draw our trade. They are: Prompt Fair Slow Per Cent Per Cent Per Cent Farmers *. 68 20 12 Laborers 58+ 21 16 Small Merchants 58 — 15 27 Clerical 56 16 24 Women Workers (Not nurses or teachers) 54 40 6 Teachers 52 26 19 Nurses 50+ 25 13 Railroad Men 50— 27 23 Professional 49 12 30 Police 45 35 10 Mechanics 39 42 16 25 19 • X Per Cent 3 12 9 10 3 Average 52 "It appears from these figures that there is no certain method by which we may choose good customers except from the ledger experience of brother merchants. It appears that even the best classes have enough of the poor credit risks to eat up the profit of the good ones. "There is another phase of credit co-operation that I want to mention and that is in collections. I presume that your collection department is in charge of your credit man. We in Youngstown would be lost without the help we get from our membership in our local credit association in this work alone. "For instance, John Smith moved; we report at our next meeting requesting new address. Oftentimes we get it on the spot, but in any case we have fifty to seventy-five of the stores watching for John Smith and maybe four or five out on the hunt while the trail is hot. If he is not found in short order, he must travel fast like the Southern darky who went on the bear hunt. The Credit Man No Prophet "The position of the credit man is one of trust and responsibility, and in many respects his responsibility is greater than that of the banker. The banker is frequently in a position to obtain collateral or real estate security. He has the advantage of seeing the borrower's checking account and is also in a position to require a written, definite, concrete obligation of the bor. rower before parting with value. "On the other hand, a credit man who is safeguarding the property and investments of his employer is often furnished with nothing but the order of the buyer. Often the credit man must approve or reject such an order on very short notice. He has but a limited time to investigate the buyer's standing and seldom has the opportunity of analyzing a buyer's personal characteristics from personal contact, an advantage, for instance, which the banker often has. "Notwithstanding these facts, it is not the function of a credit man to be a prophet or take a chance on some buyer. "The function of a credit man is to determine a future probable event (that is, whether the buyer can and will pay on the day agreed upon) in a commercial transaction based upon present known factors, an exact science. "The great difficulty is the tendency to attempt to determine this probable, future, commercial event without having all the present known factors as a guide or by using as a guide information that has not been verified. This is frequently the cause of unusual and unnecessary losses that could have been avoided if the credit man had sufficiently investigated the facts, or if the credit man had so developed the other component parts of the organization and taken advantage of the opportunities for obtaining information afforded by a local credit organization, to obtain these facts. Checking Dishonesty "I am fully convinced that one of the most effective ways of discouraging dishonesty is not so much in prosecuting dishonest debtors as in careful investigation of all applicants for credit and the absolute refusal of credit to those whose statements are found to be lacking in truth. "It appears to me that there is a wide difference in opinion as to what constitutes a good 'credit risk.' I believe that a lot of merchants think that a substantial down payment is sufficient reason for granting credit. In some cases you may be able to pull the piano or phonograph in time to prevent a loss, but in the majority of cases you will fool along for sixty or ninety days before you repossess, hoping that you may be able to collect. "In the majority of cases the instrument has been so abused that you must discount the newprice for the full amount paid or even more. Then, in addition to this, you must add the expense of tw70 sales and three deliveries, to the first customer, the return to the store and to the second customer. "It is not always that the so-called property owner is the best pay. The majority of people who call themselves property owners have less than $1,000 in property. I do not need to tell you what that means, nothing more than evidence that they are thrift}'; it is not proof by a long shot. "Let us consider what actually does constitute a good risk. A good risk is a person who spends not more than he makes but less. "The good credit risk is the man who keeps a clean home, a clean family and clean credit. A man with a clean credit is one who pays his grocer for the food he and his family have eaten, a man who pays for the shoes and other clothing his family must have. "Further, the good credit risk must be a steady, conscientious worker, whether he be a laborer or a professional man. No man can prosper and pay his bills by careless work in any line. "One of the first requisites a buyer must have is character and honesty. It is often dangerous to extend credit to one who has all the other necessary requisites to enable him to pay; in fact, credit men must always be on the alert to prevent their employers from being defrauded by buyers who have the ability to pay, but, lacking character and honesty, try to make it profitable to themselves by avoiding wherever possible the payment of their just debts. "The general reputation of the parties to a transaction is also an important element of credit. If the seeker of credit has a poor reputation for paying his bills or has the reputation of dissipating or neglecting his business or has the reputation of a generally low moral standard, the credit man should carefully investigate his standing In this respect. "Sometimes such a reputation is unjust and has been circulated by enemies or misunderstanding. In that sense reputation is different from character, for a man may have a poor reputation temporarily but fundamentally a good character. On the other hand, clever seekers of credit have practically no character but often U ■mporarily have a good reputation. "The credit man must not only get all the available, reliable information that he can concerning the customer, but should rearrange terms and conditions so as to make the sale one acceptable and profitable to the company."