SEPTEMBER
IS, 1923
THE
MUSIC
TRADE
REVIEW
9
The Collections and Repossessions
A Paper Read by ]. Fred Van Court Before the Annual Convention of the Music Merchants' Association of
Ohio in Cincinnati, September 12- Good ColIection Systems Depend on Personal Touch With
Customers-Methods for the Ohio Dealers to Handle Repossessions
The subje ct of collections has been discussed
so frequent ly before assoc iatio ns of music m er
cha nts th at there is perhaps little new to sug
ges t as to ways and means of co llectin g in stal
ment acco unts. H owever, this feature of the
business is of such vi tal importance to th e wel
fare of the dealer that, next to th e sales e nd,
it s hould occupy first place. If you are not
goo d co ll ectors yo u r creditors wi ll not carry
the burden for you and your bus iness wi ll not
lo ng survive.
Collections and Selling Methods
The collectibility of yo ur acco unts depe nd s,
of co urse, largel y on th e class of business you
seek, induc ed by yo ur advertising methods and
o btained through th e efforts of yo ur salesme n.
My exper ience wi th advertising has been that
hi gh-grade adver ti si ng will bring high-grade
sales and, w hil e the vol ume may no t be so large,
th e result in th e long ru n is more satisfac tory.
The cheap and fl ashy adver t iseme nts w ith
scare headlines and questionable offe rs will, no
doub t, prod uce mor e immediate results an d a
g rea ter vo lum e o f sales, but a la rge percentage
of the acco unts thus ob tai ned will be of ques
tio nabl e character a nd result in bad accounts
a nd repossessions.
Eve ry dealer has in his particular localit y his
own pro bl ems to so lve in handling his in s tal
ment acco unts, and I know of no cut-a nd-d ried
method whi ch can be appli ed by all dealers
a like; how eve r, the lon ge r I am in the business
th e more convinced I am of th e big advantage
o f handling each account on an ind ivi du al basis,
giving each customer such cons id eration as his
par ti cula r case war rants. Thi s view may sou nd
absurd to dealers doin g a large vo lum e of insta+
ment business, and they may assert th a t such a
m et hod consumes to o much time a nd attention;
but, if yo u desire the best r es ul ts, get away
from form letters in writing delinquent cus
tomers. Make yo ur co rre spondence ve ry per
sonal, and rem ind them in a very direc t way of
their promises, and you wi ll find th a t your let
te rs w ill have attention.
The characte r of an instalme nt acco unt can
often be determined whe n th e· customer s ig ns
the contract, a nd righ t here is the ti me for the
salesman to acquaint him with the co mpl ete
provisions of hi s contract, s uch as maturity of
payme nt s, interest, insurance, service , etc. If
he is not fully iami'liar with th ese det a ils so on er
or later there will be trouble, disputes will a rise,
payments will stop and another de lin quen t ac
co unt will be on your books.
After th e sale is close d a nd the. initial pay
ment made the salesman, havi ng faithfully pe r
formed his service, should have no cause for
worry as to t he collectio n of the account. It
is th en up to th e credit department to see th at
the provisions of the co ntract are lived up to
and payments mad e promptly .
Judgment and Extensions
The r e has, and always will be, a ce rtain
pe rcen tage of arr ea rs o n ins talmen t accou nts
on the books of any dea ler doing a large
volume of busi ness, th e s ize of which depends
on his activity in forcing his collectio ns or his
financial a bility and willingness to carry such
a rrears. If the cond iti o ns sur ro undin g an ac
cou nt are such as t o warrant extensio ns it would
be fooli sh to try and fo rce payment, for we
must r emember that the piano or talking ma
chi ne is not his home or hi s bread and butter,
and he ma y be all too ready t o give it up when
misfortune strikes him, in orde r to re lieve him
se lf of debt.
Car eful judgment must be used, as there ar e
many customers who are entitled to considera
tion and some who are not; but kee p in mind
that it is th e mon ey we are after, and not the
instrument. If the delinquent is wo rt hy of con
sideration an d yo u ar e prepared to favor him
by way of r easo~able extensions it is far more
advisa ble to take this course th a n to repossess
the inst rum ent.
The coll ec tion of interest on in stalme nt ac
co unts sho uld be pushed with as m uch dili gence
as the co llec tion of principal. Many a dollar
w ill slip through your hands if this item is not
watched. When yo u s top to consider that we are
in the banking business-that of loa nin g mon ey
to our custo mers-as well as the business of
sellin g pianos and talking machines, it behoo ves
eve ryone of us to collect what is du e, ju st the
same as your banker collects from you when
you make a loan of him.
It is quite noticeable that very often a n ac
co unt will be paid in full, insofar as the princi
pal is concerned, but a bala nce of $25 or so, in
terest, will s till be due and appear very hard to
collect. After exhausting your efforts in dun
ning your customer there is only one thin g left
to do-fil e a foreclosure suit and, nine tim es ou t
of t en, the debtor will settle before the s uit
comes up for trial; it works like a charm. The
customer knows h e owes this interes t, but ju st
hates to di g it up.
Renewing Accounts
Opinions differ as to th e wis do m of renewing
account s when th ey become all past du e. In
most ins ta nces I beli eve it to be the advisable
t hing to ·do. A new contract gives yo u a clea n
piece o f paper a nd starts your customer off in a
better frame of mind, as he kno ws there is no
arrearage to be taken care of a nd he usually
tries to keep his payments up to date until the
account is paid.
Ca re must be exe rcised on re new ing a n ac
co unt w it h re spect to the accumulated inter es t.
If ther e is any interest du e it should be ded uct
ed fro m the amount of princi pal paid, and not
added to th e principal in th e renewal. In thi s
latter case yo u are com poundin g th e interest
and w ill be very apt to run into legal diffi cul
ties if a co urt ac ti o n were ne cessary la t er o n.
In view of the a dditional expe nse inc urred
in ren e'w ing an account after it has beco me a ll
past du e, w'o uld it not be fair and a legi tim ate
c harge to add 10 per ce nt of th e amount re
new ed in the custo mer 's co ntra ct to cover car ry
in g cha r ges ?
Repossession
N ow co m es th e secon d part of the subject
give n me for discourse-"Repossessions"-the
very name chil1s us to t he bone, for who amo ng
us, unl ess th ey be draymen or attorneys, can
see any goo d in them; and who of us escapes
th em ?-th ey are inevitab le; like a thund erbolt
out of a clear sky th ey come to knock th e props '
out of an otherwis e profitable month's busi
ness.
And . why these repossessions; why not get
busy a nd eliminate them from our trade ? Thi s
is well nigh impossible, owing to the varied
a nd many re aso ns which cause repos sess io ns.
We may not be able to eliminate th em, but we
ca n redu ce them to a minimum b y careful busi
ne ss practi ces. In our eagerness after sales,
we often forget th e principles of good business
by di srega rdin g the credit standing of th e cus
tomer. We frequently over-sel1 him and load
him up wit h a deb t he cannot stand, or perhaps
we will offer rid iculou s term s ju s t to beat OUf
competi tor.
N atura ll y the number of our repo ssessions is
depe nd ent' ve ry largely on the volume .and
qualit y of our sales. Forced sales are a neces
sity in our business an d, whe n d ealing with
reliable peo pl e, generally materialize into g
ac counts, but forced sales with the unreliable
eleme nt mean poor a ccounts and finally re
po·sse ssions.
Some time ago I had occasion to be in the
office of the presi d ent of one of th e largest and
apparently successful pian
co untry. In discu ss ing the matter of credits,
I asked th e manner in wh ich the y accep ted in
stalme nt sales. He said: "We take their fir s t
paym ent, send out th e ins trument without
further investigatio n, and take our chances on
collectin g th e ba lance."
Opini ons differ as t o the wisdom of accepting
instalment sa les in this manner without regard
to the fin ancia l standing of the customer, but
one thin g is certain: the percentage of re
possessions is .hi gh er, and after considering the
cos t of handling th ese sales it is a question
whet her there is an actual increase in net profits .
When and how to repossess is a question
w hi ch often needs serio us consideration.
A fte r yo ur effort s to collect have been ex
hausted, and yo u realize tha t you have a bad
account on yo ur books, the next procedure is
to recove r your goods in th e quickest and safes t
manner possible.
Replevin Suits
In most instances, w here a small amount has
been paid and consent to the customer has been
give n, an instrume nt may be repo ssessed with
o ut legal action on th e pa rt of the dealer, and
done so witho ut fe ar of fu r ther troubl e. If con
sent is not given and o·b jection is made by the
customer, th e quickest way to get action is by
re plevi n suit . This g iv es yo u possession of your
pro'p erty, and the chances are that you will not
hear from the custo mer a gain. However, if
there has bee n a co nsid erable amount paid off
on your chattel mor t gage, the safest course is
to for eclose. The ins trument may then be sold
at public a uction, bough t in by you if desired,
and a clear title obtained.
In orde r to secure the full benefits of the
chattel mortgage which represents the form un
der which we Ohio dealers carryon our in
s tal men t bu s iness, it is essentially necessary
that grea t ca r e be taken in the execution of this
contract-the manner in which it is written up,
acknowledged and fil ed. Prompt filing is mos t
impor ta nt. "There's many a slip 'twixt the cup
and the lip," as no doubt some of us can testify
to sad experiences on account of tardiness in
filin g mort gages .
N o·twit hstandin g the many bad features of a
repossessio n, w e still have something to be
thankful for in th e piano bu si ness. This is the
ge nera ll y good condition of the instrument at
the time of repossession, for the piano or talk
ing machine is we ll taken care of in the home
an d usuall y guarded agai nst rou gh treatment
a nd misuse. Many other lines of merchandise
sold Oll the instalment plan receive much harder
usage and depreciate t o a much greater degree
than do the instruments which we sell. We
can count thi s as the one redeeming feature of
repossessio ns in our business.
HOMES BEAUTIFUL EXHIBITION
CANTON, 0., September 10.-Plans are under
way for th e hold in g of a Homes Beautiful Ex
hibition in this city. All musical instruments
use d in th e four model homes will be supplied
by th e Alford & Fryar Piano Co. and the D . L.
Le rch Music Co. The lates t in piano designs
will be s upplied b y the two music dealers .