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OCTOBER 10, 192S
THE MUSIC TRADE REVIEW
Music Dealers' Instalment Sales and Collection Problems—(Continued from page 7)
been made, when they can be definitely recorded
as sales.
The condition sale is not figured in the collec-
tion turnover computation.
Monthly Collection Report
In the monthly collection department report
entries are made for "This Month," "Last
Month" and the corresponding month "Last
Year."
This report covers four items: Lien notes, or
contract sales collections; repossessions; C. A.
R., or charge accounts, and Victor wholesale
accounts.
Now note the lien note or contract sales
items. By dividing the balance as of the first
of the month into the collections that month
you have the per cent collections to balance.
This is the standard practice of figuring col-
lection turnover. Needless to add, the collection
figures here are those that apply only to lien
notes, or contract sales. Do not figure in this
connection money received on cash sales.
When this collection percentage is compared
to those of the other two months, as recorded
on this statement, then you have a pretty fair
idea as to the state of your collections. But
still this does not give you the complete picture.
You must also have a definite idea of the aver-
age monthly collection percentages for the year
up to this date, so as to have a definite idea
how collections are progressing.
Therefore
you enter the average balance to date, you then
enter the total collections to date. The last
item is divided by the number of months so as
to obtain the average monthly collections.
Thus, if the record is for the month of Sep-
tember, the total collections to date will be di-
vided by njne months to obtain the" average
monthly collections. The average balance to
date is obtained in the same way. You then
divide the average monthly collection by the
average monthly balance and you have the per
cent average monthly collections to balance.
In this manner you can ascertain whether
the collection percentages for September size
up well with the average collection percentages
for the preceding eight months. And you make
similar comparisons for the last month, and the
same month the preceding year.
Loss on Repossessions
The loss on repossessions is compared to tin-
total charge off for the month. But first you
must figure your total charge-off for the month
and the relation it bears to the balance. This
is done by dividing the balance into the amount
charged off at the end of the month. The loss
on repossessions is figured after deducting the
payments already made by the customer to
which is added the amount that you can realize
on the merchandise in its present condition.
The loss on the repossession is compared to
the charge-off and then to the monthly balance.
After totaling the repossession to date, you
arrive at an average monthly loss on reposses-
sion and then you compare the monthly repos-
session losses to the average monthly balances,
which gives you the "Average monthly repos-
session to balance."
As for the "C. A. R. Accounts" your com-
putations are similar to those for the contract
sales, but here you do not figure repossessions.
Likewise, the "Victor wholesale" percentages
are computed on the same basis.
Repossession and Charge-off
It is very important to compare the reposses-
sion loss to charge off. Many times you will
hear a credit man boast of the fact that his
charge-off is only one-quarter or one-half of 1
per cent, but he omits to mention the loss on
repossessions. The loss on repossessions very
often far exceeds the charge off. Thus, one big
instalment house charges off at the end of the
year one-half of 1 per cent, while the total loss,
figuring also the repossessions — more 'often
known as "pulls"—amounts to 3 per cent. So
you see, the repossession loss will be almost
six times the charge off.
It is not easv to ascertain in advance the
exact loss on a repossession. At most a fair
estimate of the loss will do for record keeping.
In many stores repossessions are placed on sale
as second-hand merchandise, even if only two
weeks old, and their present value figured on
that basis. In another store a minimum price is
set on the repossessed goods, usually at about
25 per cent of its original value, and the loss
figured on that basis.
Reducing Repossession Loss
In one store the repossessed merchandise is
usually auctioned off to its own employes, be-
cause the concern does not relish the idea of
holding sales of second-hand merchandise to
its trade. Usually a value is placed on the mer-
chandise, a definite day is announced for the
auction sale, announcements being placed on the
time clock in the store and employes asked to
view the merchandise and put in sealed bids.
Recently this concern put a lot of merchandise
on sale to its employes, and although it intended
to realize only $1,000, the total proceeds totaled
$1,900. More recently two stores in the same
city got together and arranged auction sales for
employes of both stores. According to this ar-
rangement, employes of each store intervisit and
purchase anything in the way of repossessed
merchandise in either store.
At the Knight-Campbell Music Co.'s store it
is the practice to deduct from each salesman's
commissions a small amount which goes into a
special fund. When merchandise is repossessed
the loss is figured, and a part of this loss is re-
apportioned to the salesman who earned com-
mission on that sale and that amount taken from
the special fund. This has been found satis-
factory to the salesman and manager.
Enlisting Music Teachers'
Aid by Music Dealers
leans Civic Opera Association, has announced
tentative plans to bring Fortune Gallo and his
entire New York company to New Orleans this
Winter. The goal in sight is the organization
of a local chorus so that, in future years, only
singers of principal roles will be imported, with
the hope of eventually restoring New Orleans
to its former importance as an operatic center
for the South.
(Continued from page 3)
instruments were offered. The prices were not
given in the bargain form, but were simply cited
to indicate that instruments were available for
very moderate sums, with prices ranging up-
ward in the event that the prospect desired
something a little better than the cheapest.
E. S. Goodell, president of the Pierce-Goodell
Co., in commenting on the success of the cam-
paign, offered the suggestion that the plan might
be adopted with satisfactory results by other
dealers. In this connection he said:
"The idea, of course, is to have the local
dealer secure the endorsements of the prominent
educators in their respective cities. These en-
dorsements help in more ways than in the
immediate sales results. First of all, we be-
lieve it will stimulate parents who procrasti-
nate in giving their children music, and this
kind of advertising brings the argument more
forcibly than perhaps in any other way.
"Then, too, the endorsement of these prom-
inent officials carries considerable prestige of
the dealer to the consumer, and identifies them
in a way that is very satisfactory, and when run
at the opening period of school is more effec-
tive."
Forbes Piano Co. Engages
in Phonograph Campaign
Salesmen in Automobiles Carrying Direct Dem-
onstration of Adler-Royal Phonographs in
Country Districts
The E. E. Forbes Piano Co., of Birmingham,
Ala., Adler-Royal distributor, is proving the
value of demonstration in selling phonographs
to dealers in no uncertain fashion, having
adopted a most intensive method.
Each Forbes salesman possesses a Ford
roadster which is equipped on the back with a
close-fitting box. An Adler-Royal phonograph
is placed in this box, which has been made
moisture and dust proof and is kept under lock
and key.
As the salesman travels from town to town he
is enabled to inake a personal demonstration of
the Adler-Royal phonograph right on the deal-
er's floor, pointing out features and enabling the
dealer to actually hear the machine.
Reports from this enterprising distributor in-
dicate that this intensive demonstration plan i*
producing splendid results, for it is signing up
Adler-Royal dealers rapidly throughout its ter-
ritory.
Werlein Aids in Opera Plans
NEW ORLEANS, LA., October 6.—Parham Werlein.
of Philip Werlein. Ltd., music store, and chair-
man of the committee of directors of the New Or-
(All Rights Reserved.)
Rufus B. Duncan, formerly a member of the
Atlanta Journal's radio staff, has just been ap-
pointed manager of the radio department of
Ludden & Bates, one of the largest music
houses in the South. The radio lines handled by
Ludden & Bates include the Brunswick Radiola
and Radio Corp. of America receivers and
accessories.
Pratt Read
Service
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Repair Departments
for the convenience
of d e a l e r s a n d
tuners.
Send your work to
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tention and careful
workmanship.
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key—action—player
repairs and materials
PRATT, READ & CO.
Established i n 1 8 0 6
The PRATT READ PLAYER ACTION CO.
Deep River, Conn.