Music Trade Review

Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
APRIL 21, 1923
THE
MUSIC TRADE REVIEW^
The Dealer's Collection Department
The First of a Series of Articles Dealing With the Proper Management of That Part of the Retail Organiza-
tion Which Brings in the Cash—The Fundamental Policies Underlying Successful Collection
Methods—The Interrelation Between Selling and Collecting
The business obituary of many a retail piano
dealer might be well summed up in the follow-
ing words: "He was a good salesman, but a
poor collector."
The why and wherefore of proper collections
still remains an incomprehensible mystery to a
good many dealers. They sell pianos and build
up an imposing volume of business, but when it
conies to obtaining the money from these sales
they seem to think that this should take place
automatically, that the customer will call with
his or her little monthly payment and cheerfully
leave it with the cashier. Or perhaps they are
obsessed with an all-pervading fear that to push
collections means a loss of good will which will
react on their ultimate sales. Strange as it may
seem, the collection department, although of
equal importance with the sales department, in
a great many retail warerooms is neglected,
and whoever may be placed in charge of it
considered as a subordinate clerk. This lack
of consideration is reflected in the methods used
to bring in the cash.
The Collection Manager
A collection department is as good as the
man in charge of it. With the small dealer, the
man who heads an organization of but a few
members, collections should be under his own
personal supervision. In the larger warerooms
the collection manager should be of equal im-
portance with the sales manager. As great care
should be exercised in his choice, for, taking
all elements in a sale into consideration, the
sales manager's department simply sells the first
payment on the instrument; it is the collection
manager who sells all the succeeding payments
until the contract is entirely paid out.
His position requires tact and care. He must
hold a customer to the .letter of his bond and
at the same time retain his good will. His
methods must be such that the customer will
realize that he is expected to pay as he has
agreed to pay. Yet, at the same time, he must
hold the percentage of re-possessions to a low
figure. He must be a judge of human nature,
being able to extend time when the situation
warrants it, and use strong methods when he is
convinced that the customer is deliberately
evading his payments. He must get the money
and keep the instruments out.
The situation that confronts him inside the
organization is as difficult. There he plays the
part of a balance wheel. He must hold the
good will of the selling organization and at the
same time make the salesmen realize that good
collections depend directly on the way in which
the instruments are originally sold. He must
make the men who are in direct contact with
the prospects realize that there is more to a
sale than simply obtaining the signature on the
dotted line. All these elements are necessary
requirements for the collection manager and
they are what make him such an important part
of any retail piano selling organization.
Collections and Selling Methods
It has been stated above that good collections
depend directly upon the way in which the out-
standing instruments are originally sold. In-
vestigation of the policy of anv retail house in
which the percentage of past due in the collec-
tions is below the average will show the truth
of this statement. There are two main factors
in this situation. The first of these is the aver-
age time of the retail contracts, the second the
state of mind towards the sale which is created
with the prospect by the way in which the sales-
man closes the deal.
Long time is perhaps the most important ele-
ment in creating poor collections. When pay-
pense always mounts as the percentage past due
increases. The two bear direct relation to each
other and the dealer loses money both ways.
Basis of Good Collections
Summed up, it may be stated that the condi-
tion of a dealer's collections usually reflects the
way in which the collection department handles
them. Proper methods almost invariably mean
good collections. Poor methods are invariably
reflected in the percentage of past due, than
which there is no better criterion of the effi-
ciency by which a retail piano business is
The salesman, in his enthusiasm to make a
conducted.
sale, may lead the prospect to believe that pay-
ments are the smallest part of the entire transac-
These arc the general considerations under-
tion. He may indulge in stories of the financial lying the problem which confronts the dealer in
worth of the house which he represents, how it his collection department.
They cannot be
is backed by manufacturers with unlimited capi-
neglected by any dealer. It is the collection
tal, how the prospect can pay practically as he
methods that bring in the cash which permits
wishes. These stories may help the sale, but what
the dealer to pay his manufacturers' bills and
good is a sale if it takes practically all the
meet his current overheads. Upon the efficiency
profit to collect the payments and eventually
of his collection department depends the effi-
ends in a re-possession? The dealer who per- ciency of the methods by which he finances his
mits his salesmen to utilize this method of sell-
business. The two are so closely interrelated
ing invariably has past due and a heavy col-
that it is impossible to separate them one from
lection overhead, as well as a more than normal
the other. Poor collections mean poor financing
percentage of re-possessions.
The Fundamentals of the Problem
ments string out beyond an average period, the
pride of possession and the novelty of owner-
ship becomes less and less with the customer
and the payments become a heavier and heavier
burden. The tendency to miss a month is usu-
ally yielded to, with the result that the contract
becomes past due. This sort of a collection is
perhaps the hardest to handle. Long-time sell-
ing is invariably accompanied by heavy per-
centages of past due—one is the complement of
the other.
Collection Overhead
And here another element enters the problem
—overhead. A collection department, which,
because of poor selling, is confronted with con-
stant difficulty of collection, can increase a deal-
er's overhead by a considerable percentage.
Few dealers, perhaps, know the cost of collec-
tions, but if they would analyze the figures
some time they would probably experience a
sharp awakening. The expense of the collection
department is generally lumped with general
office overhead and thus is never known ac-
curately. As a matter of fact, collection ex-
pense is truely a selling expense and not an
administrative expense at all. Collection ex-
Yet it is fundamental that the collection prob-
lem is distinctly a sales problem. For as has
been pointed out before, collections depend di-
rectly upon the way in which the instruments
were originally sold. Unless this is realized all
the good collection methods in the world will
not make good collections. Once it is solved
the question of good collections becomes comt
paratively simple—one of methods and means!;
In future articles in this series The Review will
present a number of collection methods which
have proven their worth in actual use in the
retail piano trade, where the fundamentals of
the problem have already been solved through
proper selling methods.
OPENS NEW WAREROOMS IN DALLAS
KIMBALL ESTATE APPRAISED
J. C. Phelps to Handle Stieff and Packard Piano
Lines in That City—Prominent Figure in
Music Industry of Lone Star State
Total Estate Set at $2,796,940—Many Bequests
DALLAS, TEX., April 13.—J. C. Phelps, who has
been identified with the music industry in this
section of the country for many years, has just
opened an exclusive piano wareroom at 1805
Commerce street, this city, where he is handling
the Stieff, Packard and other lines of pianos
and player-pianos.
In addition to operating a retail business on
an extensive scale, Mr. Phelps will also act in
a measure as factory representative for the
Packard Co. in that he will keep on hand a re-
serve stock of Packard and Bond pianos and
players to fill dealers' orders at short notice and
in an emergency.
During hrs eighteen years of activity in the
trade in this section Mr. Phelps has won an
excellent reputation. It was largely due to his
efforts that the Dallas Music Industries' Asso-
ciation was organized and he served as presi-
dent of that body for two terms. He subse-
quently promoted the state-wide association of
music merchants. He was also one of the ener-
getic workers in the music week celebration in
Dallas.
Associated with Mr. Phelps in his new ware-
rooms is Philip H. Pierce, who will devote his
efforts chiefly to handling orders.
B. A. Morris, piano and music dealer, of New
ton, N. J., has moved to new and larger quarters
at 109 Spring street, that city.
to Charitable Institutions
f
The estate of Mrs. Evaline M. Kimball, of
Chicago, who died January 13, 1921, and was
the widow of W. W. Kimball, head of the piano
company of that name, was appraised in New
York last week, showing that she left the bulk
of he* estate of $2,796,940 to charities, public
organizations and friends. She had only $112,-
962 taxable in New York, consisting of 1,291
shares of the Western Union Telegraph Co.
The other items in the estate are not disclosed
in the appraisal.
Mrs. Kimball gave her art collection, valued
at $332,250, to the Art Institute of Chicago, with;
the request that it be displayed in the "W. W.
Kimball Room." She left $100,000 to the Newsr 1
boys' and Bootblacks' Association of Chicago^!
and $50,000 each to the Children's Memorial
Hospital and Visiting Nurses' Association. The
Fortnightly Club of Chicago got $10,000.
The will gave scores of bequests of $10,000
and more to friends, and set apart $200,000 in
trust for her brother, Irving H. Cone. The re-
mainder of the estate went to nephews andj
nieces and their children.
!,!
BECKSTEAD SELLS TO COLUMBIA
SALT LAKE CITY, UTAH,
April
14.—George S.
Beckstead has sold his business to the Columbia!
Jewelry & Music Co. The two concerns have.|
been combined under the management of C. D.-i
Strang.