Music Trade Review
Issue: 1924 Vol. 79 N. 11 - Page 11
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
SEPTEMBER 13, 1924
THE
MUSIC TRADE
REVIEW
11
What Constitutes a Good Credit Risk
N. E. Woodford, Credit Manager of the Yahrling-Rayner Piano Co., Youngstown, Ohio, Gives the Basis of
Determining the Credit Value of the Prospective Customer—The Function of the Credit Manager in
the Music Store—An Address Before the Ohio Music Merchants' Association
R
F.TAIL merchants must consider their
credit department a very important part
of their organization. First, by hiring a
capable man as manager, then by giving him
the proper consideiation, just that soon you will
start to cut down your losses through careless
granting of credit and poor collections, as well
as repossessions.
First, the credit man should have an office
or some place where a private interview may
be had free from interruption, as the customer
will talk more freely when confidential matters
are not being aired before two or more persons.
Your credit man may in many cases save his
week's salary in a single interview, and I may
add that whenever possible the new customer
should meet and talk with the credit man.
Second, the credit man should have the loyal
support of his superior officer. Do not belittle
him before the sales force by discourteous re-
marks. If you think he is too careful, talk
the matter over with him privately. Let the
sales force understand that his word is final
on credits even though you go over his head
at times. Give him a chance to put the sale
through himself in response to your suggestion.
Give him some authority and make him re-
sponsible and insist that he use every known
method and opportunity to protect you.
I can almost hear you saying, "There are
some, no doubt, who are careless, but not my
firm." Let me ask you how many of you insist
that your credit manager be an active member
of your local credit organization. My firm
insists that I attend all meetings of our local
organization and national conventions as well.
I want to say that we are the only music house
in the Mahoning Valley that is represented;
furthermore, it is like looking for the proverbial
needle in a haystack to find any at our national
conventions.
Would it not be fine if each of the music
stores of your city were able to check up and
know whether or not the customer you waited
on last is buying a piano or phonograph be-
cause your neighbor merchant pulled the one
they had on account of non-payment? I am
here to tell you that you are adding to your
sales expense by curtailing your credit depart-
ment. You must take more interest in credit
work and credit organizations. Your sales or-
ganizations are good and very necessary, but
what good is a sale unless you collect the
money? Now, I seem to hear you say your
operating expense, your overhead, is already too
heavy.
Some thirty or forty years ago merchants
began to realize that by spending a few dollars
for advertising they could increase their sales
without a proportional increase in expense and
so increase their profit. For the same reason
stores spend money on window displays and
other items of so-called expense, but such ex-
penses are not expenses in the usual sense of
the term when they increase the volume of
business and turnover. Such expenditures rep-
resent an investment in things the store sells.
Credit business does add to the store's expense,
but expense is not a net expense when it brings
in more gross profit than it costs. . . .
It will be time well spent if you will call
your sales force together and talk with it about
the importance of the credit department, show-
ing it that your credit man is your financial
guardian.
Give it to understand that the
credit man wants facts upon which to base his
decisions, not such statements as "this is a gilt-
edge customer," "this party is a personal
friend," etc.
There are other things which they should
be taught. For instance, in our sales blank
we ask for the name of the employer. I have
known cases where the form was made to read
"employed by boss," and again we require the
name of a relative for collection purposes. They
sometimes give the name of the wife as the
nearest relative or vice versa.
Methods of Granting Credit
Now, since we have considered the importance
of credit and the relation of the credit depart-
ment to the rest of the store, let us consider
some methods of credit granting which make
for the successful operation of a credit depart-
ment or in other words let us consider "credit
risks" and how to sort the good from the bad.
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 me-
chanics or professional men and so on. I have
.selected the main classes from which we draw
our trade. They are:
Farmers
Laborers
Small Merchants
Clerical
Women Workers (Not
nurses or teachers)
Teachers
Nurses
Railroad Men
Professional
Police
Mechanics
Average
Prompt
Fair
Slow
X I'er
Per Cent Per Cent Per Cent Cent
68
20
12
58+
21
16
5
58—
"15
27
56
16
24
4
54
52
' 50+
50—
49
45
39
40
26
25
27
12
35
42
6
19
13
23
30
10
1(>
9
10
3
52
25
19
4
3
12
It appears from these figures that there is
no certain method by which we may choose
good customers except from the ledger experi-
ence 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. . . .
Collections
There is another phase of credit co-operation
that I want to mention and that is in collections.
1 presume that your collection department is
in charge of your credit man. We in Youngs-
town would be lost without the help we get
from our membership in our local credit asso-
ciation 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 skip in Youngstown must travel just this
fast if he expects to get away, that is, if we
take advantage of the local credit association
and its help. About a year ago we had occasion
to locate a skip from Girard, O. We learned
that our piano was in storage in Springfield, Mo.
We telegraphed the storage company, which
acknowledged possession, but, before we could
get in touch by mail with a music dealer there
the party had skipped again. By the same
methods we again located this party at Batavia,
O., from which place we repossessed the in-
strument.
If you were presented with all the money
that's in circulation in America, not counting
what's stored away in the treasury and the
federal reserve, you'd have nearly 5,000 million
dollars. This is the latest report. That's only
forty-six dollars for every man, woman and
child. With this small amount of money, along
with a system by which bank checks take care
of 95 per cent of all transactions, the country
does a yearly business estimated at 350,000 mil-
lion dollars a year. In the list of ten greatest
inventions, include "Credit." . . .
The Credit Man's Position
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 safe-
guarding 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 advan-
tage, 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
(Continued on page 13)
Pratt Read
Products
Piano Ivory
P i a n o Keys
Piano Actions
Player Actions
Established in
1806
at Deep River, Conn.
Still There
Standard Service and Highest Quality
Special Repair Departments
Maintained for Convenience
of Dealers
PRATT, READ & CO.
PRATT READ PLAYER ACTION CO.
Oldest and Best
SEPTEMBER 13, 1924
THE
MUSIC TRADE
REVIEW
11
What Constitutes a Good Credit Risk
N. E. Woodford, Credit Manager of the Yahrling-Rayner Piano Co., Youngstown, Ohio, Gives the Basis of
Determining the Credit Value of the Prospective Customer—The Function of the Credit Manager in
the Music Store—An Address Before the Ohio Music Merchants' Association
R
F.TAIL merchants must consider their
credit department a very important part
of their organization. First, by hiring a
capable man as manager, then by giving him
the proper consideiation, just that soon you will
start to cut down your losses through careless
granting of credit and poor collections, as well
as repossessions.
First, the credit man should have an office
or some place where a private interview may
be had free from interruption, as the customer
will talk more freely when confidential matters
are not being aired before two or more persons.
Your credit man may in many cases save his
week's salary in a single interview, and I may
add that whenever possible the new customer
should meet and talk with the credit man.
Second, the credit man should have the loyal
support of his superior officer. Do not belittle
him before the sales force by discourteous re-
marks. If you think he is too careful, talk
the matter over with him privately. Let the
sales force understand that his word is final
on credits even though you go over his head
at times. Give him a chance to put the sale
through himself in response to your suggestion.
Give him some authority and make him re-
sponsible and insist that he use every known
method and opportunity to protect you.
I can almost hear you saying, "There are
some, no doubt, who are careless, but not my
firm." Let me ask you how many of you insist
that your credit manager be an active member
of your local credit organization. My firm
insists that I attend all meetings of our local
organization and national conventions as well.
I want to say that we are the only music house
in the Mahoning Valley that is represented;
furthermore, it is like looking for the proverbial
needle in a haystack to find any at our national
conventions.
Would it not be fine if each of the music
stores of your city were able to check up and
know whether or not the customer you waited
on last is buying a piano or phonograph be-
cause your neighbor merchant pulled the one
they had on account of non-payment? I am
here to tell you that you are adding to your
sales expense by curtailing your credit depart-
ment. You must take more interest in credit
work and credit organizations. Your sales or-
ganizations are good and very necessary, but
what good is a sale unless you collect the
money? Now, I seem to hear you say your
operating expense, your overhead, is already too
heavy.
Some thirty or forty years ago merchants
began to realize that by spending a few dollars
for advertising they could increase their sales
without a proportional increase in expense and
so increase their profit. For the same reason
stores spend money on window displays and
other items of so-called expense, but such ex-
penses are not expenses in the usual sense of
the term when they increase the volume of
business and turnover. Such expenditures rep-
resent an investment in things the store sells.
Credit business does add to the store's expense,
but expense is not a net expense when it brings
in more gross profit than it costs. . . .
It will be time well spent if you will call
your sales force together and talk with it about
the importance of the credit department, show-
ing it that your credit man is your financial
guardian.
Give it to understand that the
credit man wants facts upon which to base his
decisions, not such statements as "this is a gilt-
edge customer," "this party is a personal
friend," etc.
There are other things which they should
be taught. For instance, in our sales blank
we ask for the name of the employer. I have
known cases where the form was made to read
"employed by boss," and again we require the
name of a relative for collection purposes. They
sometimes give the name of the wife as the
nearest relative or vice versa.
Methods of Granting Credit
Now, since we have considered the importance
of credit and the relation of the credit depart-
ment to the rest of the store, let us consider
some methods of credit granting which make
for the successful operation of a credit depart-
ment or in other words let us consider "credit
risks" and how to sort the good from the bad.
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 me-
chanics or professional men and so on. I have
.selected the main classes from which we draw
our trade. They are:
Farmers
Laborers
Small Merchants
Clerical
Women Workers (Not
nurses or teachers)
Teachers
Nurses
Railroad Men
Professional
Police
Mechanics
Average
Prompt
Fair
Slow
X I'er
Per Cent Per Cent Per Cent Cent
68
20
12
58+
21
16
5
58—
"15
27
56
16
24
4
54
52
' 50+
50—
49
45
39
40
26
25
27
12
35
42
6
19
13
23
30
10
1(>
9
10
3
52
25
19
4
3
12
It appears from these figures that there is
no certain method by which we may choose
good customers except from the ledger experi-
ence 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. . . .
Collections
There is another phase of credit co-operation
that I want to mention and that is in collections.
1 presume that your collection department is
in charge of your credit man. We in Youngs-
town would be lost without the help we get
from our membership in our local credit asso-
ciation 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 skip in Youngstown must travel just this
fast if he expects to get away, that is, if we
take advantage of the local credit association
and its help. About a year ago we had occasion
to locate a skip from Girard, O. We learned
that our piano was in storage in Springfield, Mo.
We telegraphed the storage company, which
acknowledged possession, but, before we could
get in touch by mail with a music dealer there
the party had skipped again. By the same
methods we again located this party at Batavia,
O., from which place we repossessed the in-
strument.
If you were presented with all the money
that's in circulation in America, not counting
what's stored away in the treasury and the
federal reserve, you'd have nearly 5,000 million
dollars. This is the latest report. That's only
forty-six dollars for every man, woman and
child. With this small amount of money, along
with a system by which bank checks take care
of 95 per cent of all transactions, the country
does a yearly business estimated at 350,000 mil-
lion dollars a year. In the list of ten greatest
inventions, include "Credit." . . .
The Credit Man's Position
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 safe-
guarding 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 advan-
tage, 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
(Continued on page 13)
Pratt Read
Products
Piano Ivory
P i a n o Keys
Piano Actions
Player Actions
Established in
1806
at Deep River, Conn.
Still There
Standard Service and Highest Quality
Special Repair Departments
Maintained for Convenience
of Dealers
PRATT, READ & CO.
PRATT READ PLAYER ACTION CO.
Oldest and Best
Future scanning projects are planned by the International Arcade Museum Library (IAML).