Music Trade Review
Issue: 1924 Vol. 79 N. 11 - Page 13
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
SEPTEMBER 13,
1924
THE MUSIC TRADE
REVIEW
13
What Constitutes a Good Credit Risk?—(Continued from page 11)
a prophet is to determine a future probable
event without having any known factors to
guide him, a sort of mystic science.
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 fac-
tors as a guide or by using as a guide informa-
tion that has not been verified. This is fre-
quently 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 com-
ponent parts of the organization and taken ad-
vantage of the opportunities for obtaining
information afforded by a local credit organiza-
tion, to obtain these facts.
Investigation
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 differ-
ence in opinion as to what constitutes a good
"credit risk." I believe that a lot of merchants
think that a substantial down payment is suffi-
cient reason for granting credit. In some cases
you may be able to pull the piano or phono-
graph in time to prevent a loss, but in the ma-
jority 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 new
price for the full amount paid or even more.
Then, in addition to this, you must add the
expense of two 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 evi-
dence that they are thrifty; it is not proof by a
long shot. It may be that they made a deposit
on the property so as to operate a bootlegging
joint unmolested. If such is the case, the
chances are ten to one that you are scheduled
for another skip. Sooner or later it gets too
hot and they must move.
A Good Risk
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 de-
frauded by buyers who have the ability to pay,
but, lacking character and honesty, try to make
it profitable to themselves by avoiding wher-
ever possible the payment of their just debts.
Another fundamental attribute of credit is
faith, faith on the part of the seller that the
buyer can carry out his part of the obligation
with a reasonable degree of promptness and
certainty, and faith on the part of the buyer
that the seller can and will deliver what he has
contracted to deliver or agreed to deliver within
the time and of the quality specified.
This faith upon the part of the seller must
extend farther than mere belief that the buyer
can meet his obligations. It is the duty of the
credit man to ascertain the facts that will make
this faith tangible. There are various sources
through which this information can be obtained.
The general reputation of the parties to a
transaction is also an important element of
credit. If the seeker of credit has a poor repu-
tation for paying his bills or has the reputation
of dissipating or neglecting his business or has
the reputation of a generally low moral stand-
ard, the credit man should carefully investigate
his standing in this respect.
Sometimes such a reputation is unjust and
has been circulated by enemies or misunder-
standing. In that sense reputation is different
from character, for a man may have a poor rep-
utation temporarily but fundamentally a good
character. On the other hand, clever seekers of
credit have practically no character but often
temporarily have a good reputation.
A man's reputation, whether good or bad,
always reflects upon his credit accordingly, and
his reputation is a large element in his credit.
The credit man must not only get all the
available, reliable information that he can con-
cerning the customer, but should rearrange
terms and conditions so as to make the sale
one acceptable to the company and that will
remove to a large extent the possibilities of
cancellation of the sale and consequent repos-
session at a loss because of poor cash payments.
Opens Branch Store
LJKIAH, CAL., September 5.—A local branch of
Kohler & Chase, of San Francisco, has been
opened in the Minetti Block carrying a full
line of music goods.
Justifying Your
Confidence
W
HEN a purchasing agent speci-
fies American Felt Company's
felts, it is an expression of confidence
in us.
W e are conscious of this faith and
so we produce the finest felt that the
most modern equipment and the most
highly skilled craftsmen can create.
All the resources and facilities of
this organization are available through
our branch offices.
American Felt
Company
TRADE.
BOSTON
211 Congress St.
MARK
NEW YORK
114 East 13th St.
CHICAGO
325 South Market St.
SEPTEMBER 13,
1924
THE MUSIC TRADE
REVIEW
13
What Constitutes a Good Credit Risk?—(Continued from page 11)
a prophet is to determine a future probable
event without having any known factors to
guide him, a sort of mystic science.
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 fac-
tors as a guide or by using as a guide informa-
tion that has not been verified. This is fre-
quently 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 com-
ponent parts of the organization and taken ad-
vantage of the opportunities for obtaining
information afforded by a local credit organiza-
tion, to obtain these facts.
Investigation
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 differ-
ence in opinion as to what constitutes a good
"credit risk." I believe that a lot of merchants
think that a substantial down payment is suffi-
cient reason for granting credit. In some cases
you may be able to pull the piano or phono-
graph in time to prevent a loss, but in the ma-
jority 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 new
price for the full amount paid or even more.
Then, in addition to this, you must add the
expense of two 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 evi-
dence that they are thrifty; it is not proof by a
long shot. It may be that they made a deposit
on the property so as to operate a bootlegging
joint unmolested. If such is the case, the
chances are ten to one that you are scheduled
for another skip. Sooner or later it gets too
hot and they must move.
A Good Risk
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 de-
frauded by buyers who have the ability to pay,
but, lacking character and honesty, try to make
it profitable to themselves by avoiding wher-
ever possible the payment of their just debts.
Another fundamental attribute of credit is
faith, faith on the part of the seller that the
buyer can carry out his part of the obligation
with a reasonable degree of promptness and
certainty, and faith on the part of the buyer
that the seller can and will deliver what he has
contracted to deliver or agreed to deliver within
the time and of the quality specified.
This faith upon the part of the seller must
extend farther than mere belief that the buyer
can meet his obligations. It is the duty of the
credit man to ascertain the facts that will make
this faith tangible. There are various sources
through which this information can be obtained.
The general reputation of the parties to a
transaction is also an important element of
credit. If the seeker of credit has a poor repu-
tation for paying his bills or has the reputation
of dissipating or neglecting his business or has
the reputation of a generally low moral stand-
ard, the credit man should carefully investigate
his standing in this respect.
Sometimes such a reputation is unjust and
has been circulated by enemies or misunder-
standing. In that sense reputation is different
from character, for a man may have a poor rep-
utation temporarily but fundamentally a good
character. On the other hand, clever seekers of
credit have practically no character but often
temporarily have a good reputation.
A man's reputation, whether good or bad,
always reflects upon his credit accordingly, and
his reputation is a large element in his credit.
The credit man must not only get all the
available, reliable information that he can con-
cerning the customer, but should rearrange
terms and conditions so as to make the sale
one acceptable to the company and that will
remove to a large extent the possibilities of
cancellation of the sale and consequent repos-
session at a loss because of poor cash payments.
Opens Branch Store
LJKIAH, CAL., September 5.—A local branch of
Kohler & Chase, of San Francisco, has been
opened in the Minetti Block carrying a full
line of music goods.
Justifying Your
Confidence
W
HEN a purchasing agent speci-
fies American Felt Company's
felts, it is an expression of confidence
in us.
W e are conscious of this faith and
so we produce the finest felt that the
most modern equipment and the most
highly skilled craftsmen can create.
All the resources and facilities of
this organization are available through
our branch offices.
American Felt
Company
TRADE.
BOSTON
211 Congress St.
MARK
NEW YORK
114 East 13th St.
CHICAGO
325 South Market St.
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