Masonry Magazine January 1965 Page. 55
Credit Corner
By
William E. Locke
This country is experiencing a new, almost unheard of, frontal attack on small businesses selling service and hard goods on a credit basis. Credit buyers are the offenders, and especially vulnerable are those smaller firms not large enough to hire skilled credit personnel. In fact, some of these businessmen have so much brotherly compassion for their fellow men that receivables are allowed to take care of themselves.
This suspicion was born thirteen years ago when I started my professional practice assisting businessmen overboard with receivables by establishing profit making credit standards that not only help to maintain good customer relations but help build sales. Credit buyers will usually buy from 2 to 4 times as much as a cash buyer will buy, and more service and goods can be sold to a current account and such sales can be charged. A credit department policy that is established through education of the many faces of credit management always invites good credit business. Deadbeats soon learn to steer clear of a firm with sound credit selling practices.
The Credit World reports in their "Food For Thought" department, that according to one authority on consumer credit, people can be divided into five groups. They are:
1. Those customers who are anxious to pay and are their own best financial controllers. 75 per cent.
2. Those who are not so strongly motivated to payment of debts, but who at least have no objection to paying and who do the best they can. 10 per cent.
3. Customers who are immune to collection blandishments and polite requests and only pay when the pressure is on. These people wait for the last letter in the collection series. 5 per cent.
4. Customers who are so heavily involved in debt that in spite of any possible good intentions almost certainly cannot begin to get caught up. 5 per cent. They account for many bankrupts.
5. Customers who have absolutely no intention to pay. They regard all this as a game. The trick is to get away with as much as possible. Often they move silently in the night, leaving debts and angry creditors. 5 per cent.
If the above is true, then 25 per cent of your customer accounts need frequent attention and collection supervision. Credit buying and paying habits are not inborn in a new born baby. It takes time for a person to change from the above No. 2 category to the No. 5 category. How much have you and your promiscuous credit granting habits had to do with any of the thousands of bankruptcies occurring these days.
Bill is known nationally as a Credit Management expert, and has taught hundreds of firms, contractors among them, how to increase sales, and how to improve credit granting and collection methods by on the job training. No collection agency is involved. For details write him direct. He will also answer your credit department questions, and questions of management related to credit, in this column and direct. Wm. E. Locke, 3401 Balboa St., San Francisco, Calif. 94121.
Also, Bill is a professional writer and will send you a copy of his "Credit Managers Notebook" on a 10-day free trial. Copy of this widely used credit department procedure only $12.50.
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MASONRY
January, 1965
55