The small dealer who possesses financial ability will resolutely refrain from attempting to do a larger volume of business than his capital warrants. Where such ability is lacking, the book accounts will soon be disproportionately large and a corresponding por tion of his working capital will be tied up in accounts that month by month depreciate in realizable value.
The dealer's financial ability manifests itself also in other ways. Old and shop-worn stocks will be sold at a sacrifice rather than be permitted to ac cumulate additional age and unsalableness in the store. Economy in the matter of expenditures will be prac tised at all times. No needless help will be kept and , no extravagance permitted, either in the conduct of the business or in the proprietor's personal expendi tures. Exact accounts of expenses and of the cost of doing business will be assiduously kept—the case in this respect differing greatly from that of many dealers who do not know even approximately at what cost they are doing business and who as a result sup ply the bankruptcy court with most of its business.
12. Outside impelled by a desire to increase their profits, dealers invest in out side ventures, when to do so involves a weakening of their condition thru withdrawal from their regular business not only of a part of their capital, but also of a considerable part of that time and attention which their business constantly demands if it is to thrive. All such temptations the merchant of good financial ability resists. He will do nothing that may imperil his credit. He fears delinquency and loss of credit standing- more than he fears the loss of a possible profit. He never allows himself to be crowded too close to the limit of his resources, but always holds in reserve some source from which funds may be obtained for use in an emergency.
13. Distribution of due ability is seen in the proper distribution of the dates for ma turing bills payable. The wise dealer will not per mit his obligations to be "bunched" so that they all fall due about the same time, but will see that they are distributed over the year in such a manner as to insure his ability to meet them without embarrass ment to himself or danger to his business, and so that he may employ his credit at the bank to the best ad vantage for that purpose.
The cultivation of confidential relations with his banker is further evidence of a merchant's financial ability. Owing to his knowledge of markets and in dustrial conditions, the banker is in a position to as sist the merchant in a number of ways if he is kept informed of all essential facts relating to the mer chant's business. A great deal of valuable credit in formation is also held by the modern banker. He is generally quite ready to pass this information on to other bankers, and receives in return credit informa tion that is of interest to him and that may be of value to his customers.
14. Cooperation with mercantile a' manufacturer or merchant who keeps in close touch with the large commercial agencies, meeting their re quests for information in a spirit of cooperation and mutuality, gives evidence of possessing financial abil ity. In common with the banker, the commercial agency man is in possession of much information that is of value to the merchant, and he is often in a posi tion to give good advice. Nothing is lost by cultivat ing the confidence and good-will of the agency representative. Few merchants can afford to treat the agencies with indifference, for the ramifications of the modern credit structure are such as to touch at some point everyone engaged in business. Such im portant credit institutions as the large commercial agencies, Dun's and Bradstreet's, should have the cooperation of every business man who in this day of rapidly changing conditions would establish and maintain his credit standing.
15. Insurance.—The matter of insurance will also receive due attention from men with ability in finance. The amount of fire insurance to be carried as well as the responsibility and reliability of the insurance com panies selected will always be carefully considered, as well as the requirements of the insurance companies with regard to the installation of appliances and es tablishment of rules which reduce the cost of in surance.
Other forms of insurance, such as burglary insur ance, earthquake insurance, flood and tornado insur ance, when the nature of the business or the local con ditions make these desirable, will not be neglected by the business man of financial ability.