6. Sending the collector.—The delinquent custom er's card may be moved ahead two or three days; and if nothing is heard from the debtor, the store's collec tor is directed to make a call and investigate the situa tion. The collector should invariably be a courteous and tactful person, able to represent the store in a be coming manner. On his first call he may make no mention of the bill, but may state that as be had an errand in the neighborhood, he was asked by the man ager to call and see whether the last goods had been delivered in good order and whether they were found entirely satisfactory. The customer will almost in variably make some reference to the bill and probably offer some explanation of her omission to pay as agreed; but the visitor will refrain from discussing the matter unless it be to allay any irritation on the cus tomer's part by assuring her that the house is most considerate of its patrons and is always anxious to please them in every transaction.
The collector's report will now determine the next step to be taken in the collection of this account. If an extension is.desired, it will be granted, provided it is within reason; but in granting it, the credit man will obtain the customer's promise to make payment on or before a certain new date. Unless the full amount of the bill is to be paid on that date, he like wise obtains a definite promise as to the exact amount that is then to be paid. These items are, if possible, written down in the customer's presence. Thruout, the credit man's attitude is deferential and his man ner pleasant. No suggestion of distrust or reproof should be noticeable in his manner or conversation. He appears to yield readily to the customer's request for time, and is simply mildly insistent that a definite date and a definite amount be fixed.
This combined courtesy and businesslike attitude of the credit man rarely fails to impress the customer; just as the promptness with which he follows up every due date has a strong tendency to make the customer prompt. This is not in the least strange when we consider that delay in making periodical payments is largely a matter of habit. The collection manager's problem with regard to his lax customer is therefore simply that of substituting one habit for another.
7. Instalment-house collection. — The instalment house, by reason of the nature of the goods it sells and the class of persons to whom it chiefly appeals, is com pelled to inaugurate and maintain a rigid collection policy if its business is to be profitable. In the instal ment business, more perhaps than in any other, it is necessary to bear in mind that no sale has yielded a profit until payment for the goods sold has been re ceived by the seller.
The goods most commonly sold on the instalment plan are pianos, talking machines, sewing machines, furniture and household goods. The majority of
buyers are wage-earners and their families. If the goods are taken back from non-paying customers, they can usually be resold as second-hand goods only at a part of the original price. The cost of transpor tation, storage and necessary repairs on such goods makes it unprofitable to take the goods back if it is at all possible to collect the money for them.
A large number of wage-earners, by reason of the nature of their work, may be here today, there tomor row, and somewhere else next week. Even where their residence is relatively permanent, they may find themselves without work at any time. In this respect, as will be .noted, they differ materially from the ma jority of charge customers in the city department store. nut the instalment house cannot choose its customers from among.the people of "gilt-edge" credit standing. Whenever the customers' appearance and conversation do not distinctly make it appear unwise to open credit relations with them, they must, as a rule, be accepted as satisfactory credit risks.
This being'so, the first step in collecting the account consists in obtaining as large a first payment as possi ble. As instalment sales are ordinarily in the nature of a lease—legal title to the goods remaining with the seller until the amount of the sales price has been paid to him by the buyer—the larger the first payment the less willing is the buyer to forfeit his interest in the goods thru non-payment of the remaining instal ments.
Contrary to the usual opinion, the instalment house generally loses when it retakes goods, even tho as much as two-thirds or even three-fourths of the sales price has been It follows therefore that the in stalment house must collect practically the entire amount of the sale if it is to make a reasonable profit on the transaction.
8. Piano collections.—Let us take as an example the piano business. In the case of low and medium priced pianos, nearly all sales are on the instalment plan. In this business it is found by experience that in order to make the transaction profitable, the con tract price should be paid in full within three years. The dealer accordingly endeavors as nearly as possi ble to arrange such payment terms as will complete the transaction in thirty-six monthly payments. If it is a three-hundred dollar instrument, an effort will usually be made to obtain a first payment of twenty dollars and to arrange for subsequent monthly pay ments of about eight dollars each. If the buyer cannot pay as much as eight dollars a month, he is advised to select an instrument costing less, so as to bring the sale within the three-year period.