11. The adjuster.—The modern tendency in credit management is for creditors to cooperate in their dealings with weak or insolvent debtors. The pro visions of the National Bankruptcy Act have prob ably done much to encourage this practice. While in Canada, as we have already seen, there is no national bankruptcy or insolvency act, there is a growing tendency among creditors to give a deserving trader a chance to improve his position. Formerly many a temporarily embarrassed debtor was plunged into bankruptcy by the pressure of creditors anxious to obtain their money in advance of other credi tors. As the law now insures a pro rata distribu tion of assets among all bona fide creditors of an insolvent estate, the temptation to force collections under such circumstances is considerably lessened, and the benefit of concerted action is increasingly real ized. Frequently, with the of a little pa tience on the part of the creditors, and under the direction of some competent person, the unfortunate debtor may be able to reinstate himself and eventually to pay his debts in full. Many of the larger and bet ter collection agencies maintain adjusters who on short notice will visit the debtor, look over his situation, and take such steps as will be for the best interests of both debtor and creditors.
Not infrequently, the creditors, after sending an adjuster to investigate a debtor's affairs, see the wis dom of accepting a certain percentage of their claims as payment in full rather than throwing the debtor into bankruptcy. This lifts the burden off the debtor's shoulders and permits him to start anew under more favorable conditions.
12. Taking unearned a dealer who never would take a five-cent piece belonging to another, appears to have no conscientious scruples about taking a cash discount to which he is not en titled, and frequently regards it as little less than an insult to be reminded by the wholesaler that the terms of sale are to be observed according to the letter.
Let us suppose the terms of sale to stipulate a cash discount of two per cent for making payment within ten days—which is a custom that obtains in many lines of business. The purpose of such a discount is, of course, to induce an immediate payment. Obviously, it is most unfair for a debtor to deduct the cash dis count when lie does not make payment until after the ten days have elapsed; yet this is just what is be ing done by many, and it is causing much annoyance and actual loss to the creditors. Fifteen, twenty, and even thirty days are taken by some customers who nevertheless invariably deduct the cash discount be fore remitting the amount of their bills.
Not a few wholesale houses, for fear of losing the dealer's trade, submit to this form of exploitation without protest; others, tho they may make mild pro tests concerning the irregularity of the practice, fail to take a positive stand in the matter. Some, and
their number is happily growing larger each year, decline to submit to what they regard as a dishonest practice, and invariably charge the dealer with any sum, however small, that has been unjustly deducted in the form of a cash discount. The latter course, in addition to being the only right one from a moral standpoint, has the advantage of inculcating in the debtors' minds a wholesome respect for the house that pursues it, and a corresponding confidence in its goods and service. It is the practically unanimous testi mony of those who have put themselves on record as absolutely opposed to the abuse of discount terms, that this attitude has caused the loss of no desirable customer. Moreover, it is found that a frank and courteous statement of the attitude of the house in the matter of the observance of discount terms is usually sufficient to convince any dealer who is in the least degree fair-minded, that the practice complained of is wholly without justification in equity and morals.
13. Charging interest on deferred payments.—The same line of reasoning that condemns the deduction of unearned cash discounts insists upon the payment of interest on every past-due account. Yet in many instances the obvious justice of this stand is ignored by buyer and seller alike. Accounts that are sold "net thirty days," are frequently not paid until forty five or sixty days have elapsed—at times not even then.
The wholesale house that consents to have payment deferred in this manner, is virtually lending its capital to the delinquent debtor without any compensation whatever. Since the debtor, if he were to borrow the money at the bank, would have to pay interest upon the loan, there appears to be no good reason why the wholesaler's capital should not be entitled to equal earnings while in the debtor's possession beyond the regular credit period. As a matter of fact, the whole saler is really entitled to more than the usual five or six per cent per annum, since under ordinary circum stances he could earn more than that by employing the money in his business.
As with the custom of taking unearned cash dis counts, so also the matter of paying interest on past due accounts is largely a question of right attitude on the part of the creditor. Experience shows that the evils complained of can be removed whenever a cor rect policy is adopted and consistently maintained. The exercise of a little tact will often go far toward making a customer, who has been guilty of such prac tices, see the evil of his ways and change for the bet ter.