THE CREDIT MAN 1. Credit man's place in the scheme of business.— The existence of the credit man as a distinct function ary in business is a result of the development of that system of credit-giving which in this country has grown up in connection with the sale of goods on open account. Matters of credit, in common with other questions of business policy and business practice, were at one time decided by the owner or general manager. But with the increase of retail stores within the reach of the jobbers' salesmen and with the growth of the present system of credit-giving the matter of passing upon a customer's credit title came to be a special func tion in the hands of a special official who could devote the necessary time and attention to making credit in vestigations. As competition grew keener and profit margins grew smaller, the importance of the credit man in preventing losses became correspondingly em phasized in practice, until today he is rightly regarded not only as an indispensable factor in modern mer chandising but as a constructive force in the scheme of business.
The best credit man is undoubtedly he who checks the largest number of orders with the fewest losses. We must remember, however, that a credit man may err on the side of being too conservative just as readily as on that of being too liberal. He may be so afraid of sustaining a loss that be will check only the orders which he knows to be absolutely safe— orders from highly rated and well-known dealers. Such a policy would not ordinarily save money for the firm; on the contrary, it would in most cases re sult in a loss. For in turning down orders that came from less substantial dealers, the credit man would be depriving his firm of the profits on many orders that, if accepted, undoubtedly would be paid for according to terms of sale. On the other hand, a too liberal credit policy that permits the checking of orders with out due consideration of the probability of their being paid, will most certainly increase the percentage of annual losses and correspondingly reduce the firm's ultimate profits on the year's trading.
In order to be of the greatest value to his house the credit man must accordingly steer a middle course. He must take some chances, altho these should never be blind chances. He must always firmly decline to check an order if a well-founded doubt exists in his mind with regard to the probability of the ultimate payment of the account.
It follows then, that only by ceaseless vigilance and thoro investigation of the conditions that surround the credit-seeker's business—to which reference was made in an earlier chapter—can the credit man check the largest possible percentage of orders while keep ing his losses at a low mark.
2. The question of authority.—Difficulties often arise because the authority given the credit man is not clearly understood by all concerned and clashes of authority ensue. There are some credit men who be lieve that their authority should be absolute, and that no one of coordinate rank or even of superior rank in the general organization of the business should question in any way the decisions of the credit depart ment.
Unless the head of the firm is the direct head of the credit department, it would be an abdication of proper executive supervision to place such unlimited power in the hands of the credit man. There seems to be no good reason why the head of this department any more than the heads of other departments should be granted extraordinary power.
The effectiveness of an organization does not de pend so much on placing one man above another, or of defining the exact limits of each man's powers, as in causing them to work together cordially and harmoniously for a common purpose. If one man is to dominate another let it be not by virtue of rules and orders, but by reason of a forceful personality. It is doubtful whether any hard and fast lines can ever be set up in so perplexing a situation as the relation of the credit man and the sales manager. If each tries to understand the other's point of view and has a sym pathetic appreciation of what it is, they can be de pended upon to reach a good working basis.