June 8, 1918 



HORTICULTURE 



559 



COLLECTING INTEREST ON UN- 

 PAID ACCOUNTS. 



The following inquiry comes to me 

 from a retail dealer in Capron. III.; — 



Please advise If with a sign up iu our 

 store reading seven per cent, interest will 

 be _charged on past due accounts, and the 

 same statement appearing on all our bill- 

 heads, can we legall.v charge and collect 

 this interest? 



This is a subject on which I have 

 had decided opinions for many years. 

 Whenever I have had the opportunity, 

 I have advised Individual clients as 

 well as commercial organizations 

 which it has come in my way to 

 address, that all wholesale and retail 

 merchants should have a rigid rule 

 that accounts not paid by a certain 

 date must bear interest. 1 sat down 

 once and tried to calculate how much 

 money the merchants of the land lost 

 by not doing this, but it ran into such 

 a sum before 1 got half way through, 

 that I stopped. Without doubt the 

 total would be staggering. 



The customer who fails to pay his 

 account when due is no more or less 

 than a borrower from his creditor. 

 Why should he not pay interest like 

 any otUer borrower? Only the other 

 day one of my clients was discussing 

 his financial condition with me. He 

 had just been compelled to go to his 

 bank and borrow, because he had so 

 much money on his books that he 

 couldn't collect. Was he charging in- 

 terest on those overdue accounts? No. 

 Why not? Because he didn't think 

 his customers would stand for it. That 

 has always been the obstacle in the 

 way of charging interest on overdue 

 accounts — fear of antagonizing trade. 

 There are two answers to make to 

 that objection to-day. First, customers 

 are being educated to stand anything 

 just now, and being charged interest 

 on overdue accounts is no worse than 

 many other things they have endured 

 with comparative equanimity. Second, 

 the plan to charge interest could in 

 many towns be adopted by all the mer- 

 chants together if somebody would 

 work it up. Such a combination would 

 be perfectly legal, and in many cases 

 quite easy to form — and absolutely 

 effective. 



A large numt>er of other merchants 

 are in the same position as the client 

 I spoke of — they are paying interest 

 on money which they borrow to prac- 

 tically lend out to their customers 

 without interest. 



It is the settled law that merchants 

 can charge interest on overdue ac- 

 counts, provided the customer knew 

 or had reason to know that interest 

 was to be charged. The qualification 

 is important. Take a dealer who has 

 handled his credit trade as it is us- 

 ually handled — carrying his people 

 along, collecting when he can, but 



never charging interest, although 

 some of his accounts or parts of ac- 

 counts, run for many months. A man 

 like that, who has been accustomed to 

 give a customer months of credit 

 without interest, cannot suddenly 

 start in to add interest to his cus- 

 tomer's account. He has led his 

 customer to believe, by a course 

 of dealing, that he did not intend 

 to charge interest and he cannot 

 suddenly change that course of deal- 

 ing without warning. He should send 

 an express notice by mail to every 

 customer, and post a sign in his store, 

 that on and after a certain date all 

 accounts not paid when due will bear 

 interest. When the time comes he can 

 start to add interest to his customers' 



Capt. Jambs W. Ajsdebson 



unpaid accounts and can collect every 

 cent of it. 



After a merchant had established 

 this rule and was enforcing it right 

 along, any new customers who came 

 to him could be charged interest on 

 overdue accounts without notice, re- 

 gardless of the fact that they might 

 not have been charged it by anybody 

 else with whom they had dealt. That 

 is because the particular dealer has 

 never established any course of deal- 

 ing with them which led them to be- 

 lieve he didn't intend to charge inter- 

 est. He had merely applied his regu- 

 lar rule to them. And the uniform 

 custom of a merchant, carried out, let 

 us say, by notice on his letterheads, 

 billheads and perhaps by a notice 

 l)ostod in store, binds his customers 

 whether they see it or not. 



Even where a merchant has a regu- 

 lar custom of charging interest on un- 

 paid accounts, no interest can be 



charged upon an account unless it is 

 liquidated, that is, unless the amount 

 is settled and fixed. An open running 

 account does not bear interest. 



Notice to customers that interest 

 v.'ill be charged on accounts not paid 

 when due should, of course, state 

 when they are due, that is, in ten. 

 days, thirty days, on presentation, 

 and so on. I remember one case in 

 which a merchant's effort to collect in- 

 terest was defeated because he said it 

 would be charged on accounts "not 

 paid when due," and he had been so 

 shiftless in presenting bills In the past 

 that nobody knew w-ben he considered 

 them due. 



The situation as to collecting inter- 

 est on unpaid accounts is somewhat 

 different when you have to sue a cus- 

 tomer to collect an account. In that 

 case you can always add interest from 

 the day when commercial custom 

 would make the account due, for ex- 

 ample, at the end of thirty days. To 

 illustrate, you sell a customer $500 

 worth of goods on May 1st. He doesn't 

 pay. Custom would make the account 

 Iiayable June 1st, and you can there- 

 fore add interest from June 1st. 

 (.Copyright, May. 1918. by Elton J. 

 Buckley.) 



CAPT. JAMES W. ANDERSON. 



The accompanying cut is from a 

 photograph of Capt. James W. Ander- 

 son. Coast Artillery. U. S. Army, son 

 of Wm. Anderson of Lancaster, Mass. 

 He is stationed at Fort Greble, New- 

 port, R. I. He took the military ex- 

 aminations just before he graduated 

 from the .Massachusetts Institute of 

 Technology, last June, was commis- 

 sioned second lieutenant and sent to 

 the Officers' Training School at 

 Fortress Monroe, Virginia. Last No- 

 vember he was made first lieutenant 

 and sent to Fort Greble. About two 

 weeks ago he was promoted to cap- 

 tain. He is 24 years of age. 



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