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CUTTING DOWN 



CREDIT LOSSES I 



pntrn rgj^nni ^ Persistence and much pains have enabled some retail florists to cut 



MJiL. down the accounts past due and the losses from had debts to fioitrcs that 



may be regarded as reasonable. The many ivho have not will find in this 

 article guidance how to follow their example. 



yt illirillfff 



ULLY as important a mat- 

 tor as selling the flowers 

 is collecting the money for 

 them. The total of sales 

 made during the course of 

 a year is not so consequen- 

 tial as the money actually 

 received. The bills pay- 

 able cannot be met with 

 accounts on the books, nor 

 can profits be paid out of money that is 

 still due. To the florist the matter of 

 credit and collections is of high impor- 

 tance because the nature of tlie business 

 demands that accounts be carried for a 

 large proportion of his customers. The 

 percentage varies with the 

 class of trade to which he 

 caters and the location ot 

 his shop. Few florists who 

 have shops do less than 

 fifty per cent of their 

 business on credit. The 

 "cash and carry" idea 

 has not spread to this line 

 of business, save as it is 

 exemplified in the street 

 peddlers and corner flower 

 stands. 



the florist's wishes and Judgment, it 

 follows that the success of his business 

 depends in good measure upon the dis- 

 cretion he exercises. To grant credit 

 to Tom, Dick and Harry is courting 

 disaster. On the other hand, to refuse 

 credit altogether is seriously restricting 

 one's business in volume and in charac- 

 ter. The middle course to be pursued 

 calls for the exercise of a ])olicv that 

 ie(iuires some elasticity. 



Basis of Credit. 



Some florists, though not a great 

 many, exact references or a credit rat- 

 ing before they extend credit to a cus- 



How Much Credit? 



The largest cash ami 

 smallest credit business, 

 of course, is done by the 

 "popular" florist in a 

 busy downtown district, 

 depending upon shoppers 

 and other transient trade. 



From this extreme, on 

 the one liand, the jH'rcent- 

 age of credit business 

 rises to the higli-water 

 mark in the case of th(> 

 residential neighborhood 

 florist, particularly if- he 

 be in an esjiecially elite 

 and expensive section. Such a 

 does as high as ' eighty-five or 

 ninety per cent of his business 

 credit basis. 



The percentage of credit to 

 business, however, is not so important 

 as the percentage tliat is collected. One 

 may safely do ninety per cent of his 

 business on a credit basis if he collects 

 his money and collects it promptly. So 

 the real questions are how credit is ex- 

 tended and how collections are treated. 



A charge account, if one wishes to call 

 it so, is not an inherent right or privi- 

 lege of a customer. It is a convenience, 

 a favor indeed, conferred by the florist. 

 This is a point many florists overlook 

 and they are the ones who have most 

 diflSculty in collecting their money. 

 Since such an account is something to 

 be granted, or not, in accordance with 



If we will try— 



"The whole trouble in the credit sit- 

 uation," says a prominent retailer, "is that 

 florins are usually too busy to give proper 

 attention to credits and collections. We 

 can educate the buying public to certain 

 methods so that they will come to our 

 terms ju^ as well as we can let accounts 

 slide along for months and become al- 

 mo^ uncoUedlable." 



as ''bad debts'' at the end of the year. 

 The business man of today expects to 

 receive payment on a nu)nthly state- 

 ment within a reasonable length of 

 time after it is due. Some houses still 

 print, "2% ten days, net thirty days," 

 im])lying that they expect payment be- 

 fore a month has elapsed and will give 

 a slight discount for prompt remittance. 

 But the idea that a house should make 

 a coiu'cssion in order to obtain ])rompt 

 jiayment of what is due is considered 

 unsound l»y credit men, though it is by 

 no means obsolete — far from it. A 

 business man should expect payment 

 within a reasonable time. What "rea- 

 sonal)le" means depends 

 upon his line of business 

 and \i\nn\ the location of 

 his customers. One who 

 has a local retail trade 

 exjtects payment by the 

 fifteenth, or possibly the 

 twentieth of the month. 

 Tsually", in the florist's 

 case, two-thirds to three- 

 fourths of the customers 

 pay by one of these dates. 

 The rest keej) the ' ' col- 

 lection department" t)Usy. 



Ba4 Debts. 



Ibirist 

 oven 

 on a 



total 



touu'r. 



ilepeiK 

 trade. 



Tlic necessity for sucli a ruU 

 < upon the character of one's 

 The llorist in a shopping, hotel, 

 resort or apartnu'iit distrii-t must not be 

 too liberal in granting credit to those 

 who buy of liiin. The florist in a resi- 

 dential district, particularly if it be one 

 that is well established and of a superior 

 character, takes fewer chances if he is 

 lenient in allowing customers to open 

 accounts. He deyiends more on jtersonal 

 .judgment, which in all cases must 

 transcend rating lists, credit guides 

 and references, in order to insure a suc- 

 cessful business policy. 



Of these accounts on 

 which the "collection de- 

 [lartnu'nt'' must work, 

 sonu' must be marked off 

 at the end of the year as 

 a loss. No credit business 

 can be done without such 

 loss, for a florist cannot 

 restrict himself to "gilt- 

 eilged'' c\istomers. He 

 would not do nuich busi- 

 ness if he so limited him- 

 self. And sometimes un- 

 foreseen things happen to 



Prompt Payment. 



Whether one is jiursuing such a iiolicy 

 can be told from an examination of the 

 accounts due and the percentage of 

 one's business which is charged off 



le t'\-en tiic ''gilt-edged'' ones. But the 

 losses from uiu'ollectable a<-counts can 

 be ke])t to a low figure by wise discrc 

 tion in extojiding credit and l)y con- 

 stant effort to collect overdue .-iccounts. 

 Investigation showed one florist re- 

 ported having charged ofi" as little as 

 one-sixth of one per cent of his total 

 sales for bad debts in a recent yoai', a 

 remarkably good recoril. One re[)orts 

 last year charging off one ])er cent of 

 his total credit business, the equivalent 

 of three-fourths of one per cent of his 

 total sales, since seventy-five jier cent 

 of his business is done on credit. An- 

 other reports four-tenths of one per cent 

 of his total sales charged oft" as bad 

 •lobts last year. Still another thinks 

 his losses are less tlian one-half of one 

 per cent of his total credit sales for the 

 year. These are florists doing a good- 



