-i'i:X- 



20 



The Florists^ Review 



July 13, 19'22 



for one year — and $190 to bp paid as 

 the principal. The second year '^s inter- 

 est is six per cent on the remainder, 

 $810, so that the amount that goes to- 

 ward paying off the principal is so 

 mu<'h larger. Each year the interest is 

 smaller and the amount paid on the 

 principal larger, and the final year of 

 the period the payment which clears 

 the debt is less than the usual $250. 



Under the plan above outlined, the 

 borrower does not face the task of rais- 

 ing a large sum at the expiration of a 

 certain period, but by smaller payments 

 gradually clears the debt. The debtor 

 therefore is not led to trust to the fu- 

 ture, for he must pay as he goes along, 

 step by step. 



Two Ways of Application. 



Bankers in the agricultural districts 

 are making loans in this way, though it 

 is little used in the large cities. The 

 florist who finds he cannot obtain a loan 



of this kind can use the system in an- 

 other way, with the same good results. 

 Instead of making the payments to his 

 creditor, let him make them to a savings 

 bank, in preparation for the diite when 

 the note is due. If he follows the latter 

 plan, the interest he pays will be greater 

 ajul liis final payment larger than other- 

 wise. But, at the same time, the money 

 he places in the bank each year will be 

 drawing interest, so that the additional 

 amount will be reduced that much. 



The value of the plan, no matter how 

 it is applied, lies in the fact that it 

 keeps the borrower from extravagant 

 expenditure in the early years of the pe- 

 riod for which the loan is made and so 

 ])revents him from being compelled to 

 face the necessity of raising a large sum 

 in a short time. It is a way of "play- 

 ing safe" that will bring to more than 

 one the pennant of prosperity and finan- 

 cial ease. 



■■■■■■■i»"»'Vh«"ii'Hi'hi*M»if»ii»ii'Si^iiKi>^ii"J«?^ ?K i'V^i'St'vsi»^^ 



FLORISTS' CREDIT 



AKKKK».KKK»JiJi,JtJiJtJiJ^MtJtJW?^^ 



ESTABLISHING CREDIT. 



A Business of Beauty. 



As a cow man would express it, I am 

 a "coming 1-year-old" in this wonder- 

 ful business called the florists' trade. 

 My life 's work has been devoted to 

 banking and bank credits. I do not 

 claim to know all about banking and 

 certainly no one individual could mas- 

 ter all the salient points of any busi- 

 ness, let alone the florists' trade, within 

 a short space of seven months. You 

 might be led to think I so speak of 

 this business as a wonderful one on 

 account of that well known term, jirof- 

 its, but this is not the case, for I dare 

 s.'iy few flj)rists in America have been 

 iiurdened by the excess profit tax in the 

 last eighteen months. 



1 have been a half brother to this 

 industry for a long, long time. A Vioy- 

 hood chum was a florist; his father he- 

 fore him was a florist, and when the 

 time and conditions became propitious 

 for this jial to go in for himself. I was 

 fortunate enough to l)econie one of his 

 associates. 



From my brief entry into this busi- 

 ness I take the attitude that a florist 

 is one who has built his success upon 

 those great j)sychological emotions of 

 the human lieart and mind. We are 

 dealers in nature's best and most l)eau- 

 tiful i)roductions. We are in constant 

 touch with the heart strings of human 

 life. This should mean that a florist, as 

 a man or woman, be of a high tyjie of 

 citizenship, and as a rule you will find 

 that this is the case. 



The Necessity of Credit. 



How may ;t florist establish Ix'ttcr 

 credit as a borrower.' In the first jilacc, 

 let us get a full understanding of the 

 strict meaning of credit. I'ut in its sim- 

 )ilest terms, credit is an advancement, 

 either of goods or money, such advance- 

 ment being b.ased u])on the supposecl 

 ability of the i)arty to whom advance- 

 ment is maile to make payment for 



I'.iIKT liy Hiisciic Smitli. miinuBcr of the Fnrt 



Wditli ('U'.irinc Hiiusc, Fcirt Worth. Tex., rend 



iit tlie I);ill.is iiicctiii),' of tho 'I'cxiis Stiitc Flo 

 lists' ,\ss(Miiitinn, .Inly 0, 



such goods or money within a certain 

 time. 



Viewed from the bankers' standpoint, 

 there are two elements or two classes 

 of credit — one called the moral risk, 

 the other a secured risk. The moral 

 risk, to my mind, is most vital and 

 important as relates to the florists' 

 trade. When I mention florists' trade, 

 I mean all of the branches of our in- 

 dustry, whether production or selling. 



Ninety per cent of florists at one time 

 or other must have credit of goods or 

 money — money with which to carry on 

 the business, take care of the important 

 items of overhead, such as labor, rent, 

 taxes; and to buy goods with which to 

 stock the shelves. And at times it be- 

 comes necessary to ask for credit to 

 tide over dull periods or periods of de- 

 jiression. 



The Instruments of Credit. 



Since credit deals with an ability to 

 pay, necessarily this means that such 

 an ability to ))ay must largely be judged 

 by i)ast performances. The person who 

 can walk into his bank and sign his 

 name on the dotted line, with no ques- 

 tions asked, is a man who has given 

 due and thoughtful consideration to his 

 obligations, has either paid his paper 

 promptly when due or has, after full 

 explanation, made prompt payment of 

 interest due. 



Banks are most largely used in the 

 ol)taining of credit. Banks, to a great 

 extent, are loaning the other fellow's 

 money. Witli the increasing volumes 

 of trade, with tlie added intricacies 

 caused by the ever multiplying new 

 lines developing, and with restrictions 

 of st.'ite and government being drawn 

 closer and closer, bankers are required 

 to ])lace more safeguards around the 

 funds which they hold as trustees. 

 The moral risk is fast disai)iiearing; 

 tliey now are not only considering the 

 moral ability and desire to p;iy, but are 

 demanding that the borrower give fur- 

 ther evidence of such ability to pay, 

 in case of unforeseen conditions that 

 might arise, and are asking that cot- 

 laterjil security be givet(. 



Ill order to meet this ^condition, we. 



as florists, must get our tlMIBS in order. 

 Any business, whether ir oe manufac- 

 turing, merchandising or farming, is 

 resolved into two elements, assets and 

 liabilities. Credit is based upon the 

 relation of these two elements, and it 

 is upon such relationship that the 

 banker, wholesaler and supply house 

 must be guided in extending the line of 

 credit requested. You well know the 

 meaning of these two terms. 



How many florists have such a sys- 

 tem of accounting that they can at any 

 time, or at certain stated periods, make 

 a complete analysis of the past year's 

 business! In order to teach a dog 

 tricks, you must know more than the 

 dog. In order to intelligently give your 

 banker certain facts, you must be able 

 to know these facts. The average 

 banker is a pretty shrewd human; he 

 must be; and he is as full of questions 

 as a 4-year-old child. 



Let us imagine that you are sitting 

 across the table asking your banker 

 for a loan. After the usual procedure, 

 he has explained how hard times are, 

 how tight the money situation is, and 

 other information he might add. He 

 looks over his "specks" and begins to 

 fire questions at you. 



"What is your annual volume of 

 business? Give your total amount of 

 annual sales. What is your monthly 

 average overhead? Give an itemized 

 statement of your liabilities. What 

 is your percentage of loss in the ex- 

 tension of credit to your customers? 

 Based upon last year 's figures, what do 

 you estimate your earning powers will 

 be for the coming year? In your ex- 

 penditure for advertising are you get- 

 ting results? ^ Are your advertisements 

 given time and thought, or do you give 

 Tom, Dick and Harry advertisements, 

 thinking tliereby that you are making 

 customers and friends?" 



These questions are all pertinent to 

 the banker, even though some of them 

 may seem impertinent to you. 



"What is your invested capital? 

 What is the approximate amount of 

 l)roj)erty owned? What is the condition 

 of your assets? Do you carry a lot of 

 dead stock? Are you familiar with the 

 merchandise as to turn-over? Are you 

 specializing in certain lines? In your 

 organizations are your clerks making 

 and holding customers? Are the goods 

 and the condition in which you put 

 them out giving satisfaction?" 



Summarizing all of these facts, fig- 

 ures and questions into net results, I 

 have reached the conclusion that in or- 

 der for florists to obtain better crpdit 

 as borrowers, they must wake up to"i,he 

 possibilities of the trade; they must 

 have confidence in themselves and pass 

 this confidence on to the banker and to 

 the public. Each must individually 

 study his own problems and adapt to 

 his own needs a system or systems 

 which will give him certain concrete 

 information. 



The Golden Rule. 



I would not attempt to suggest a sys- 

 tem of accounting that would enable a 

 florist to make a complete analysis or 

 audit. There are various and sundry 

 methods, some more adaptable to cer- 

 tain needs and requirements than oth- 

 ers. Tlie basis used by the government 

 in the ascertaining of the income tax 

 due is about as simple a method as can 

 be used. Vet it is comprehensive in its 

 <( oiK-liKli'il on paiti' '21.) 



