tion to pay on a certain date, other than a sort of general understanding on the part of the buyer of what the terms of the seller may be. Often a credit man must approve or reject such an order on very short notice, and has but a limited time to investigate the buyer's standing, and seldom has the opportunity of analyzing a buyer's personal characteristics from personal contact, an advantage, for instance, which a banker often has.

Notwithstanding these facts, it is not the function of a credit man to undertake to be a prophet or take a chance on some buyer. The function of a prophet is to determine a future probable event without having any known factors to guide him-a sort of mystic science. The function of a credit man is to determine a future probable event (that is, whether the buyer can and will pay on the day agreed upon) in a commercial transaction, based upon present KNOWN factorsan exact science.

The great difficulty is the tendency to attempt to determine this probable future commercial event without having all the present known factors as a guide; or by using as a guide information that has not been verified, and this is very frequently the cause of unusual and unnecessary losses that could have been avoided if the credit man had sufficiently investigated the facts; or if the credit man had so developed the other component parts of the organization with which he is connected to obtain these facts.

In the proper exercise of his duties the credit man can improve the business of his employers by constructive methods; he can guide the salesmen of the company by analyzing territorial conditions; he can give the salesman a list of good concerns in the community that the salesman intends to visit, instead of allowing the salesman to form his own conclusions in that regard. Many salesmen lack sufficient training in financial matters and often seek to establish an agency based wholly upon the physical appearance of the store and the look of prosperity of the prospective customer. Sometimes the best looking store in a community, the building and fixtures of which represent substantially all the capital of the concern, is on the verge of bankruptcy. Frequently the physical look of prosperity is due to overexpansion and overbuying, and in addition to the money invested in the building, the balance of their capital may be tied up in slow-moving assets. It is not, however, unusual for a salesman to rely largely upon the physical appearance of the prosperous looking individual and the prosperous looking establishment which he conducts, and usually when making an agency with this concern considers that he has made a desirable agency and is very much exercised if the credit man later rejects the order. In the same town there may be, and probably are, one or two other concerns whose business establishments are not so pretentious and whose more modest owners are somewhat

less prosperous looking, but who are doing a good, conservative business, and who are paying their bills promptly and are in good credit standing.

Therefore, one of the functions of the credit man of an institution employing traveling salesmen is to properly guide the salesman starting out on the territory by giving him a list of desirable credit risks in each of the towns he will visit on his trip, in order that money will not be uselessly wasted in obtaining undesirable orders and in order that closer harmony may be established between the sales and financial organizations. This list can be readily compiled by reference to Dun's or Bradstreet's rating books.

The functions of the retail credit man present a somewhat different aspect. His clients are frequently prosperous looking but are poor credit risks. For instance, in clothing or dry goods establishments the moral risk is a large factor, and it is very rarely that a loss occurs in this class of trade if the moral hazard is good and the seeker of credit is living within his means, is progressive, enjoys a good standing and is in an established position. Much tact, however, is required in the handling of individuals; a credit limit is usually established on each account, so that an assistant may pass on orders as they come in from time to time from the various departments. The co-operation of the department managers and bookkeeping and collections departments is very necessary to enable the credit man to properly

exercise his function in this respect. A newcomer's antecedents should be investigated very carefully. If possible, the reason for a newcomer having changed from his previous location should always be determined, as this will give a clue as to some of the general characteristics of the applicant. A man who moves around the country without any definite purpose in view, leaving unpaid bills stringing along behind him wherever he goes, is, of course, not entitled to credit and an investigation of antecedents can and usually will disclose these facts.

To watch credits and collect money is not sufficient. A credit man can actually become an important adjunct of the selling organization by increasing saleswithout any expense he can be a large factor in getting repeat orders. A credit man can make more customers pay up, and then quit purchasing, more surely than any other man in the organization; but systematic, tactful, diplomatic letters of the proper spirit will develop into good salesmen and probable order getters and good collectors as well.

It is profitable for a credit man and for his house to assist in building up and expanding the business of customers by advice and help. If a customer of yours gets behind in his payments an analysis of the reason for this condition can be made by a study of the financial statement of the customer. If the customer is overstocked, suggestions can be made for moving the stock by proper

sales campaigns; if too much money is outstanding, accounts can be realized on by suggesting to the customer the methods of conducting a collection campaign; if the business has fallen off and expenses are out of proportion to volume, suggestions can be made for cutting expenses. Advice covering whatever may be necessary for your customer to do to put his operations on the right side of the ledger will not only enable that customer to pay his obligation to you, but you will be more than repaid in the future business you will secure from one who has profited by your advice.

It requires an analysis of each particular case to know what suggestions of value can be made to the customer, but if you get the confidence of your debtors so that they are frank with you and will come to you and tell you their troubles, or write them to you, much misunderstanding and difficulty will be avoided, and that harmony and goodfellowship in business will be established that is profitable to both buyer and seller.

If statements are made by seekers of credit that cannot be verified, credit should be refused. If a man makes an unqualified statement that he owns a certain piece of real estate and investigation discloses that it stands in the name of his wife, credit should be refused unless the wife guarantees payment or joins in the obligation with her husband.

Many organizations, particularly the local associations of the National Association of Credit Men, main