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The reader may make his own applications by comparing information under corresponding numbers in the text and in the example given above.

REFERENCES

Beckman, Theodore N. Credits and Collections, Chap. XV.

Bliss, James H. Financial and Operating Ratios in Management, Chaps. VI-XXV.

Greendlinger, Leo. Financial and Business Statements, Chaps. IIIXVII. New York, Alex. Hamilton Inst., 1917.

Wall, Alexander. Analytical Credits, Chaps. VIII-XIII. Indianapolis, Bobbs-Merrill Co., 1921.

Part III.-The Credit Department

CHAPTER XIV

PERSONNEL IN THE CREDIT RELATIONSHIP

The Place of the Credit Man in the Organization. The real credit man is the physician of business. He must keep in constant touch with his clients, or patients, to be sure of the condition of their financial health. He must know what are the necessary facts to be ascertained, and where and how to get them. He must then analyze the case. He must know where and how to look for symptoms of disease. When the facts have been gathered, and the case diagnosed, he must record those facts and his conclusions for future reference. If the symptoms he discovers on a risk he has assumed, later develop seriously, he will be called upon to prescribe a remedy. He must often help nurse his patient, the debtor. He may sometimes have to assist at a financial funeral when he happens to diagnose or prescribe improperly, or when he has tackled a hopeless case.

A credit man must be thoroughly honest; he must be fair in his dealings with every one; he must be sympathetic with the customer in his problems and with the firm in protecting their interests; he must be human, and have a good understanding of human nature; he must be tactful; he must have a good memory; he must have courage to do unpleasant and embarrassing things, when necessary; he must be dignified, yet pleasant and agreeable; and he should be a man-in all that the word implies. Some pretty good qualities are required,true-but a good credit man finds in the opportunities for service and helpfulness to others, the zest for his daily en

deavors. To measure up to these opportunities requires ability built upon qualities such as just described. It may be apparent that some of these qualities might often be lacking. But they are qualities none the less essential to real success in this line, and should therefore, if possible, be acquired. How acquire them? "Know thyself!" The student of credit management should analyze himself, find out his shortcomings, and then set about remedying them.

The modern business office finds the credit man head of a department or an officer in the corporation. Often times the credit manager has become the secretary or the treasurer of the company. Such a situation has not always existed. Before the time of the Civil War most business organizations were small and most business was done on a personal basis. The proprietor himself knew his customers personally and made decisions as to credit. With the development of transportation, trade areas for individual merchants increased in size, and the salesmen of the house were the only ones who knew the customer. Then the number of accounts increased so rapidly that the proprietor, in spite of all his misgivings, had to transfer this important duty of credit to someone else, often to the bookkeeper. Whoever was chosen, however, was still expected to depend on the head of the house for counsel. The continued growth of the business, however, demanded further division in many instances, and thus at last the accounting and credit divisions were set up and the modern credit manager came into existence.

Responsibility of the Credit Manager. The place of the credit man varies with the personnel and the tradition of each organization. He should be the deciding personage on credit questions. Occasionally his judgment will differ from that of the head of the institution; and in these cases the credit man can only put himself on record as having recommended

a certain line of action, and then follow instructions. It is natural in such instances for the credit man to feel that a lack of confidence is placed in him. Instead of feeling, however, that he has reached an unalterable situation, the credit man must seek to ascertain the basic reasons for lack of confidence in his decisions and endeavor constantly to build within the organization the sense of his ability and the real merit of his judgment. The establishment of credit policy is certainly a function of management and should be decided after consideration by all members of the firm, but once established, the administration of that policy ought to be left to the credit manager. It has been said that the credit man is the "safety brake in the credit machine"; naturally when the brakes are applied friction develops.

Functions Performed. The discussion of the place of the credit man in the organization has indicated in a broad way his functions. The true credit man never divorces himself from the dominant necessity under which all competitive business is transacted—the making of profits. Sales make profits possible and so the credit man must be stirred by the thrills of a successful sales promotion executive. Credit supervision must mean, not the limitation of sales, but the selection of buyers. Thus we may classify the functions of a credit man under three heads: (1) the promotion of sales, (2) the scientific selection of buyers, (3) and the training of the selected buyers in proper payment methods.

(1) Promotion of Sales.-The various duties performed in the fulfillment of these functions vary, of course, with the type of business; but in general, the function of the credit man in the promotion of sales consists of: (a) welcoming customers, and (b) making acceptable presentation of the firm's merchandising policy. Psychologically, first impres

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