the approval of the credit manager. Credit information should be kept alive by revisions and additions as facts are gathered. Credit files should be reviewed and brought up to date once or twice annually. With such a system, the question of passing orders becomes a matter of routine and can be successfully handled by assistants, except in questionable cases. Cooperating with the Order Department.-While the foregoing work is being done by the credit department, the order department (see Figure 28) has checked orders as to prices, quantities, materials, etc., and has prepared filling orders on the company's form in triplicate, one copy for the order filling or shipping department, one for the bookkeeping department and one for the traffic department. All these are sent to the credit department for approval or rejection. The Evans Packing Company's order is among these orders, and, when the assistant who attends to this work (see Figure 23) receives this the credit investigation has sufficienty progressed to permit the approval of this order. After approval one copy of the orders is sent to each of the departments above indicated. But among the orders may be some that cannot be approved. These are referred to the credit manager for attention. When an order is held up, because credit limit has been reached, because the account shows overdue payments, or for any other reason, the selling and order departments should be immediately notified. By doing this the selling department can cooperate with the credit department in bringing about conditions that will make possible the approval and shipment of the order, and the order department has an opportunity to make necessary adjustment in its schedule of shipments for the shipping or manufacturing departments. The form shown in Figure 33 below is used in notifying these departments of orders held. These orders are placed in a separate file and a weekly report is made to the credit manager showing a list of such orders, the reasons, and the progress being made toward approval or final rejection. After matters have been adjusted As soon as this has been adjusted you will be notified. CREDIT DEPARTMENT Per...... Our reason given above is strictly confidential and is for your information only. Our reason given above is strictly confidential and is for your information only. Figure 34. Notification of Order Released or Rejected to permit passing such orders, the selling and order departments should again be notified that they may be informed of action taken. For this purpose, form shown in Figure 34 is used. It will be observed that this system provides a means of placing at the disposal of everyone whose duty it may be to approve orders, all the information available on a customer. If the credit man obtains information and impressions by way of personal interviews, telephone conversations, conferences with other credit men, etc., a record should be made so that others may have the benefit of this knowledge when called upon in his absence to deal with a customer. It is often necessary for a credit manager to be away from the office. By making a memorandum of such information and impressions and passing it to a typist, it can very readily be made a part of the customer's record in the credit file and thus prevent mistakes. A credit department organization and system should be efficient enough to permit the credit manager to leave the office at any time and still adequately take care of anything that may come up in the ordinary routine of business. Miscellaneous Duties of the Credit Manager.-On this subject of procedure, let us take another look at the credit manager's desk. Let us assume that he has distributed all routine matters to his assistants and clerks; he will still have a number of things requiring his personal attention that will keep his time quite well occupied. Among such items will be found protested and improperly drawn checks, notes to be accepted or rejected, requests for special terms and extensions on accounts, stubborn cases where credit information is not readily available, revision of terms and credit limits to old customers, personal interviews, attending creditors' meetings and assisting in prosecuting fraudulent cases, attending trade group meetings, giving personal assistance to customers in difficulty, attending credit men's meetings, travelling over his territory or visiting branch offices, directing collection of troublesome accounts, making adjustments of stubborn cases, rendering reports to, and conferring with, officers of his com pany, cooperating with sales department on new business and increasing lines to old customers, keeping abreast of the times through reports, statistics, journals, periodicals, etc., on all matters of general interest bearing on credit and economic conditions, beside answering the many questions of departmental employees that come up in the ordinary routine. A credit man, if he puts his heart into his work and properly equips himself and his department, can make himself one of the most valuable men in an organization. REFERENCES Hallman, J. W. Organizing the Credit Department, Chaps. II-III. New York, Ronald Press Co., 1924. Kavanaugh, Thomas J. Bank Credit Methods and Practice, Chap. XI. New York, Bankers Pub. Co., 1921. Walter, Frederick W. The Retail Charge Account, Chaps. XI-XII. New York, Ronald Press Co., 1922. CHAPTER XVII ANALYZING THE RESULTS OF CREDIT Factors in Credit Department Efficiency.-A credit department may rightfully be considered an asset to any business house doing a credit business, if its acceptance of good business approaches the possible maximum amount of bona fide business secured by salesmen, with a small loss in bad debts; if it causes a minimum loss of customers in handling the accounts; and if it operates at a low rate of expense to the business. A credit department should be considered a liability, if: it fails to accept the proper amount of business safely possible to accept; if it has an excessive bad debt loss; or causes the loss of customers through improper methods; or if it operates at too great a cost to the business. Briefly stated, those are the determining factors of whether a credit department is an asset or a liability to any business. But this naturally raises some interesting questions, namely: 1. What constitutes the maximum amount of business that shall be accepted? 2. What is the minimum, or proper, bad debt loss? 3. What is a minimum loss of customers by the credit department? 4. What should it cost to operate a credit department? Maximum Amount of Business to be Accepted. In any line of endeavor there is a potential field or market, developed or capable of being developed, for that particular commodity or service. That field or market constitutes a potential unit. of 100. If there are ten competitors doing business in that |