Cash Or Credit - What Is The Real Question?
( Originally Published 1912 )
The real question for every retail store to answer is not "Shall I do a cash business, or a credit business?" The real question is, "How can I handle both my credit and my cash business in the most profit-able manner?" That is, "How can I handle my cash business so quickly and accurately that a constantly increasing number of people will want to trade at my store, while I will not be subject to serious losses through dishonesty or carelessness in handling cash, or for any other reason? How can I also handle my charge customers so that the long time credits will be cut out, I will have but a small percentage of `slow pay' and practically no `no pay' customers?" This is the real problem. The following is the way in which this problem is being successfully solved.
Handling Cash Trade
The cash trade is handled by the use of the cash sales book, requiring each employee to make an ac-curate definite record of every transaction, putting that sales check on file, so that you—the merchant—will know exactly what is being done in your store. Just as sure as the sales person begins to get care-less about writing out the sales check for a cash sale, that is your signal to be on your guard. Carelessness breeds irresponsibility; irresponsibility breeds dishonesty. It isn't any use to mince words or save "tender feelings" in a matter of this kind.
This does not, however, infer, or even suggest that all sales people or your sales people are dishonest. It merely says, and says it plainly and distinctly, that in modern business dealings the clerk who de-sires to keep his own record absolutely clean will for his own protection write down a record of each transaction in which he takes part.
Handling Credit Trade
The credit trade is handled in such a way that an accurate record is made of each sale at the time the sale is made—memory is not trusted—forgotten charges are too dangerous and prevalent a source of loss under the old "day-book-ledger" method. A record of each customer's account should be where the merchant can see it at a glance without hunting for it. This is best accomplished by the Systemat, a unique method of filing sales checks in such a way what the name of each customer and the total amount of her purchases since last payment are always visible to the proprietor, but not to the customer. This "Short Credit" system gives the proprietor complete, accurate, instant information about each customer's account, each transaction of every kind, each day's total business, and the total sales for each week, month and year, and shows him whether they are credit or cash, how much and when each customer is in the habit of paying and whether each customer's purchases are running smaller or larger than usual.
All Arguments, Both Sides
No retailer should depend on "hearsay" in settling any question. He should get all of the arguments in favor of doing business for cash only; he should also get all of the arguments against doing business for cash only. Then he should get all of the arguments in favor of doing a credit business and all of the arguments against doing a credit business.
In this way when he understands all sides of these two questions he can then come to a decision that will be sound and permanent—a decision that may prove to mean the difference between success and failure. The above facts are presented in the hope and with the firm belief that they will contribute materially to a better understanding of the real nature of the "Cash or Credit" controversy.