contracts. If it is desirable for the collector to carry the contract,
a third copy should be made for that purpose. Original contracts should
be kept in a fire-proof safe, and should be filed in numerical order.
The most convenient file is a document file, in which contracts can be
filed folded.
=Collector's Card.= The most convenient method of handling collections
is to supply the collector with cards as shown in Fig. 27. On the face
of this card is a record of particulars, similar to that shown on the
outside of the contract, while the reverse is ruled for a record of
payments.
Since all contracts call for payments on certain days of the week or
month, it is very necessary that the collection cards be brought to
notice on the collection days. A simple method of providing for this is
to use a card file equipped with a set of thirty-one numbered guides
to represent the days of the month, or a set of guides printed with
the days of the week. The cards are filed back of the guides which
represent the collection days.
It is customary to divide the city into sections, assigning a collector
to each section, the number depending on the size of the city and the
number of accounts. It is necessary to use as many files as there are
collectors, with an office file added for those who prefer to pay at
the office.
Every morning each collector is given the cards on his route, on which
payments are due. On his return, he turns in all cards to the cashier
with the amount collected. If a back call is necessary, the card is
filed ahead a day or two.
The cards in the office file are placed on the cashier's desk each
morning and payments are recorded as made. Those on which no payments
are recorded are kept on the desk, and after a reasonable time are
given to a collector to follow up.
When payments have been recorded in the cash book, all cards are again
placed in the files under the next collection dates. They are then
ready for the collectors.
[Illustration: Fig. 28. Receipt for Installment Collections]
=Collector's Receipt.= Some method is, of course, necessary for
checking up the collectors, and to insure the turning in of all money
collected. A very satisfactory plan has been devised by the cashier
of a western music house, in the form of a duplicate receipt as shown
in Fig. 28. These receipts are bound in book form and numbered in
duplicate, the original being perforated.
The receipt is especially convenient for the customer, as it shows
exactly how the payment is to be credited. For the same reason, it
is equally convenient for the cashier. All of the numbered receipts
must be accounted for; if one is spoiled, it must be turned in, which
provides an effective check on the collector.
=Mail-Order Installment Collections.= An increasing volume of
installment business is now done by mail. An established principle of
the mail-order business is that customers must be given an opportunity
to inspect the goods before they can be expected to make a binding
contract for their purchases. Beginners in the mail-order field are
quite likely to look on this as an impractical plan, fearing the loss
of goods, but experience soon teaches them that it is the only plan on
which the business can be successfully conducted.
When experienced mail-order men, with the courage to try out a new
idea, experimented on the plan of allowing customers to return goods,
they found that the more liberal the offer, the more business they did.
This led to the giving of an absolute guaranty, offering to ship goods
on approval with the privilege of return for any reason within certain
time limits.
As the fear of loss of goods became less pronounced, it was argued that
more liberal terms of payment could be granted with safety--if goods
could be sold successfully on the installment plan to local customers,
why not by mail? A trial proved the plan to be practical, and now many
articles are sold by mail on the installment or easy payment plan.
Goods are even shipped without an advance payment, either the goods or
the first payment to be returned within a certain time limit.
In selling goods by mail on the installment plan, it is necessary
to secure a binding order, in which the customer agrees to return
the goods within a certain number of days, or make the payments as
specified, with an agreement that title to the goods shall be held by
the seller until all payments have been made according to contract.
The contract must also give the seller the right to recall the goods
whenever the customer shall fail to make a single payment as agreed.
The success of the mail-order installment business depends largely on
the manner in which collections are handled. Not having the advantage
of personal contact with the customer, the collector is obliged to
depend on the knowledge of the man which he gains from references and
the correspondence of the customer. But the shrewd collector soon
learns to read his man from the general tone of the correspondence,
and sometimes from the absence of communications from the debtor. When
he has learned the character of the man, he can handle each account
independently; until then, he is obliged to follow the same line of
action in all cases, depending on the law of averages to prove the
correctness of his theories.
[Illustration: Fig. 29. Loose-Leaf Ledger for Mail-Order Collections]
Too great emphasis cannot be placed on the importance of studying the
character of the man. It is only by paying special attention to this
point that the collector can learn to treat each account individually.
In the first place, the class of goods sold largely governs the
class of customers from a credit standpoint. The men who buy sets of
business books are, as a rule, safe credit risks. Their training and
environment have a tendency to teach them the importance of fulfilling
an obligation; appreciating the necessity of maintaining their credit
standing, they will make every effort to carry out the terms of the
contract, or give a valid reason for asking an extension of time.
Illustrating the opposite extreme is the class who will sign a contract
for the purchase of a cheap musical instrument, at a high price, to
gratify a desire to outdo a neighbor, without regard to their ability
to make the payments as agreed. Such people trust to luck, and expect
to pay in promises if they do not happen to have the money. For this
reason, the percentage of profit that must be added to cover the cost
of collection increases, as the quality of the goods and the standard
of the credit risk decrease.
=The Account.= Accounts with mail-order installment buyers are handled
in a similar manner to those of local buyers. All contracts should be
numbered as received, and registered in numerical sequence. The form of
register already shown answers the purpose very nicely.
[Illustration: Fig. 30. Mail-Order Collection Card]
After registering, the particulars of the contract should be entered in
the ledger. A form of ledger sheet used by a publishing house is shown
in Fig. 29. This is loose-leaf, and does not differ in form from the
ordinary balance ledger, except in the particulars given at the head
of the sheet. Here is shown the name and both residence and business
address of the customer, number of contract, monthly payment and due
date, references, source of order, price and name of books, and date of
shipment. These sheets are filed in post binders, five-hundred sheets
to the binder, and indexed alphabetically.
The next step is to enter the contract on a collection card. A
satisfactory form is shown in Fig. 30. This is a card 4×6 inches in
size, and is practically a duplicate of the ledger sheet. The card is
filed in a chronological file under the due date--that is, if payments
are due on the 24th of the month the card is filed under that date.
Except when removed from the file for the use of the collector, or to
enter payments, the card is always filed under the same date. If it
becomes necessary to have an account brought to notice on other than
the regular collection dates, a memo is made on a separate card and
filed in a special tickler.
Should it become necessary to refer to a card on other than
the regular collection dates, reference to the ledger--indexed
alphabetically--gives the due date, by which it is quickly located.
Sometimes, however, it is desirable to refer to all contracts in a
given territory. To make this possible, a card file with indexes
printed with the names of states and cities is provided. For each
contract a plain 3-×5-inch index card is used, the name, address, and
contract number only, being entered. This provides a complete set of
indexes--alphabetical in the ledger; numerical in the register; by due
dates in the collection file; geographical in the card file.
When a payment is received, it is entered in the cash book and posted
to both the ledger and the collection card. Every card must be located
at the time payments are entered in the ledger, or the customer will
very likely receive notices after he has made the payment.
=The Collection Follow-Up.= The promptness of the follow-up on this
class of collections is of the greatest importance--the debtor should
not be given the excuse that he failed to receive a notice. Though not
provided for in the contract, the debtor expects a notice of every
payment due.
When the goods are shipped, a formal notice of shipment should be
mailed, and if the first payment has not been made, it should be
requested. In ten days, or after the approval time limit has expired, a
second notice should be mailed, provided no payment has been received.
This can be a formal notice, and should assume that the goods are
entirely satisfactory, and at the same time calling attention to the
fact that the first payment is past due. If this does not bring a
remittance within ten days, it is well to send a draft notice. This
notice should go into the conditions of the contract in some detail,
and, without assuming a threatening attitude, it should assume that if
payment is not received within five days it is the desire of the debtor
that a draft be made. Either the notice or the draft will usually bring
the first payment, or the return of the goods.
[Illustration: Fig. 31. Attorney's Collection Register]
Each month, a formal statement showing the exact condition of the
account should be mailed a few days before the due date. It is well,
on this statement, to make an offer of a discount for cash to pay the
account in full. A discount of 5% on an account that has several months
to run will often be accepted, and is profitable to both parties. This
statement should be followed in ten days by a second notice, also of a
formal nature.
All notices up to this point may be printed, but further requests
should be in the form of letters. Except when it has been found that
an account should be handled in a special manner, form letters will
be found most satisfactory. The letters should start out mild in tone
increasing in insistence as the series is extended.
When persuasion fails, the debtor should be notified that the account
is being placed in the hands of an attorney, or a collection agency.
But before suit is actually started, it is well to investigate the
probability of collecting a judgment. If a man is judgment proof, it
is much better to take the necessary steps to secure the return of the
goods. This is usually accomplished by requesting the express company
to call on the debtor for the package.
Every debtor has his vulnerable point; if that point is reached, the
money can be collected. The most successful collector is the one who
finds that point in the largest number of cases.
=Collections by Attorneys.= The handling of collections constitutes an
important part of the practice of many attorneys. It would naturally be
supposed that attorneys handling collections for their clients would
have an efficient system of records, but unfortunately this is not the
rule. Except in offices handling a large number of claims the methods
are very lax--there is an entire absence of a system that will reveal
the exact status of every claim. And yet to install a system that will
give just the information desired is very simple, and the operation
requires less labor than to handle the claims in a haphazard way.
[Illustration: Fig. 32. Attorney's Collection Card]
When a claim is received by an attorney, it should be given a
number, and registered in numerical order. The register should be a
book--either loose-leaf or bound--with headings for the date received,
names of debtor and creditor, amount of claim, amount collected, fees,
amount remitted, and date remitted or returned, as shown in Fig. 31.
This is not intended as a complete history of the claim, but merely as
a permanent record.
The papers in each claim should be placed in a folder. The old method
was to use a manila jacket or document envelope, to be filed in a
document file. The objectionable feature of this method is that the
papers must be unfolded for reference. A better plan is to use a
correspondence folder, such as is used in the vertical file, in which
the papers can be kept flat.
Whatever style of folder is used, all papers should be fastened--either
pasted, or by means of a paper fastener. On the outside of the folder
should be written the names of debtor and creditor, and the number
of the claim. The balance of the space on the folder can be used for
recording special information about the claim from time to time. These
claim folders should be filed numerically, according to claim numbers.
[Illustration: Fig. 33. Back of Attorney's Collection Card]
For a convenient record for daily reference, giving a brief history of
the claim, a card is found very satisfactory. The folders are somewhat
bulky and inconvenient for quick reference, and, except in special
cases, it is not necessary to refer to all of the papers. Brief notes,
which can be made on a card, will answer every purpose.
A convenient record form is shown in Fig. 32, which is printed on a
card 4×6 inches in size. This gives the particulars of the receipt of
the claim, the amount, date, and number, with a record of collections,
fees, and remittances. A card is made for each claim, and filed
alphabetically under the name of the debtor. The reverse of the card
is printed as shown in Fig. 33. This shows the different steps taken to
enforce collection.
The card file provides an index to all debtors against whom claims
are on file, while both the register and the file of folders provide
numerical indexes. But it is the creditor who is the client of the
attorney, and it is very necessary that he be in a position to refer
to or report on all claims received from any client. This necessitates
another index to creditors, which is provided for in the card form
shown in Fig. 34.
[Illustration: Fig. 34. Index to Creditors for Attorney]
The card is headed with the name and address of the creditor,
below which is a list of all claims filed by him. When a claim is
returned--paid or unpaid--the date is entered on this card, so that the
record shows only unpaid claims. These cards are filed alphabetically,
under the names of the creditors.
A follow-up of the claims is provided by a plain index card on which is
written the name of the debtor and number of the claim. This card is
filed in a tickler, under the date on which it is desired to follow up
the claim. This serves as a memorandum only, all records being made on
the claim card or the folder.
[Illustration: A SCENE IN ONE OF CHICAGO'S BUSY FREIGHT YARDS, SHOWING
AN OUTBOUND FREIGHT HOUSE]
THE SHIPPING DEPARTMENT
INTRODUCTION
The average manager of a business has but a rudimentary knowledge of
traffic affairs as they relate to the shipment of his goods. He does
not know that he is receiving the lowest rates to which he is entitled,
or that the most favorable classification is applied to his shipments.
A large percentage--probably a majority--of the concerns which do
any considerable amount of shipping, or receive a large quantity of
freight, lose annually in overcharges, due to improper classifications,
defective packing, and a general lack of knowledge of the subject, a
much larger sum than would be required to pay the salary of a competent
traffic manager. There are so many intricate details to be considered
in the shipping problem, that the subject requires special study, and
shippers whose volume of business is even moderate find it profitable
to employ a traffic manager.
Not every shipper is doing a business of sufficient volume to warrant
the employment of a man to devote his entire time to this question,
but, in the organization of every business doing even a small amount
of shipping, there should be one man who will make a study of traffic
matters. He need not have an intimate knowledge of the entire subject
of traffic affairs, but he should be posted on all questions that have
a bearing on the shipment of the goods of his house. When no regular
traffic manager is employed, the duties of the position fall on the
shipping clerk; he is the logical man to make a study of the subject.
Considered from the standpoint of his knowledge of shipping
requirements, classifications, manner of packing, and the application
of special rates, a man who has had experience in the freight
department of a railroad makes the most successful traffic manager.
Such a man may not be fitted to organize and handle the work of the
shipping department but, in a concern large enough to require the
services of a traffic manager, there will be work enough to warrant the
employment of an assistant to look after this branch of the work.
THE SHIPPING CLERK
In this discussion of the organization of the shipping department, the
shipping clerk will be considered as assuming the duties of traffic
manager, as well as those that usually pertain to his position. He will
be at the head and have full charge of the department, keeping such
records as may be called for by the business.
It is the duty of the shipping clerk to see that all goods are shipped
promptly, packed and described to secure the most favorable rates, and
properly routed. He must have a checking system that will enable him
to locate errors and to know that all goods called for by an order
have been shipped. He will be assisted by such packers, checkers, and
porters as may be required to handle the work.
The packers will receive the goods called for by an order from the
stock men, and will pack them properly. They will check all goods
packed against the order. In this, they will be assisted by checkers,
who check the goods received on the shipping floor and again when
they are packed. Discrepancies must be reported at once and adjusted
immediately.
In some concerns, the shipping clerk is also the stock clerk, in which
case he has charge of the actual filling of the orders. He is assisted
by stock men, who select the goods and assemble the orders under his
direction.
Like the head of any other department, the shipping clerk should have
full control of his department. No other person in the organization
should be permitted to make shipments. Concerns have been found in
which it was the custom for different employes to ship small articles
without the knowledge of the shipping clerk. Invariably, this leads
to mistakes and results in blame being wrongfully placed on the
shoulders of the shipping clerk. And even greater damage is done in the
disruption of the organization.
=Information Required.= The shipping clerk should be fully informed on
all traffic questions that affect the shipment of the goods of his
house. Of first importance is a knowledge of classifications, that he
may know that his shipments are placed in the lowest classification to
which they are entitled. Copies of the classifications can be obtained
from any local freight office.
In this country there are three principal classifications, these being
the _official_, governing the eastern territory; _western_, governing
western territory; _southern_, governing southern territory. There are
also a few special classifications governing classifications in certain
states. While some attempt at uniform classification has been made, the
several classifications show many variations, the same article taking
different classifications in different territories.
When classifications are received, they must be carefully studied
by the shipping clerk that he may really understand to what
classifications his goods are entitled. It might be supposed that
a certain article or class of goods would always take the same
classification, but this is not the case; other questions than the name
have a bearing on the question.
The manner of packing goods very often determines the classification.
Certain articles are placed in a lower classification if boxed than
they would be if crated. This is specially true of goods that are
liable to damage in transit. Many shippers make a practice of crating
goods because it can be done more cheaply than boxing, without
realizing that the difference in packing cost is more than offset by
the increase in the freight rate.
The classification is also sometimes determined by the manner in which
the goods are described. It is necessary, therefore, to study the
classifications with reference to the description that will insure the
most favorable rate. However, false descriptions made for the purpose
of securing a lower classification must be avoided, as the Interstate
Commerce Act provides a heavy penalty for such falsification. But there
may be several different descriptions which legitimately apply to a
given article, each placing it in a different class. A case in point:
The western classification made no provision for filing cabinets in
carload lots, with the result that a carload shipment, described as
filing cabinets, took the rate provided for less than carload lots. But
the same classification gave a lower classification, consequently a
lower rate, on office furniture in carload lots. Filing cabinets being
office furniture, it was entirely legitimate to describe such shipments
as office furniture.
Another illustration of the effect of description on the classification
is found in shipments of carriages. The classification, and consequent
rate, on this commodity is based on the space that it will require,
rather than on the rate. If shipped knocked down and properly crated,
with the dimensions stated on the shipping bill, a carriage takes a
lower classification than if shipped assembled, or if the dimensions of
the crate are omitted.
These illustrations are sufficient to show the importance of a thorough
knowledge of the provisions of the different classifications. The
shipping clerk who would give the best service to his house should
make a study of this subject, even if he is obliged to take the
classifications home and study them at night. Every shipper should see
that his shipping clerk is supplied with copies of classifications
governing the territory in which he is doing business, and give him an
opportunity to learn their provisions in respect to the commodities
which he ships.
=Class Rates.= A _class rate_, as the name implies, is one based on
the classification. All commodities are divided into classes, six in
number, and all commodities of the same class--with certain exceptions,
explained later--take the same rate. Schedules of rates between
given points, based on the class, are prepared by the classification
committees, but before being put into effect, they must, in case
they apply between points in different states, be submitted to the
Interstate Commerce Commission for approval. While not a _rate-making_
body, the commission is a _rate-governing_ body, constituting,
in a certain sense, a board of arbitration between shippers and
transportation companies.
The rates being based on the classes--the higher the class, the higher
the rate. To determine the rate, it is first necessary to find the
classification; reference to the rate schedule will show the rate for
each class.
=Commodity Rates.= A commodity rate is one applying to a special
commodity, between definitely stated points. Commodity rates are
established by the railroads to meet some special condition, and with
these the classification committees have nothing to do.