Sophisticated credit system

Press, 4 June 1984, Page 28

Sophisticated credit system

The Farmers’ Trading Company’s multi-million dollar retail credit computer system is one of the most sophisticated and comprehensive in the southern hemisphere. Yet the company remains determined to maintain its personal touch with customers. “We go out of our way to help people with their credit difficulties,” says Mr Ron Hooton, general manager, finance. “We have a reputation for helping people. “When the wage freeze was on we wrote to everyone whose account was two or more months overdue and asked them to contact us if they were having difficulties.” The company also offered special help to customers caught in the Tasman Pulp and Paper Mill strike at Tokoroa, and the floods at Paeroa and in Southland. “We have a large percentage of customers who would not normally have credit available to them from other sources. We try to meet their needs,” Mr Hooton says. “We direct our merchandise at the middle to lower market. We are a family store. Each month we send out 490,000 statements, which represents between 320,000 to 350,000 customers. “This means, as a company, we are dealing with 10 per cent of New Zealand each month. “New Zealand is certainly a credit-oriented country now,” Mr Hooton says. “People talk about America as a country where everyone has a card, but, considering the impact of the FTC credit card combined with Visa and Bankcard, I would suggest there would be few New Zealanders who did not have a credit card these days.” Mr Hooton said the FTC reached a critical point in the early seventies, and was forced to computerise. “Our ability to process credit reached a crisis, with our volume overtaking our technical ability to handle it. “I would find it difficult to explain what problems the customer account records were causing us. It was probably one of the major difficulties in the company’s history.” The development of a comprehensive computer network, linking all 80 stores throughout the coun-

try, has not detracted from the company’s caring image. Mr John Hunt, the Group credit manager, said it was surprising how many parents brought their teenagers in to open accounts when they started work. Several months ago letters were sent to all holders of accounts which had been inactive for some time. “I was amazed how many elderly people wrote back saying that, although their buying habits and patterns had changed and they did not purchase as much any more, they were nonetheless keen to hold on to their card. Of course they are welcome to.” Mr Hooton said further credit services would be launched soon. Customers will be able to use their blue and white card to buy goods from other merchandisers who provide complementary services to FTC. This will be a unique concept in retailing in New Zealand. Mr Hunt points out that the company is leading the way in other areas of the retail credit field too. Point-of-sale computerised terminals on all counters mean each sale using a company credit card, whether it is in Kaikohe or Invercargill, can be checked back to the main Auckland computer in seconds. “Provided the purchase is within the person’s credit limit, and the account is not seriously overdue, then it is OK. “This means a very substantial proportion of sales are authorised automatically on the spot.” Special check and security systems alert the sales assistant if the card presented has been stolen or cancelled. “We are the first company to introduce this system outside the United States,” Mr Hunt said. “Our credit losses are less than half those of Australian stores, where the system is still being introduced.” The Farmers’ Trading Company offers a monthly charge account, where the balance must be paid in one month, its even more popular 20-week account, where the balance is spread over five equal instalments, and hire purchase facilities. Five thousand new accounts are opened each month. At the company’s Hobson Street headquarters in Auckland a team of 120 staff are kept busy constantly interviewing new applicants for credit and updating existing accounts. The company’s computer copes efficiently with the momentous task of receiving payment of accounts. In one day alone up to 150,000

payments can be received, mostly in cheques. A special machine has been bought just to open the envelopes, a costly and time-consuming exercise in itself if done manually. Posting out accounts is also done by computer, with addresses automatically sorted out into area codes, which entitles the company to a postage discount. The company also relies on the computer for stock levels and maintenance, and for keeping its own accounts payable to suppliers up-to-date. The computer also moni-

tors and checks daily, through the sales credit system, the balance in each register, turnover and banking in each store throughout the country. Mr Hunt said the company tried to adopt a reasonable approach to people who did fall behind in payment of their accounts. “If people are reasonable with us, then we are reasonable with them. “If a man is made redundant, sure, you can repossess his lounge suite. But he’ll probably never come back to you again. “Mind you, if someone is

sitting on a $2500 stereo and says he can only pay $2 per week, we’re probably not going to be too sympathetic to that.” Computerisation has helped the company monitor customers’ credit records more carefully and efficiently, and enables staff to make better assessments about customers who are genuinely in trouble. “Quite honestly, if we had not computerised we would have been unable to cope,” Mr Hunt says. “We were on a manual system and always seemed to be weeks behind.”