“Haphazard, Uncontrolled Credit”

Northern Advocate, 3 January 1941, Page 7

“Haphazard, Uncontrolled Credit”

One of the mysteries of trade over the counter beyond the understanding of some cash customers is the seeming deference paid to customers running accounts.

But it would appear a change is coming in what the “New Zealand Draper” describes as “many of the old bad habits formed during a period of testing and strain.” The “stern necessities of war and altered trading conditions,” the journal explains, provide the opportunity to cut out “haphazard and uncontrolled credit.” New Zealand firms, it is held, “should hasten along a progressive move that already has made its appearance here. “On a cash basis the retailer can keep his capital liquid. ... It is a necessity to ensure that what he sells returns a profit to him in these days, when Governments are exercising a strict control on prices, ruling out the possibility of a higher 'mark up’ to cover credit risks.

No Exceptions.

“Admittedly there is a difficulty in changing over to cash trading. “The main, thing is that there must be no exceptions, and' the position must be put frankly before the public by letter, window-cards, and oral explanations. “Even those shops that feel it impossible to cut Cut credit completely should teike steps to put every account on a stricter basis. The point is not whether the retail trade can afford to take this step. It is, ratheK whether it can afford not to do so.

“Approval is another system that has been overdone and is almost an imposition in war-time. Too often it has been only the thin end of the credit wedge. In addition, with the depletion of staffs and limited delivery facilities, many shops will not be able to afford the time, trouble and cost of approval lines.”

“A Drag on Profits.”

What is described as “one of the biggest retailing problems is that of special orders, which are in the nature of a drag on profits. In these days a customer should be educated to choose from stock. If he cannot do that he should be prepared to. pay—and pay well at that —for the trouble, time, postage and carriage that his whim causes. It is largely a habit carried over from the old bespoke days,' and is hardly necessary—except in very rare instances —with the development of the ready-to-wear trade. Where special orders are necessary a substantial deposit should be paid. Many retailers have been lax about this in the past, with the result that many special orders have been left on their hands to lower the rate of profit.”