RECORDING CREDIT INFORMATION
Scattered information is of little value. A credit man may avail himself of all sources of credit information, but unless he has it filed and recorded where he can put his hand on it, he will find it of little assistance in determining credit risks. He cannot "keep it in his head" and get the best results.
There are credit men who profess to rely largely on intuition, but the hard-headed man—the one who makes the fewest mistakes—relies on his facts and figures. He uses judgment, but first wants the facts marshaled in logical order.
Filing. The method of filing best adapted to the needs of a given concern depends on the size of the business, number of customers, method of collecting information, and the quantity of data kept on file. In a small business, depending almost entirely on the ratings of the mercantile agencies, with an occasional special report, no special filing system is necessary. The few reports received can be filed with the regular correspondence. But in a well-organized credit department, handling credit information about a large number of customers, the question of filing is of importance.
In the first place, all reports should be kept in one place; special agency reports, reports of traveling salesmen, local correspondents, and the credit clearing house, with financial statements furnished by the customer, should be filed together. This means that they should be separated from the general correspondence; if filed with the correspondence, they are sure to become scattered when the files are transferred.
Without question, the most satisfactory method of filing is to use the vertical file, with a folder for each customer. For the average business, an alphabetical index is most satisfactory, but for a very large business, with customers throughout the country, it is best to subdivide the file by states and towns, arranging the folders of customers in each town alphabetically.
Credit reports are not, as a rule, of sufficient bulk to require the large files and folders used for correspondence. A file of the same style, to accommodate folders about 7×9 inches in size, is more compact, and has been found very satisfactory for this purpose.
Fig. 4. Front of Credit Information Folder
A plain folder, such as is used for correspondence, will answer the purpose, or a special form may be substituted. An excellent example of the special folder is shown in Fig. 4.The special feature of this folder is that on the flap which folds over the front provision is made for a transcript of credit information. The back of this folder is printed as shown in Fig. 5. This form is used for a record of purchases, and covers a period of seven years.
Card Transcripts. For convenience, it is best to make a brief transcript of the credit information. This transcript should embody the essential facts which naturally influence the credit risk, and should be in such form that it can be referred to very readily.
As explained above, this transcript can be made on the credit information folder, but the more usual plan is to use a card. For each customer a card such as shown in Fig. 6. is used. The special feature of this card is that both the capital and credit ratings are listed. Such a card saves the time that would be required to refer to the agency books, and affords a comparison of the ratings given by the agencies on different dates. Both the book ratings and special reports are entered on this card.
Fig. 5. Back of Credit Information Folder
A card which provides for reports, other than those furnished by the agencies, is shown in Fig. 7. A line for the folder number will be noted at the top, a numerical system of filing the folders being used. Although the numerical system is frequently found, it has no practical advantages, and the alphabetical system is to be preferred.
The form shown in Fig. 8 provides for more general information about the business—such information as would be gathered from the reports of salesmen and local correspondents. It will be noted, also, that the financial information refers more especially to the firm members. This card is used to supplement the books of the agencies.
Fig. 6. Credit Agency Report Card
Fig. 7. General Credit Report Card
The card shown in Fig. 9 gives a complete history of reports asked and received, and of credits granted. This form is used in a business in which the purchases of a customer are infrequent, and involve considerable sums. The credit risk is considered each time an order is received.
The card shown in Fig. 10 is used by a retailer. As is usual in retail credits, the information provided for in this form refers to past experiences and the general reputation of the customer.
Fig. 8. General Credit Information Card
Like the folders used for filing credit statements and reports, credit cards should be indexed alphabetically, subdivided by states and towns when necessary. Filed in this manner, each card is accessible, and can be referred to quickly. An advantage of cards for this and many other purposes is that obsolete matter is quickly eliminated, and new names are added at will without disturbing the general arrangement of the records.