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.