The Birmingham age-herald., 1916-02-12
CREDIT DEPARTMENT
hrd of Series of Articles on Business Amnistrati(
BY JOHN II. FRYE President Traders National Bank

| as far as practicable, easily convert ible into money There is among pa irons of southern. banks, particularly, a strong tendencN to expect renewals at maturity. And when all precau- tions have been taken, it will still be necessary to renew good deal or paper. bank should endeavor to ac- commodate all worthy customers, put the first consideration is 10 handle the business in such way as to be able 10 meet its obligation to deposltors, and borrowing customers should under stand that the bank is not only not under agreement to renew their paper, put may expect payment at any ma turity. Unless such a course is pur- sued, the institution may soon reach stage where it cannot meet the de- mands of depositors.
 When we commenced business, we began to keep a record of the initial date of each loan, and the number Of times it was extended and in the months of June and December in each year, all paper that has been renewed more than once is carefully canvassed. Such course is advisable, with view to calling the attention of GUS toners, where necessary, to the fact that their obligations have been car rted for long period, and must be paid There is a very general impress Stoii tudl DdnkS ueSlre the payment Ol interest only, and that any provision to retire the principal sum of paper Is unnecessary. To be required from time to time, to 1iquidate his obliga- tions is in the majority of cases, ad- vantageous to the customer; for the unrestricted use of credit has injured more men than it has helped.
 COLLECTIONS
 It is essential to canvass daily each demand and overdue paper, and to take steps to secure payment, where ad- visable. In some cases, the makers, and in others the indorsers, should be notified that notes are past due. Printed forms are often used in giv ing these notices, but it is some times desirable to call parties over the telephone, or to see them in per son. As rule, discounted paper should be charged to the account of indorsers, if not paid at maturity. Be- fore placing notes in the hands of an attorney for collection, makers and in dorsers should be notified of the ac- tion contemplated and given an oppor- tunity to pay.
 There is at times a temptation to hold paper of a doubtful character, for fear of the result of an aggressive ef- fort to make collection; but as rule, notes are more likely to be paid, if steps are promptly taken to enforce collection. It goes without saying, however, that discretion must be used, and that each case must be considered separately from every other. In some instances, better results can be gained by making renewals, either providing for payment in full at one time, or in instal1ments. But in the majority of cases, it is best not to allow paper to become old, or long delinquent The amount can be lost but once; and strong argument in favor of aggressive measures is, that loss, if any, may be ascertained and charged off without delay.
 MISCELLANEOUS
 Do not lend to an unreliable or ir- responsible man, even on the indorse- ment of Rockefeller. It is not advis- able to extend credit too freely to branch offices of concerns of moderate size. Such business is usually risky Do not lend a man in Alabama on the indorsement of his wife, as under the laws of this state, she cannot be made liable for his obligations Do not lend to member of firm on the indorsement of the firm, executed by himself. Such an indorsement is prob ably not binding.
 Do not deliver collateral, as a rule, without the consent of the pledgor. The fact that a note is negotiable does not necessarily, afford protection to the owner who delivers securities with it. One may easily be made liable for conversion of security, or other in jury to the pledgor.
 It is most desirable to keep bills re- ceivable in balance to a cent. To this end, it is advantageous to pay bonus of a reasonable amount quarterly, for having paper kept absolutely in bal ance.
 
 to refuse credit. When practicable, it is best to give an answer at the first interview. Frequently this cannot be done, and in such cases it is advis- able to take the address of the party and give advice by mail or telephone Such method is preferable to hav- ing the applicant call second time, particularly if it develops that an un- favorable answer must be made.