Credit

ton. the percentages are somewhat different from the national. Of the $960.140,000 home improvement business done in Cali{ornia, Oregon and Washington, in 19613, only $50,407,350 or 5.25% was done on time-payment plan. 'Ihis is not l-recause residents in the three states can pav cash. This is because man,v California. Oregon and Washington home improvement deal- ers have not learned completely how to use installment selling as a sales tool.

CREDIT SAI.ES

Installment sales of home modernization projects har.c grown. lt is easier to sell a $500 home modernization job on time' payment than tr.r sell a $300 job for cash.

Not all home modernization dealers understand that installment selling is a sales tool. A dealer's sales volume can skyrocket by the proper use of installment selling.

Horv one dealer success{ully used his rvorking capital where it belonged-in the expansion of his business-may be cited here.

Recent Case Cited

This erample, a recent case coverirtg a large home modernization dealer, was taken from the files of Allied Concord Financial Corporation.

The dealer wanted to expand, but his cash rvas very tight in 1960.

This is a record of his total sales:

The growth of his net worth, the proof of the pudding, follows:

In the case of the home modernization dealer cited, he was doing a business of slightly over $500,000 a year in 1960. The possibility of increasing sales to $l million was very real, if he could ofier more liberal credit terms. IIis working capital lvas $40,000, and his installment accounts amounted to $72,000. Nornrally, some of his customers paid at the end of the month, but installment accounts lengthened his averag;e collection period to 164 days.

Cash Was Tight

The ratio of current assets to current liabilities r-as close to 4-to-1, which was great, except that most of his current assets were frozen in customer installment contracts. This meant that the dealer could not expect to expand his sales beyond 1960 limits, since $72,000 was tied up in installment accounts, and his own credit was very tight. The additional working capital needed to carry his increased sales was about $60,000. He had no desire for partners, and saw no easy way of raising the working capital necessary for the expansion.

The dealer first turned to his bank. but here he was severely limited by the total (Continueil on Page BB)