est
of whether or not you should extend and borrow is not the amount of
business that can be done, but the amount of money that can be spared.
The mere fact that you have the money or can get it does not in the
least mean that it should be spent.

And the reason for this is that, in order to keep your credit good,
you must meet all obligations promptly. Nothing has a more chilling
effect on any business than failure to meet all indebtedness when due.
As soon as additional time is requested in which to meet obligations,
your credit rating begins to contract; and if, at the same time, your
credit has been overexpanded the business is placed in a most
difficult position. More than one concern has gone to the wall when
faced with this combination.

Proper Bookkeeping Records.

The principal difficulty in this matter of the proper use of credit
will lie in poor bookkeeping records, making it impossible for the
proprietor to know very much about his financial position or operating
condition day by day and week by week and month by month.

Many service station proprietors figure what they owe once a year
only, when they inventory, and many do not keep a permanent record
even then; and usually those who are neglectful in this regard are the
ones who owe the most, proportionately, who do not take their
discounts, and who do not progress.

The following table covers the average discounts allowed in various
lines. If you study it, and find out how much it costs you to lose
discounts, you will at once realize the necessity for the proper sort
of bookkeeping records.

1. 1% cash, 30 days net . . . . . . . . . . . . . . . . . . 12% per year
2. 2% cash, 30 days net . . . . . . . . . . . . . . . . . . 24% per year
3. 3% cash, 30 days net . . . . . . . . . . . . . . . . . . 36% per year
4. 5% cash, 30 days net . . . . . . . . . . . . . . . . . . 60% per year
5. 8% cash, 30 days net . . . . . . . . . . . . . . . . . . 96% per year
6. 1% 10 days, 30 days net. . . . . . . . . . . . . . . . . 18% per year
7. 2% 10 days, 30 days net. . . . . . . . . . . . . . . . . 36% per year
8. 3% 10 days, 30 days net. . . . . . . . . . . . . . . . . 54% per year
9. 5% 10 days, 30 days net. . . . . . . . . . . . . . . . . 90% per year
10. 8% 10 days, 30 days net. . . . . . . . . . . . . . . . 144% per year
11. 1% 10 days, 60 days net. . . . . . . . . . . . . . . . 14.4% per year
12. 2% 10 days, 60 days net. . . . . . . . .