corporate neighbour, Trimingham's, in the new year when they begin levying a 1.5 percent monthly charge on overdue charge card balances.

And A.S. Cooper & Sons will also take a fresh look at their credit practices in the new year.

It comes as Bermuda businesses again study ways of becoming more competitive, improving the bottom line, especially in a retail industry that has lobbied hard and unsuccessfully for substantial governmental relief from customs duties.

Smith's management is set to introduce a new computerised accounts receivable system early in the new year and have invited their Smith's charge card holders to pay a minimum monthly balance on their account.

The 1.5 percent monthly charge totals more than 19 percent annually.

Customers who want to pay on a 30-day basis will still, however, have the luxury of no charge, if the balance is paid within the specified time period.

Company president, Mr. Roger Davidson, emphasised that the company will not levy that finance charge if customers maintain 30 day accounts with the new cards that are to be issued. He expects to have the new system in place by February or March.

"With the increasing cost of business we have been, I think, overly generous in providing extended credit for people. We're not in the banking business. We are retailers, and those people who want extended credit need to talk to the banks.

"It has been a creeping problem, growing over the years. As business has been tougher, the banks say to us "are you managing your business efficiently? Are you making sure that your receivables are up to date?'' And in examining all the various parts of our business and putting in an accounting system that will give us a better ability to track information, we are moving to this system.

"Our North American competitors have been doing this for 25 to 30 years.

Frankly, it is something that we have to do.'' The company thinks that it will improve its cash flow situation, because customers, who haven't had to pay interest charges, haven't always paid their bills so quickly.

The company has been selective about who was eligible for cards, operating a credit clearance system that has been in place since the Second World War.

Many of the credit policies for major department stores were instituted before the advent of mass scale major credit cards for local purchases, before Bermudians had their local buying potential enlarged by Visa and MasterCard.

Trimingham's moved near the end of the eighties to institute a 1.5 percent charge on overdue accounts, much like Smith's is now implementing.

President, Mr. Eldon Trimingham, said the honour system for free credit gets more difficult, and expensive, when a business is hounding its customers.

"After a couple of months, you start to chase them up, after three months, you ring them on the 'phone. I suspect that Smith's got tired of doing it.

"The objective in our option account is to pay on a monthly basis, like most people do, or you can pay some of it and carry an interest charge.

"For about 140 years we did the old manual system. I think we changed it around 1989. We did it because as more and more businesses went on to computerised systems, which incorporated some sort of interest charges for late payment, we found that we were becoming tail-end charlie.

"People felt that they had to pay their Telco and Belco bills and their credit cards. They were thinking that Trimingham's doesn't mind not getting paid this month. But they had to pay the others because of credit charges or to keep the utilities on.

"It was a very expensive system, carrying the charges. Just sending the bills out once a month incurred a horrendous cost.'' A.S. Cooper & Sons has operated its credit policies in a different way. By their own admission, they are quite liberal. There are no charges unless the charges are unpaid after 90 days.

But in fact, president Mr. Peter Cooper said customers are initially getting more than 30 days to pay, because if they make a purchase in January, say January 3, the amount is not payable until the end of February. If you don't pay by then, there is no charge. In fact, you can have 90 days plus, or until just before the end of April before you would be assessed a late fee of $20.

A month later, at 120 days overdue (plus almost the entire month of January) the customer is assessed an additional $50 late payment. But a month later, the account is frozen and sent to a credit association for collection.

Mr. Cooper said:"We are going to a new Cooper charge card to go with new cash registers and, yes, we will have to look at our credit system and the late payment fees.

"I wouldn't say that we would charge as much as 1.5 percent a month, but we will review it.'' Mr. Eldon Trimingham.