Negotiable instruments are forms used in the business world for the transfer of values. In the ordinary transactions of commerce, they take the place of actual money. We have learned in an earlier chapter that money represents value and negotiable instruments are used as substitutes for money. They are of several kinds. Checks and bank drafts are payable by banks on demand and hence may be treated as cash. Notes and drafts, however, do not ordinarily possess this facility, since they are usually payable on a certain date and they are paid by individuals rather than by banks. Therefore they must be handled by banks as individual, separate pieces, each requiring care and diligence in presentation and collection. Drafts on individuals must be presented to the drawee either for payment or acceptance, and notes must be at the place where they are made payable on the day they are due. Banks undertake to collect these items for their customers and pass the proceeds to the credit of their depositors. This function is incidental to commercial banking, the bank acting as the agent of the owner of the paper to be collected.
In small banks it is not unusual to see a brass sign displayed at the receiving teller's window, reading "pay notes here." Although they are not required to do so by law, all banks send notices to the makers of notes or the drawees of drafts that they hold the note or draft awaiting payment, and some one of the tellers or clerks is assigned the duty of receiving payment. As the bank grows, a separate department is organized for this purpose and a note teller is appointed. He is usually in charge of the messengers or runners. Instead of sending out notices, the bank may render its customers better service by having its messengers present the items for payment at the place of business of the payer. The messengers also present checks for payment at banks not represented in the clearing house, collect coupons and return unpaid checks to depositors. It is necessary that they should exercise great care in all these transactions, since, for the time being, they are the accredited representatives of the bank and the bank is bound by their actions.
We can show this by discussing the duties and responsibilities of the note teller, the messengers being his assistants. He keeps a register record of all the "time" items that are placed in his hands for collection. This record consists of the name of the payer, the endorser, or the owner of the item for whom the bank is making collection, the date of maturity, the amount, and whether the item is to be protested or not if unpaid. There may be other instructions, as, for example, a request for telegraphic advice of payment. A column is used to record the final disposition of the item which in banking parlance is called "fate." Usually a separate register is used for drafts because they may require particular care. They are often accompanied by bills of lading or other documents that are to be delivered only when the drawee has paid the draft. Drafts are often made payable "on arrival of goods," and the note teller keeps in touch with the drawee so that there may be no unreasonable delay after the goods covered by the draft have reached their destination.
The chief responsibility resting upon the note teller and his assistants is to see that all items are properly presented to the right parties and at the right time. What due presentment consists of is a legal point which we need not discuss here, except to say that the bank must do its utmost to reach the payer and secure payment. Only cash can be accepted in payment, although all banks will take checks from responsible parties when drawn upon solvent banks.
The custom is to require that checks presented in payment of notes or drafts should be certified. (When a check is certified the bank charges the account of the drawer at once, and the check becomes an obligation upon the bank rather than upon the drawer.)
When checks, notes or drafts are not paid when due or when properly presented for payment they may be protested. This consists of presentation by the bank's legal representative who demands payment. If the item is then unpaid, notice to that effect is sent to the maker or drawer and all endorsers. The endorsers on negotiable instruments are under obligations to pay in case the drawer or drawee does not, provided they are served with notice that payment has been legally demanded and refused. The protest is notice to them that proper presentation has been made.
In making his proof the note teller enters on one side of a sheet the name and amount of each note, draft or check which is to be collected on that day. As the items are paid, he extends the amount in another column and opposite he makes a memo of the funds he has received. This memo is technically called the "satisfaction" of that particular entry. The total of the items thus "satisfied" at the end of the day must be equalled by the cash and checks which the note teller hands over to the paying and receiving tellers.
A subdivision of the note teller's department is the collection department, although some banks are organized with the latter as a subdivision of the transit department. The collection teller, as the head of the department may be known, is charged with the collection of notes and drafts payable out of town. These items cannot be listed with checks and cash items, but are entered on separate sheets. The same methods of bookkeeping and collection apply as with out-of-town cash items, except that credits and debits are made only upon receipt of advice that the items are paid. Checks and cash items, on the other hand, are credited to the depositors on the day of deposit, subject, of course, to final payment. That is, if the items are "not good," they will be returned and the account of the depositor will be charged. This plan is adopted for mutual convenience made necessary by the great numbers of checks that are deposited daily in every bank. If every separate item required a special advice of payment and would be credited only upon receipt of such advice, banks would be compelled to increase the number of their clerks enormously.
Out-of-town collections are governed by the same rules as city collections. The collection clerk or teller makes a register record of the name of the payer, the place payable, the endorser, and the amount together with other instructions. Usually this record is entered on slips made with carbon copies, and the slips are filed in drawers or cases until advice is received. If the bank is notified by its bank correspondent that an item has been paid, the slip is taken out and marked "Paid." It is then handed to the bookkeepers. Using the slip as a debit or credit memorandum the account of the depositor is credited and the account of the bank to whom the item was sent is debited.
The collection teller is responsible for the items entrusted to his care. He must see to it that notes reach the town where they are payable before maturity, that drafts are sent to responsible banks for collection, that all instructions sent with the items are fully obeyed and that correct and prompt advice of payment or dishonor is received.
No comments:
Post a Comment