When the department accepts a draft under a credit, it charges some such account as Customers' Liability: Acceptances of Bank of New York under Commercial Credit, Foreign (or Domestic, as the case may be), and simultaneously credits an account Acceptances of Bank of New York, under Commerdal Credit, Foreign (or Domestic, as the case may be). At maturity the debit and credit are reversed, and the party for whose account the draft was accepted is charged- the face amount. The commission may be billed either at the time of accepting or at maturity, depending upon the arrangements made.
Payments Against Documents Drafts and documents are received by the department through the window, by mail, and from other departments of the bank. To concentrate responsibility within the department it.is expedient to charge the window man with all receipts from every source and with the responsibility of ascertaining specifically the source and the party to whom credit is to be given for pay ment made. The window man is also responsible for the initial examination of the documents to see that they are in order regard ing the most obvious matters, such as indorsement of bills of lading, etc.
It is the duty of the payment clerks to examine with care the documents or drafts received, to ascertain whether payment may be made, and if so, to attach the necessary tickets, and if not, to make up a statement of the reasons for refusal to pay. This work is very detailed and various. The payment men are re sponsible for the discovery of every irregularity in the documents or transaction, and all such irregularities are referred through the department head to the bank officer who is vested with authority to decide the course to be adopted in each case.
The examination conducted by the payment men is made for the following purposes: 1. To compare the documents, the credit card, and the accompanying letter, and determine to which credit the documents relate.
2. To determine whether the credit has been exhausted or canceled, and whether its expiration date has been passed.
3. To note the gist of the credit and see whether under the terms of the credit the proposed transaction is proper.
4. To check the invoice against the credit and see that both describe the same merchandise and that the invoice, bill of lading, and credit describe the merchandise in the same manner. This check includes price, quantity, units, etc.
5. To determine whether the marine insurance certificate covers the total amount of the debit which the bank is called upon to make. The commercial practice is to include an amount of io per cent in excess of the total payment. The vessel's name must agree with that mentioned in the bills of lading; and the mark numbers and the description of the merchandise must agree with the entries in the invoice and bill of lading. The certifi
cates must be negotiable in form. When there are both original and duplicate certificates, as is usually the case, the bank must have both.
6. When a bank or individual for whose account a credit has been opened simply instructs the department to obtain shipping documents, it is understood by the department that it is required to obtain order bills of lading, issued in full set, indorsed in blank. These bills of lading must be carefully signed by the steamship company or an authorized agent or by the master of the vessel, and must plainly designate the number of copies that have been issued, be dated, and issued to the shipper's order and for him, and indorsed in blank. They must be clean bills of lading, that is, they must bear no qualifying marks such as "bags torn," "not responsible for leakage," or any other phrases which shipowners are fond of using. They must agree with the invoice as to all marks and numbers and description of merchandise and must show the name of the steamer, its destination, and its route. Any erasures or corrections must be initialed by the signer.
If it is determined that the documents must be returned to the beneficiary for correction, notation of the fact that the docu ments were presented and payment was declined is made on the credit card and a memorandum of the exact nature of the irregularity is made and kept.
If, on the other hand, in the judgment of the payment clerk the documents are in order, he then records on the back of the credit card the date, the amount paid, the marks on the ship ment, the description of the merchandise, the steamer's name and destination, and the character of the documents. Any dis crepandes which are noted but passed are initialed by the person who approved them. If previous payments have been made, a pencil footing is carried down to show the total of payments. If the payment exhausts either the dollar amount or the merchan dise amount of the credit, it is important that it be stamped "Exhausted and canceled" and delivered to the bookkeeper to be canceled on his records. If funds have been segregated and there is any balance left in the segregated account, the balance is restored at once to the regular account, together with the ac crued interest. If there is a small merchandise or dollar balance left under the credit but of such nature that it seems improbable that it will be used, inquiry is made of the beneficiary about its disposition.