The Collection of Foreign Items Foreign items are items due from and payable in foreign countries. The collections are received from and made for both domestic and foreign customers, as well as for the bank itself. Few of the country or interior banks have a volume of foreign collections large enough to warrant the establishment of foreign connections with a view to making their own collections, and non-banking parties have still less warrant for such action. The metropolitan bank can, therefore, perform an invaluable service for bank and non-bank clients by acting as their foreign collec tion agent, and the concentration of the business of many clients makes for economy by reducing the overhead per item.
A bank may establish uniform or varying rates of commis sion for collections. A not unusual plan is to fix the rate, say, of 1/8 per cent, and not to let the department change the rate un less specifically authorized in the case of some particular item or client. Though the department does not usually earn enough to pay for its maintenance, the net deficit is regarded as an investment in good-will.
The collection of foreign items requires a record of their despatch and the receipt and disposition of the payment for them. The items are received, acknowledged, registered, indorsed to selected correspondent collection agents, listed on remittance letters, and despatched with the remittance letters and accompany ing documents. A tickler and follow-up for such remittance letters are kept until later when advices of payment or non-payment or of acceptance or non-acceptance are received, and still later when payment is received and acknowledged and the customer is paid by cashier's check or credit to his account. To handle the work the following clerks may be required: a window clerk, a register clerk, an indorsement clerk, checkers, an acknowledgment clerk, a tickler or follow-up clerk, a check clerk, and investigators.
The Receipt and Entry of the Items The items are received through the window and from other departments. Collections received from individuals, firms, or banks that do not keep an account with the bank are referred to an officer before their collection is undertaken. If they are acceptable to the management, the department is instructed to "receive from and for the account of " the specified parties, and this card is filed for future reference. The window clerk may
tmderline any special instructions contained in the letter of in structions lest they go tmnoticed. Document,a,ry collections require special attention in order to see that all the documents are in order.
It is also necessary to determine whether drafts received from domestic clients require documentary stamps. Under the Revenue Act of 1917 stamps are not required if the drafts cover export shipments other than those to the insular possessions of the United States or if drawn at sight; otherwise, stamps are required at the rate of 2 cents per $1oo or fraction thereof. Each collector is under license by the Collector of Internal Revenue to collect the income tax; he is also the source of information as to the ownership of items collected.
When all the details described above are in order, the window clerk stamps the item and all accompanying documents with a stamp bearing the name of the bank and the collection number assigned to the item. The item is then passed to the register clerk, who enters it in the bill register book under the following heads: the collection number given it by the bank, the collection number given it by the client, from whom received, for whose ac count received, name of the drawee, address of the drawee, cor respondent to whom sent, amount, tenor, acceptance, due date, advised, date of advice, fate, and to what bank the collection is to be forwarded.
The Tickets and Remittance Letter Documents must be forwarded in the mails of the steamer carrying the merchandise to which the paper relates, and when documents are attached to any of the collections this fact must be taken into consideration. If duplicate drafts or documents are to be sent they must be separated from the original and forwarded by a subsequent mail in order to insure the safe delivery of at least one set.
The items forwarded to correspondents are indorsed by special or blank indorsement stamps and are signed by someone author ized to sign for the bank. The following are then prepared : an acknowledgment of receipt of the item for collection, a debit ticket, a credit ticket, and an advice of payment to be sent to the client when the payment is received. The preparation of these documents may be economically done by the use of fan-fold copies.