The Bills Payable Bookkeepers One of the most important divisions of the general ledgers is the bills payable or Depositors' Drafts Advised and Outstanding account. This account records the amount of the drafts drawn on the bank or its interior correspondents by its foreign corre spondents. It is almost an iron-clad rule with every foreign bank to advise all their drawings immediately. After the signa tures on these advices have been verified, they are ready for entry in the bills payable books. It is the custom, with few exceptions, to charge the account of the foreign correspondent immediately upon receipt of their advice by debiting " their" account and crediting bills payable or Depositors' Drafts Advised and Out standing. The letter of advice is used as the debit ticket. The advices are first sorted and then entered in the respective books and proved. The record includes the date of receipt of advice, the date on which the draft was drawn, the number of the draft, the beneficiary's name, and the amount. When later a draft is presented, an entry in the books is looked for which corresponds in every particular vvith the draft presented, and the date of presentation is stamped after the entry.
As the clearances (foreign drafts presented through the clear ing house) are received through the check desk department of the domestic division, they are sorted into bundles and alpha betically arranged. After the indorsements have been carefully examined and verified, they are paid by stamping the advice entry in the book. Those items that remain open constitute the balance that day. Drafts which have not been advised are re ported to the head of the department, who refuses or sanctions their payment as the case may be. After the clearances are stamped out, each bookkeeper adds up his bundle separately, and the total of all must equal the total with which the department is charged by the check desk department, after certain allowances have been deducted for returns, exchange on drafts, etc.
Advices of drafts drawn by foreign correspondents on in terior correspondents of the New York bank are spoken of as "countries" by the metropolitan bank. The New York bank furnishes its foreign correspondents vvith a list of correspondents in the United States, Canada, and our territorial possessions upon which they may draw. It is unnecessary for the foreign bank to advise the interior correspondent. When countries are received by the New York bank they are immediately confirmed to the interior banks. The advice gives them full particulars of the draft, such as the date, number, payee, amount, and drawer, and it requests the interior bank either to honor the described draft and reimburse itself by drawing its own draft on the New York bank and attaching the foreign draft, or to reimburse itself in whatever other way it prefers. The general method for the in
terior bank is to reimburse itself by drawing on the New York bank. At the time of the advice the New York bank may in quire of the interior bank whether it has funds vvith which to honor such draft; or the New York bank may transmit funds by telegraph to the interior bank or may tell it that its account has been credited for the amount involved. Nearly all such drafts bear the legend, "In case of need with the Bank of New York," which is a direction that in case the draft is presented before receipt of the New York bank's confirmatory letter, the interior bank can immediately communicate with the New York bank for instructions.
Drafts drawn on domestic correspondents may be subject to an exchange charge which varies with the location of the drawee city. This feature is explained to the foreign correspondents in a list of domestic correspondents furnished to them by the New York bank. The bank has also a standing agreement with these domestic correspondents that they will honor such drafts for a certain exchange charge, and if they honor them at par they add their exchange to their reimbursement draft.
The bills payable books, or depositors' drafts advised and outstanding books, are divided into alphabetical parts, as A to C, D to L, M to N, 0 to R, and S to Z. In them are entered the actual advices of drafts drawn by the foreign correspondents on the bank and its interior correspondents.
Other books of these bills payable bookkeepers are: 1. Drafts paid without advice, wherein are entered drafts that have been paid without advice; in such cases confirmatory advices are requested.
2. Return book, wherein are entered drafts which were originally issued on the bank but did not belong to it, or which were returned for any other reason. If, for instance, the draft is returned for want of a confirming advice, as soon as the relative advice arrives, the de partment notifies the holding bank that it is in position to pay it. This service is much appreciated by the correspondent banks, as it saves them the bother and expense of protest.
3. Depositors' drafts advised and outstanding, credits, wherein credits are entered, principally drafts drawn without advice, and entered from credit ticket.
4. Depositors' drafts advised and outstanding, debits, where in debits are entered; this book is used principally for entries of : (a) Cancellations of drafts previously advised.