When the receiving teller is asked to credit a foreign bank's account and charge the account of a domestic correspondent bank, he puts through a double ticket, and from the letter of in structions are prepared a credit note and letter of advice, the carbon copy of which forms the permanent record of the bank. The receiving teller checks the credit note against the original instructions and sends it to the auditing department, which checks it against the entries on the account, initials it if it is cor rect, has an officer sign it, and returns it to the receiving teller. The letter, with enclosure, is then despatched through the foreign mail department.
A set of special cards containing instructions which must be followed in executing certain transactions is kept by the receiv ing teller, and these instructions must be referred to and adhered to. In accordance with their tenor, it may be necessary for him to issue special receipts or special advices or to cable advice of deposit to the foreign bank whose account is credited.
The receiving teller has at his disposal a tickler which shows the payments that are. due each day for cable transfers, and he advises the cable transfer clerk of any payments not received that day. When he receives cash or checks to cover cable transfers, he prepares a credit ticket and also makes a record of this credit to Unpaid Exchanges. A special record is also kept of overdrafts, and in case any credits are received for any of the overdrawn accounts he at once advises the bookkeepers.
The Sale of Drafts on Foreign Banks The bank stands ready to sell to customers its own drafts drawn on banks in all parts of the world. A customer wanting a draft applies for it by letter or on a special form which serves as the original instructions covering the transaction. This form has spaces for the entry of such data as date, drawee city, rate, number, to whose order, currency, and applicant's name and ad dress. Ordinarily a request for a draft must be accompanied by check drawn to the order of the bank or with instructions to debit the applicant's account. Out-of-town checks received for this purpose are collected before the draft is issued. When the in structions are to debit an account, they must be written, not oral, and the signatures verified, after which a hold is placed against the account. If the account is not debited, the amount is charged to Unpaid Exchange and the checks received are credited to Unpaid Exchange.
To protect the bank, drafts are not issued before payment except to firms of the highest credit, and when a draft is sent by mail before payment a statement is enclosed for the amount due When drafts are issued against a debit to the account of the client, he is informed that "in accordance with the instructions con tained in your " letter the bank has "placed the following amounts to your debit in account." When drafts are sold by contract to a bank, unless otherwise stipulated in the contract, payment is made on steamer day only; and the drafts are drawn and delivered on the day before steamer day and are paid for next day.
The requests for foreign drafts are passed upon by the draft clerk and he determines how the request shall be handled, that is, upon whom he shall draw, etc. He consults his standing in structions to find the proper drawee bank, and if no standing instructions cover the transaction he consults the men who prepare the position sheets, taking care that no draft is drawn which will knowingly overdraw the bank's account with a cor respondent abroad. He then refers the request to the traders, who give him a rate. The tickets and the acknowledgment or bill are then prepared, and the draft is written on the particular form that applies to each country. The draft, original instruc tions, and tickets are carefully checked. A stub from the draft is sent to the auditing department to check against the book entry. The duplicate drafts and the stubs are filed with that department also.
It is important to despatch the advices of drafts on the first mail steamer in order to guard against having payment of a draft refused for want of advice. The letter of advice advises "having issued the following drafts" and lists those drawn since the last mail on that bank. When the draft is sent directly to the payee, an accompanying letter explains that "by the order of and for account of we beg to hand you enclosed" described draft and asks acknowledgment, and the remitter upon whose request the draft was issued is also informed by letter.
When bills are issued drawn at 6o or 90 days' sight, credit is made to Bills Payable account Long Bills Foreign Exchange, and a record of the drafts is kept in a long bills register. When the draft is accepted, the due date is noted in the register and at the proper time Bills Payable is debited and "our " account credited.