11. Credit man's report—After the credit man has gathered all his information, he makes a report to the officers and recommends the acceptance or refusal of the application. His report carries much weight in any further discussion by the officers or the members of the executive committee on the application in hand.
The reports made by the credit department are usually accompanied by the complete data secured, so that if the officers wish to do so they may refer to the original documents and form their own opinion as to whether or not the credit man has drawn the correct conclusion.
After the final determination of the executive com mittee or the officer in charge of loans, the papers are returned to the credit department where they are put into envelops of suitable size and filed in alphabetical order. After a file has once been started, all matters of credit importance are put into the envelop or folder, together with such memoranda as may be necessary. Newspaper clippings referring to the borrower and any matters of importance that come to the attention of the officer or credit man are also noted and filed.
12. Value and care of credit.—A man who has once established credit with a bank should appreciate its value. He should realize that his credit standing is a part of the character of his business and that it is some thing that may stand him in very good stead in times of stress. There are certain unforgivable sins in banking, which a depositor should never commit if he would keep his credit standing good. The four most important of these are : (1) kiting, ( 2 ) not taking care of one's paper when due, (3) overdraw ing one's account, and (4) drawing against uncol lected funds. They are of importance in the order given.
13. Kiting.—It is surprising how many business men permit themselves to be drawn into that foolish expedient, kiting. It is the most self-evident attempt ever made to bolster up an account and when once discovered, it is never forgotten. The officers, and all clerks who have to do with the account keeping, are warned by the circumstance itself to keep on the lookout for further trouble.
Kiting consists in drawing checks between allied concerns, especially between those in different cities.
A, in Louisville, draws a check in favor ,of B, in Dallas. B reciprocates by sending a check on this local bank to A. They deposit the checks and use the proceeds before they are collected.
Figuratively speaking, the kite always gets caught in the bookkeeping wires at both banks. No account can draw heavily against uncollected funds without calling the bookkeeper's attention to the fact. His first impulse is to analyze the deposit against which the check is drawn. Invariably he finds that a check was deposited, drawn on an account in the bank which has sent in for collection the item he is holding in his hands. There are many banks in the country which will immediately ask a kiting depositor to withdraw his account, and will not even give him a chance to explain the matter. Some people try to cover a kite by taking three concerns at different places into the transaction. This is a little harder to detect, but in the end it is just as sure to be found out as the sim plest one. Every draft against uncollected funds, must meet the eye of the bookkeeper who has all the information at hand to detect the danger.
14. Overdue paper.—It is careless, to say the least, to allow one's note to become due without giving it attention. Such an act of carelessness leaves a bad impression upon those who can judge a borrower only by his acts. Past due paper enters into a special file and is presented to the discount clerk and officer every day until the matter is adjusted. If the borrower once forgets to give attention to his loans on or before the proper date, a black mark is registered, which is almost as indelible as the record of a kite.
15. Overdrawing.—Overdrawing one's account has been referred to already. No man can afford to take this chance with his bank.
16. Uncollected funds.—Drawing against uncol lected funds is equally bad. Every depositor should remember that cash is the only kind of deposit he can make which the bank can put to immediate use. Clearing house checks must pass thru the clearing house. Checks drawn on out-of-town points must be sent there for payment.