When transactions of this kind are large in number, subsidiary books devoted exclusively to their record may be kept.
Tickler File Method of Handling Approval Sales.—Approval sales transactions must usually be completed within a comparatively short space of time, either by acceptance or by return of the goods, and in such cases a shorter method of recording them is followed. The sales tickets or invoices covering approval sales are made with some kind of a distinctive mark—color of paper, title, etc.—to allow their easy separation from the regular sales tickets. These tickets are kept in a temporary tickler file in the order of the expiration dates of the approval period. If the sale is consummated, the ticket bearing a stamp to that effect is sent through for record as a regular cash or credit sale. If the goods are returned, the ticket may be filed as a part of that particular customer’s record; in this way a cumulative record is secured which would in some cases give an interesting commentary on human nature. If the customer is one who makes it his or her practice to buy on approval to secure the free use of nice wares for an evening or for some social function, the record would show it. A rigorous and unrelenting collection and follow-up system, supplemented by a full credit and information record, is the only safeguard against unscrupulous customers and oftentimes even this proves inadequate.
At inventory time all goods out on approval as shown by the approval sales file must be included in the inventory at inventory price, for the goods are still owned by the firm. As stated above, they must never be treated as sales.
The Bill and Charge System.—By this name is known the method of writing up the customer’s bill and using it as the basis for the charge to his account. The system is operated somewhat as follows: The duplicate sales tickets go to the auditing department, where they are first sorted by departments to secure the departmental analysis of the sales, and then re-sorted according to customers. Thus, if a customer has made purchases in more than one department, the tickets covering all his purchases are brought together. Each customer’s monthly bill or statement of account is started at the beginning of the month on a folded billhead perforated at the fold, the duplicate or under portion usually being somewhat wider, with loose-leaf binder punchings. On these bill and duplicate blanks the charges for the day are entered from the sorted sales tickets. This work is usually done on a billing machine with carbon roll or with carbon paper insertion.
At the end of the day the total amount of the charges entered on all monthly statements is either found by means of an adding machine or is indicated by the “tally strip” of the billing machine. This total must of course be equal to the aggregate amount of all sales tickets for that day, thereby proving the work of the billing clerks.
Customers’ bills after entry each day may either be passed on to the bookkeepers who charge each customer’s account with the day’s total purchases as shown by the bill, or the bills are returned to the file until used again for subsequent purchases. In such case the bookkeeper enters the total monthly charge to the customer’s account, only once a month.
Returned goods and allowances are also entered on these customers’ bills, but in a separate column or on another portion of the sheet.
The total charges entered on these statements must check against the total credit sales for the month, thus proving the additions of the bills.
At the end of the month the bill is torn from its duplicate and is passed to the bookkeepers. They enter the previous month’s balance, if there is one, and the current payments on account, and extend the amount now due. After the bills or statements have been mailed to the customers, the duplicate bills are filed away, being virtually the detail of the ledger account, for use in case of dispute.
This method of handling credit sales provides a ready means of getting the bills out on time, of assuring agreement between the ledger accounts and the bills, of freeing the ledger accounts of unnecessary detail, and of checking the total billings against the total sales tickets.