C. O. D. Shipments.—C. O. D. shipments are handled through the agency of an express company, the post-office, or a bank. Express companies accept for shipment freight which is to be paid for upon delivery, agreeing to collect and remit the amount of the invoice to the consignor less collection and remittance charges. This method of shipping sometimes gives the consignee the privilege of examination before acceptance. It is used with customers who are unknown to the shipper or with those whose credit is doubtful.
When the parcels post service is used for shipping goods C. O. D., the post-office makes the collection for the shipper. The shipper must, of course, always prepay the postage, although this may by agreement become a charge against the customer.
When a bank is made the shipper’s agent to collect on delivery, a draft is drawn on the consignee and sent to the bank along with a special C. O. D. bill of lading, the order bill referred to above. This original C. O. D. bill together with the attached draft is sent by the bank to its correspondent located in the same city as the consignee. The correspondent bank presents the draft to the consignee for acceptance or payment, as the case may be, and thereupon delivers the special bill of lading to him. The shipper’s order to the railroad provides that the goods are to be delivered only upon presentation by the consignee of this special bill of lading. In the use of the order bill of lading, it is customary for the original copy to show the goods consigned to the order of the shipper himself. This copy, indorsed by the shipper, and the attached draft are the documents used by the bank in making the collection.
Duties of the Traffic Department.—In a large business a special department known as the traffic department is authorized to handle all shipments. Briefly, its duties are to look after all incoming freight, its receipt in good condition and its proper distribution to the several departments; to handle all outgoing freight, its proper routing so as to secure lowest tariffs and speedy delivery; and to secure the adjustment of claims for damage or loss of goods in transit.
The Statement of Account.—When goods are sold, an invoice or bill showing terms of sale, quantities, items, prices, and total amount of sale is sent to the customer. Periodically, frequently the last of the month, a statement is rendered each customer whose account shows a debit balance. Frequently the date of sending the statement is recorded in the explanation column of the ledger account, which, from a credit point of view, is a desirable practice.
The statement of account is a transcript, sometimes a summary, of the customer’s ledger account, i.e., it contains all charges and all credits for the period covered. If there is a balance outstanding at the beginning of the month, the current statement opens with the balance item and is followed by lists of all charges, payments, and other credits for the current period; the total credits are subtracted from the total charges and the balance constitutes the amount now due and owing. Sometimes a statement of account is made out in detail, giving a copy of the original invoices which evidence the several sales transactions. Statements of account are issued in many different forms, but the following illustration shows all the essentials:
Form 20. Monthly Statement of Account
CHAPTER XXIII
BANKS AND THEIR METHODS
Service of the Bank to the Community.—Practically all business houses at the present time take advantage of the banking facilities to be found in every community where there is enough business transacted to justify the establishment of a bank. A bank is sometimes defined as an institution which deals in money and credit. One of its chief functions and the one on which its main income is based is that of acting as a place for the deposit of moneys, these deposits forming the basis for its loans and discounts. Among its other important functions and services are to collect drafts and checks drawn on other banks; to issue and sell its own drafts on other banks, thereby enabling its customers to make payments to out-of-town creditors; to discount commercial paper, i.e., to loan money to its patrons on approved security; and to issue paper currency.