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Cards (k)— Where the Carding machinery constitutes a considerable portion of the whole plant it is very desirable that a distinct account should be kept of the Cards. The average working life of Cards is from five to seven years, according to their quality and the character of work on which they are employed. The simplest and most effective method of keeping the account is to add all expenditure to the capital value, and to write off annually from one-fifth to oneseventh of the cost of clothing completely all the machines in operation. The Cards covering certain parts of the machines wear out much more rapidly than others, and if desired the account may be so ruled as to divide the outlay under several heads (e.g., Swifts, Doffers, Strippers, Angles, Workers, and Fancies). Varying rates of depreciation may then be written off, according to the average length of life of each class. Elaborate details of this character are, however, more conveniently dealt with outside the financial books.

(k) Woollen Cards are especially referred to here, but Worsted and Cotton Cards may be treated in like manner.

CHAPTER VII.

FINANCE AND DUTIES OF THE CASHIER.

The management of the finances of a manufacturing business requires much skill and forethought.

Considerable sacrifices are often made by small capitalists in raising funds to meet engagements which ought never to be contracted, or which, with proper management, might be provided for without loss. Others with ample resources are careless as to the manipulation of the funds at their command, and consequently neglect a very fruitful source of income.

In order to finance to the best advantage it is necessary to know in advance what funds will be available in the immediate future. For this purpose the cashier should compile a table shewing in monthly totals what accounts are expected to be received and what are contracted to be paid.

A small increase of Capital or overdraft at the bank will sometimes enable a firm to take discounts, by prompt payment, which they would otherwise loose. Where the terms of payment, as in the Woollen trade, allow the option, after a clear month's credit, of a four month's bill, or prompt cash less 2} per cent., such an increase of available money will produce 71 per cent. per annum.

The terms of a banking account are entirely subject to arrangement, and vary very much according to locality, the nature and comparative safety of the account, and other circumstances. A Yorkshire banker may, and usually does, offer the following terms to a manufacturer, viz:-To charge interest at the rate of 5 per cent. upon an overdraft, and to allow interest at the rate of 11 to 27 per cent. (according to the value of money) upon a credit balance; bills (if first class) to be discounted at the Bank rate for the time being for accounts having a credit balance, and at a half per cent. above the Bank rate for accounts having an overdraft. A commission to be charged upon the turnover of one-quarter per cent. while the account is overdrawn, and one-eighth per cent. while there is a credit balance.

The financial manager of the firm should constantly watch and anticipate the state of the Bank account, striving where possible to keep a balance to credit, and thus avoid the double charges of an overdraft. He will often have to make very careful calculations in order to decide whether a greater advantage, present or future, will be gained by giving an acceptance or by paying prompt cash.

Where an acceptance is given the customary 2} per cent. discount is sometimes allowed, less the Bank rate for discounting the bill. Inasmuch as the Bank rate averages only 2 to 3 per cent. this method of payment is obviously a decided advantage to the payer, although it may properly be refused by the payee on the ground that he has to run the risk of four month's longer credit without compensation. Where, however, the status of the payer is beyond doubt, the payee receives exactly the same as though he were paid prompt cash less 2} per cent., and has consequently no cause for complaint (1).

Bills received from customers may be kept in hand until they mature, or may be discounted at any time prior to maturity. The expediency of either holding or discounting depends upon the funds available, the rate of discount, and the state of the firm's Bank account for the time being. Inasmuch as the discount rate only averages from 2 to 3 per cent., it is clearly more profitable to discount all bills received, than, by keeping them in hand, to necessitate a permanent increase of Capital or bank overdraft.

Bills are frequently discounted with bill brokers and other discount houses in order to obtain a lower rate, but the extra trouble involved in this course is seldom compensated by the benefit derived therefrom. The Banker should first be approached for better terms.

As to dealing with Foreign Bills, see Bills of Exchange, in the Appendix.

It is a safe and desirable practice to pass all money (excepting small sums), both received and paid, through the bank. The paying away of customers' cheques in discharge of debts owing by the firm in order to save bank commission, generally speaking, is false economy and is open to many objections. Whilst a cheque is in circulation interest on the amount is lost, the drawer may fail, and opportunities for fraud are multiplied. On the other hand, payment by the firm's own cheque or by banker's draft decreases the chances of embezzlement, furnishes undeniable evidence of the amount paid, and facilitates the book-keeping. Payment by banker's draft at 14 or 21 days is often accepted instead of cash, and the bank commission is thus saved. Where banker's drafts for large sums are received by the firm, they may sometimes with advantage be paid away before they become due. The draft should be endorsed to the order of the party to whom it is paid.

The prompt collection of outstanding debts is a matter of much importance. The cashier should call attention to all overdue accounts

(!) The following instance will suffice to illustrate the important advantages to be gained by this mode of payment:-A firm purchasing material amounting annually to about £90,000 was in the habit of paying prompt cash, less 2 per cent. discount. The firm borrowed £50,000 at 5 per cent. interest as loan capital, a portion of which was suddenly recalled at the death of one of the parties. In order to provide funds to meet this demand payment by bills on the above principle was resorted to, and was eventually accepted by all houses from whom goods were purchased. The result of this change in the mode of payment was as follows, viz:—The £90,000 per annum was paid by acceptances at four months instead of prompt cash, consequently £30,000 in bills was continually outstanding, and of course the same amount of Capital was released to pay off the loan. The customary 2} per cent. discount was obtained as before, less the Bank rate for discounting the bills which averaged 24 per cent. per annnm. The difference, therefore, between the 5 per cent. interest previously paid on the loan capital and the 27 per cent. allowed for discounting the bills left a saving of 24 per cent. on £30,000, equal to £675 per annum.

This case is a type of many where a change in the method of financing has effected large savings, and relieved embarrassment.

owing to the firm, and should not permit any customer to extend the ordinary terms of credit unless such extension is contracted for at the time when the goods are sold. The growing tendency to relaxation of terms of credit is an evil that can only be counteracted by the utmost firmness on the part of established houses. A proportion only of the usual discount should be allowed where accounts are not remitted promptly, and where practicable the whole discount should be forfeited.

The terms of payment should be printed on all invoice and statement forms, and it should also be intimated that interest will be charged on overdue accounts (m).

The profitable handling of financial matters depends very largely upon the care and vigilance of the cashier, or other person entrusted with the duty of passing accounts both to be received and paid, and the principal will do well to supervise this work. A rough test may, however, be placed upon the results year by year. The discount on purchases and the discount on sales accounts may be compared with those of previous years. From the amount of purchases made during the year it may be readily computed how much discount ought to have been obtained, after allowing for loss of discount in cases where bills are given. The discount on sales can only be compared by way of average, as there is so much irregularity in the modes of payment; one customer will remit prompt cash, another will give an acceptance and another will pay at half-time, and so on. Nevertheless, the average should be much the same year by year in a steady business.

While advocating the utmost vigilance in making use of all the advantages which custom and usage allow in financial matters, the author cannot too strongly deprecate the unfair means that are sometimes resorted to in order to extort more than is justly due. If on no higher ground than that honesty is the best policy, it should be remembered that a reputation for fair dealing is an invaluable aid to a buyer.

(m) Interest cannot be legally claimed until after notice has been given that it will be charged, hence the necessity for such intimation.

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ness.

The most rigid exactness and precision should be observed in controlling the payment of wages, which constitute one of the largest and most important items of expenditure in a manufacturing busi

All requisite statistics and information, as well as security against fraud, may be obtained by judicious organisation, with even less clerical labour than is involved in many of the clumsy and unsatisfactory methods in use, which afford neither information or security. Inter alia it is necessary to know :(i.) The amount paid in each department, or for each class of

work, during any given period. (ii.) That no amounts are charged by the cashier other than those

actually paid. (iii.) That the time workers are paid only for actual time employed. (iv.) That the piece workers are paid only for actual work executed. The following plan, which fulfils all the above requirements, has for years been in operation in many large manufacturing concerns with entirely satisfactory results :

Pay Tickets.—The overlooker of each department is furnished with a book of pay tickets, each page being ruled and perforated so as to form ten tickets, (see page 243). Duplicate coloured sheets, not perforated, alternate with the perforated sheets and receive impressions from carbon paper. These books remain in the countinghouse during the week, and are handed out to the several overlookers in time for them to write out the pay tickets for the workpeople under their supervision. The books are then collected and verified (1) by a trustworthy person, other than the pay clerk, whom we may style the Wages Superintendent, and the duplicate pages are cast up and initialed by him in ink. The perforated pay tickets are torn out and handed back to the overlookers, who distribute them amongst the workpeople (6). The books containing the duplicates are sent into the counting-house, and from them the money is counted and made ready.

A cheque should, where convenient, be drawn for the exact amount required, thus avoiding the temptation to misappropriate any surplus.

(n) The verification may be done either before or after the wages are paid, and, if after, mistakes may be rectified on the succeeding pay day.

(0) For greater security, the Wages Superintendent may distribute the tickets personally or by deputy, and may require the workpeople to furnish the amount due to them before handing over the tickets.

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