General Liability Statements

So far as the liabilities statements are concerned, the number of them dispatched, and the length of the intervals between, are matters which each bank arranges to suit its own particular circumstances or policy. But the best kind of management calls for reasonably frequent accountings by the branch managers of all discounted paper held by them.

There may be two liability statements required, one being weekly or bi-weekly, and the other monthly or bi-monthly. It is sometimes desired that the particulars of the large liability accounts be set out for head office information at frequent intervals, so that the changes can be seen and followed. Thus a statement of liability accounts exceeding a certain sum - $1,500, $2,000, or $3,000 - may be called for twice a month, or more frequently.

On the statement form, which is a large sheet, the accounts that qualify for entering are set down, one after the other, in alphabetical order. A heading is raised for each account, and under that the subsidiary or collateral names, and the security held, are given, arranged first, by classes and then in alphabetical orders. For example, the customer's loan bills are entered first. The name of the endorser of each bill exceeding the amount fixed upon as minimum is given, and the amount. If the loan is secured by pledge of some specific security, the security is described. Next the overdraft, if any. Then, in entering trade bills, the names of promissors are given, with the amount for which each one is liable. Liabilities under the minimum amount are entered: "So many trade bills under $------, $------."

The past due bills are entered in a manner to specially strike the attention, usually in red ink. At the foot the amount of the customer's indirect liability, with the particulars thereof, is given. When the totals are extended there will be shown the total amount of the customer's loans and overdraft, of his trade bills, the grand total of his liability, and probably columns will be provided for a comparison with the total amount as of the same date in the previous month and in the previous year.

Then a liberal outer margin is provided in which the manager is expected to give the customer's rating, the surplus he claims over what amount of liabilities, his character, standing, capability, the condition of his business, and other facts calculated to assist the general manager in his efforts to get a clear idea of the desirability and safety of the debt. Each subsidiary name or security has also to be reported upon, but the remarks are not so minute or so full as in the case of reporting on the principal.

When all the accounts qualified for the statement are treated in this manner, the totals extended and carried forward to the end of the last sheet, the statement is completed. As it contains only a part of the loans and discounts, the total shown at the end does not balance with anything. Copies being required, for reference and for guidance in making out future statements, the writing is done in copying ink.