The receiving teller transfers deposits of cash to the paying teller, who in turn uses the money to meet the claims drawn against the bank. The receiving teller also handles deposits of credit instruments such as checks, promissory notes, and drafts, which the bank presents to the drawee for payment and credits to the account of its customer.

These instruments are classified on a basis determined by noting whether the customer received credit to the account before or after presentation has been made. If the bank gives him immediate credit before presentation of the instrument, it is described as a "cash" item against which the depositor may draw his checks at any time. On the other hand, if the bank withholds the credit and does not permit the customer to draw against the deposit of the instrument until it has actually been paid, it is then termed a "collection" item. In other words, the cash item allows the depositor immediate credit, while the collection item gives him only deferred credit.

In general, cash items include all instruments which are due or past due, while collection items consist of claims which have not yet matured. For example, a check is a cash item, for it is an order which a bank must pay on demand. A collection item may be illustrated by a draft which has been deposited several days before its maturity.

These instruments may be further classified as city or country, depending upon the place where reimbursement is made. A city item is one which is presented in the same locality as the collecting bank, while a country item is payable anywhere beyond the immediate vicinity. The classes of exchange items handled by a bank may be grouped as follows:

City Country cash collection cash collection

In order to trace the entire procedure of forwarding these items for ultimate payment, it would be necessary to extend the study beyond a survey of the operations of one bank to a complete analysis of the relations among banks. This subject will be reserved for treatment in Chapter XV, and for the present the discussion will be confined to those departments within the bank which prepare the items for collection.