This section is from the book "Elementary Banking", by John Franklin Ebersole. Also available from Amazon: Elementary Banking.
Drafts on individuals must be presented to the drawee, either for payment or acceptance, and notes must be at the place where they were made payable on the day they are due. Banks undertake to collect these items for their customers and pass the proceeds to the credit of their depositors. This function is incidental to commercial banking, the bank acting as the agent of the owner of the paper to be collected. In small banks it is not unusual to see a brass sign displayed at the receiving teller's window reading "pay notes here." Although they are not required to do so by law, many banks give notice to the makers of notes or the drawees of drafts that they hold the note or draft awaiting payment, and to some one of the tellers or clerks is assigned the duty of receiving payment. As the bank grows, a separate department is organized for this purpose and a note teller is appointed. He is usually in charge of the messengers or runners. Instead of sending out notices the bank may render its customers better service by having its messengers present the items for payment at the place of business of the payer. Of course, it is legally bound to do this if the notes are payable there instead of at the bank. The messengers also present checks for payment at banks not represented in the clearing house, collect coupons and return unpaid checks to depositors. It is necessary that they should exercise great care in all these transactions, since for the time being they are the accredited representatives of the bank and the bank is bound by their actions. The note teller or collection clerk keeps a register record of all the "time" items that are placed in his hands for collection. This record consists of the name of the payer, the indorser, or the owner of the item for whom the bank is making collection, the date of maturity, the amount, and whether the item is to be protested or not if unpaid. There may be other instructions, as, for example, a request for telegraphic advice of payment. A column is used to record the final disposition of the item, which in banking parlance is called "fate." Usually a separate register is used for drafts, because they may require particular care. They are often accompanied by bills of lading or other documents that are to be delivered only when the drawee has paid the draft. Drafts are often made payable "on arrival of goods," and the note teller keeps in touch with the drawee so that there may be no unreasonable delay after the goods covered by the draft have reached their destination. In making his proof the note teller enters on one side of a sheet the name and amount of each note, draft or check which is to be collected on that day. As the items are paid he extends the amount in another column and opposite he makes a memo of the funds he has received. This memo is technically called the "satisfaction" of that particular entry. The total of the items thus "satisfied" at the end of the day must be equalled by the cash and checks which the note teller hands over to the paying and receiving tellers. The note teller has miscellaneous functions which probably differ in most banks. When a bank has a note teller's department and is in doubt which particular department should handle a transaction it seems always to be assigned to the note teller. He is often in charge of the bank messengers, receives bank deposits which come in over the counter, handles telegraphic transfers, and often issues letters of advice and certificates of deposit, the former being formal, officially signed acknowledgments of funds received and the instructions accompanying them.