BUSINESS PAPERS—THE GOODS INVOICE AND BILL OF LADING
=Definition.=—When a business transaction takes place, a record or
memorandum of its amount and nature is usually made out. Thus, the
amount of cash received for a sale may be rung up on the cash register
or a sales clerk may make out a duplicate sales ticket and turn over
the carbon copy as a sales memorandum to the bookkeeper; for cash
disbursed a receipt, to be the basis for formal entry on the books, may
be demanded from the person to whom the payment is made.
These memoranda of business transactions are called “business papers.”
They comprise all of the more or less formal and informal documents
which constitute the firsthand evidence of most transactions. Among the
most common business papers may be mentioned: the goods invoice for
purchases or sales; negotiable paper, including the check, note, draft,
money order, and warehouse receipt; the statement and account sales;
the shipping order and bill of lading; the bill of sale; the lease
agreement; and contracts of all sorts. A few of the business papers
most frequently used will be explained.
=The Invoice.=—When a merchant sells goods to a customer he writes
out an itemized “bill” which is sent along with the goods. This bill,
loosely called an “invoice,” is from the seller’s viewpoint more
accurately described as a sales invoice, and from the customer’s or
buyer’s viewpoint as a purchase invoice. It is an itemized statement of
goods bought or sold, and should state the names of vendor and vendee,
the address of the vendor and the date of sale, the quantities, kinds,
and prices of the goods, the terms of sale, and additional information
as to method of shipment, etc.
=Handling the Purchase Invoice.=—When goods are bought the purchase
invoice should be verified or audited. The method of audit depends upon
the organization of the business. In a small business, if the invoice
is received before arrival of the goods, it is usually held till their
arrival and then checked against them as to quantities, quality, and
price. The extensions and total are verified and entry made in the
purchase journal, using the audited invoice as a basis. The invoice
should then be placed in a temporary file till paid, after which it is
usually filed under the vendor’s name for future reference. The check
in payment of the invoice, when returned canceled by the bank, is
frequently attached to the invoice for which it was issued as evidence
of its settlement. At any rate the paid invoice should bear on its face
a notation to show the payment.
In a large business where the clerical work is divided among
departments, several copies of the original purchase order sent to the
vendor are usually made out—one copy, for instance, for the purchasing
department, one for the receiving room, one for the auditing department
and so on. The procedure of auditing is then more complex. The copy
furnished the receiving room is usually left blank as to quantities,
and sometimes the description of the goods ordered is also omitted.
When the goods are received, quantities and kinds are filled in by the
receiving department, and the copy is sent to the auditing department
where it is checked against the auditor’s copy of the original order
and the purchase invoice from the vendor. If found correct as to
quantity, kinds of goods, extensions, and additions, the invoice
becomes the basis for entry in the purchase record—journal or voucher
register as the case may be—after which it follows the customary
routine as to filing. The invoice remains in a temporary file as long
as it is unpaid. Upon payment it is placed in a permanent file, either
under the name of the vendor, by invoice number, or according to
whatever system may be in use.
=Handling the Sales Invoice.=—Practically all systems of handling
sales require that at the time of the sale some record or memo of the
transaction be made. In retail establishments the use by each salesman
of a book of sales tickets with provision for duplicate or triplicate
impression is very general, whether the sale be cash or charge. The
cash and charge tickets are usually put up in separate books and a
different color of paper is used for each. At the close of the day the
total cash tickets are checked against the cash received from cash
sales, and the total charge tickets give a controlling figure for
charges to customers. The total of the cash tickets plus that of the
charge tickets gives the total credit to Sales.
These sales tickets are usually entered on a daily sales sheet provided
with distributive columns for analysis according to departments or
kinds of commodities. A recapitulation giving the totals of each of
these columns is made and posted to the ledger, while the customers
ledger accounts may receive their charges direct from the sales ticket.
This recapitulation really constitutes the sales journal record, as is
explained in Chapter XLVII.
Where the number of charge accounts is not large, a folder system is
sometimes used. Each charge sales ticket is placed in the folder which
takes the place of that customer’s account, thus avoiding the necessity
of making a formal entry on the ledger. When the customer pays this
bill, the sales ticket is so marked and is either left in the folder
or transferred to a permanent file. The successful operation of the
folder system presupposes that the customer will pay the exact amount
of his bills shortly after the date of the ticket, no provision being
made to care for overlapping credits. Whatever the system, the sales
ticket is the original record of the transaction and therefore valuable
as evidence in case of dispute. These tickets should be filed away and
kept until all danger of dispute is past.
=Credits and Returned Goods Invoices.=—If for any reason goods
purchased prove unsatisfactory and are returned, record of their return
should be kept by the shipping clerk and used as a basis for securing
proper credit from the vendor. The vendor usually sends a returned
goods invoice, which, though similar in form to the purchase invoice,
constitutes a _credit_ to the purchaser instead of a charge. These
credit memos, as they are termed, are always of some distinctive color,
frequently red, in order to distinguish them readily from the regular
invoice.
Similarly, when dissatisfied customers return goods, or when the
business makes them an allowance on goods sold, a credit invoice or
credit memo is sent them and the duplicate copy of this memo retained
in the office becomes the basis for entering the transaction on the
books.
=Shipping Goods—The Bill of Lading.=—The purchase and sale of goods
usually involve dealings with railroads. It is not the purpose of this
chapter to give an extensive system or method of handling shipments,
but merely to explain the purpose of the railroad documents and their
use as business papers.
A shipment of goods is evidenced always by a “bill of lading,” a
contract under which the railroad accepts freight for carriage, defines
its liabilities as a transportation company or warehouseman, and states
its duties and those of the shipper. Its standard content is prescribed
by the Interstate Commerce Commission, although any additions to it not
in conflict with the standard content are not forbidden. If the shipper
so desires, he may have bills of lading printed to conform in size with
his own files, instead of using those furnished by the railroad. There
are two standard forms, the _straight_ bill of lading which is not
negotiable and the _order_ bill of lading which is negotiable.
The bill of lading is always made out in triplicate, the original and
the two copies being identical except as to titles and signatures.
The original is signed by the shipper and the railway agent, and
constitutes the shipper’s receipt for the goods delivered to the
railroad. The second copy called the “shipping order,” is signed by the
shipper only. It is his order to the railroad to ship the goods, and
is held by the railroad as evidence of its authority. The third copy
or memo is an exact duplicate of the original. Like the first copy,
it is signed by the shipper and the agent, and is held by the shipper
as a duplicate receipt. Sometimes it is forwarded with the invoice to
the customer, but otherwise should be filed by the shipper with the
original bill of lading. In case of claim against the railroad for loss
or damage to goods in transit, the original bill of lading is required
as evidence and should therefore always be kept in the shipper’s
possession.
=Freight Notice and Expense Bill.=—A notice, called “freight notice,”
is sent by the railroad to the consignee upon arrival of the goods. A
more or less formal order is given by the consignee to the teamster
or drayage company to call for the freight. This order authorizes
the railroad to deliver it to the teamster or drayage company. Upon
its delivery, an “expense” or freight bill is sent to the consignee
itemizing the freight charges due on the shipment. The freight notice
and the freight bill are usually made at one impression, the heading on
the one being a notice of the arrival of freight, while on the other
the heading is that of an ordinary invoice or bill showing the freight
charges on the designated goods. Some railroads make three copies at
one impression, consisting of (1) the freight notice, (2) the delivery
receipt, and (3) the freight bill. Copy (2) is a receipt surrendered by
the consignee upon delivery of the goods.
=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:
[Illustration: Form 20. Monthly Statement of Account]