In most Exchanges, the custom obtains of keeping in the ledger a separate account for each creditor, i. e., each person or firm from whom goods are purchased. This entails an enormous amount of work, and as this work can be done by none but an efficient employee, it also entails a considerable unnecessary expense. In the system to be described, this work is reduced to a minimum, and while each of our creditors has his ledger account, this account is kept in such form as to require no duplication of our records, and, at the same time, to tell us at any time exactly how we stand with each of our creditors.

Purchase Orders.

Let us start with the process of ordering our merchandise. This is done on Form 15, shown in Fig. 23. By means of carbon paper, a duplicate of our order is entered on Form 28, shown in Fig. 24. The original goes to our creditor as an order; these orders are numbered consecutively throughout the year, or even over a longer space of time, should it be found desirable. Form 28 goes to the Receiving Clerk and is held by him on a Shannon file until the goods arrive. He then checks the goods against this form and issues them as described under “Stock Records”. A variation of this method, known as the “blind tally”, is worked by making out a triplicate copy on Form 28, this copy to have the “quantity” column blank, which is easily effected by slipping a piece of paper above it to receive the carbon record which would otherwise be printed in that column. The receiving clerk then has no idea of the quantities ordered and fills in the “quantity” column himself. A comparison of this with the duplicate (kept locked up in the office) quickly shows us whether we received all of our goods. This system has broken up some very obscure practices. In either system, it should be noted that we need not await the arrival of the invoice, unless it is desired to do so, before issuing goods to departments. The columns at the right of Form 28 are for convenience in calculating selling prices, etc.

As previously noted, the receiving clerk (or stock clerk, whoever handles this work) hands in at the close of business each day, two copies of Form 17, one covering the selling price of all stock which has arrived or been transferred during the day, and the other covering the cost price of same. Attached to these forms are all requisitions and receiving records (Form 28) covered by these Forms 17. The Steward sees that each receiving record is correctly calculated and properly entered on both copies of Form 17. (He, also, at this time, sees that the requisitions are properly entered on both forms.) The receiving records are then filed in a Shannon drawer to await the arrival of invoices or for comparison with them if they have already arrived. For convenience, they are filed behind alphabetical guides according to the names of our creditors. When the invoices arrive, they are filed in the same manner and in the same drawer. They would, therefore, naturally tend to find each other.

Before the receiving record is sent from the office to the receiving clerk in the first place, the order is entered in our Purchase Record, which, as its name indicates, is a chronological record of all our purchases of merchandise of whatever sort. Hire of services, of course, is not entered in this record.

There are various forms in use for Purchase Records, invoice Records, etc., and a study of several of them leads us to advocate the use of Form 29, shown in Fig. 25 as being the best suited to the work in hand. This is specially ruled and printed and like most of the other forms described is as well suited to the needs of a small exchange as a large one. They will cost about $12.00 per thousand and a good substantial binder for them will cost from $2.75 to $11.00, depending upon the quality of the binding. One and a quarter inch back is large enough for our purpose; the sheets are 10¼ × 10½ inches, the former being the binding side.

When our order is first made out, we enter in the proper column of the purchase record, the name of the firm on whom the order is drawn. This is the only entry made at this time, and the retained copy of the order (the receiving record) is then sent to the receiving clerk. When the invoices arrive, they are stamped as shown in Fig. 26, the 1st and 2d lines of this stamp are filled in, their date is entered in the left hand columns of the purchase record and the invoices are then filed as before described. In this way, the office keeps track of how fast the stock is arriving, because the number of firm names entered on the purchase record will show us the number of outstanding orders, and the number of dated entries will show us the number of invoices that have arrived which have not yet been checked up by the Steward (usually because the goods have not arrived). When the goods arrive, whether they follow or precede their invoices, and the receiving clerk has checked them into stock and returned Form 28 to the office, the purchase price is entered in the Purchase-Credit column shown. This purchase price disregards our cash discount, which is cared for in the cash book. However, if there is any allowance due us for returning all or a part of the goods on any invoice, the amount of such rebate is entered in the Debit-Purchase column. This is the only use to which this column is put.

Let us suppose that we are now ready to pay a bunch of invoices. Proceed as follows:—

1. Take the invoice file, and, starting with the letter “A”, go through the file, taking the accomplished invoices as you come to them. All those relating to any one firm should be found together, as before mentioned, thus saving much time at this stage.

2. Having your invoices, make out a voucher (Form 14, Fig. 27) for each firm or creditor concerned, entering thereon all invoices relating to that firm. If the buying is done properly, there should be plenty of room on the voucher for these invoices. (In case of a firm from whom we make almost daily purchases, we hold the invoices and make one payment at the end of the month.)

3. As you go along, have a dating stamp handy and stamp the date on each invoice as you make out the corresponding voucher. If the invoice is discounted, stamp the date in the “Discounted” space; if there is no discount, stamp the date opposite the word PAID (see Fig. 26). At the same time, enter the voucher number (which may, and probably will differ from the invoice number) in blue pencil on the proper space of this same stamped impression.

4. When all the invoices are finished, take the vouchers, and, starting with the top one, find where each invoice is entered in the purchase record and stamp the date in the PAID column opposite each entry. These places are easily found by reading the invoice numbers entered on the vouchers.

5. While you are stamping these dates, compare, as you go along, the amount of the invoices as entered on the vouchers, with the amounts entered in the purchase record.

6. Now take the vouchers and enter them in the Cash Book on the right or credit side. In the “net cash” and “creditors” columns should be entered the exact amounts actually paid, in the Discount column should be entered the amount of discount allowed. Discount is always shown in the cash book and on the vouchers in red ink, to avoid confusion with credits, which should be shown in black.

7. After the cash book has been posted, the proper checks are made out, ready for the signature of the Exchange Officer. They and the vouchers are then mailed to the various creditors.

8. The paid invoices are then placed in a Shannon file drawer by themselves where they can be consulted easily. They form a complete file of sub-vouchers to the cash account for the month. They should never be mailed to our creditors for the purpose of having them receipted; it takes too much energy and time to get them back. In case our creditor fails to return our voucher, we can still prove payment, beyond a reasonable doubt, by producing the canceled check (which he must release sooner or later) and the original invoice exactly corresponding to it in value. One authority goes so far as to say,—“If a check bears no evidence as to its purpose but can readily be identified with a particular bill or invoice, it still is a better voucher than a receipted bill, ... a mere receipt for so much money, which can readily be forged, is poor evidence of a legitimate payment, but a paid check, properly endorsed and otherwise identified as representing a definite liability, is pretty fair proof that the money has reached the creditors.” (P. 49, Vol. 6, Enc. Commerce and Accounting.)

As a matter of fact, we sometimes experience considerable difficulty in getting even the vouchers back from our creditors. Lieut. Schudt, at the Fort Levett Exchange, hit upon a scheme which tends to lessen this difficulty. This is, simply to have the vouchers printed on a card of suitable weight; the reverse of each card being printed in the form of a self-addressed penalty post card. Our creditor, after dating and receipting the voucher, simply drops it into the mail box without the additional trouble of mailing it in an envelope.

The Voucher Check System.

A much more efficient system than that just described, one which we hope will some day be prescribed by regulations, is the “voucher check” system. This system is rapidly forcing its way to the front through the merits of its sheer efficiency, and is now in force in the business administration of many large concerns, the Pennsylvania Railroad, for example. The system is founded on the indisputable proof of payment that is afforded by an endorsed and paid check. As one eminent authority on auditing, has said,—“If a check bears on its face or back any indication of its purpose, it is the best receipt for money paid that can be secured”.

The voucher check system does away with separate “vouchers”, as we in the Army are accustomed to think of them; the checks themselves are our vouchers. The checks are somewhat different from the usual type, as they bear on their face a statement of the invoices they pay. In fact, they contain substantially the same matter as is shown on our regular voucher. Form 30, Fig. 28, shows a voucher check that would be entirely suited to our use. It may be unnecessary to explain, the dates, numbers and amounts of the invoices are entered at the right in the proper spaces, the amounts are totaled, rebates, allowances, etc., are deducted, the discount applied to the remainder and the check proper (left hand part) made out accordingly. Form 30a, shown in the same figure, is the carbon copy, the original being made out in indelible pencil. The right hand or coupon part of this duplicate is torn off, pinned to and mailed with the original check. It gives our creditor a memo of the payment, rendering it unnecessary for him to hold the check until he can make a special note of the payment, thus helping him out and at the same time expediting the process of cashing in our check. The left hand part of Form 30a remains in the check book and performs the same function as the regulation check stub. It will be noted that we thus save the labor usually expended in filling out our stubs and in addition, we are not liable to accidentally forget to fill out the stubs altogether, as sometimes happens with the regular style of check book.

The form and size of these voucher checks lend themselves very readily to manufacture in the same “make-up” as certain kinds of sales books, but the ordinary style of duplicating book is probably just as good as the more elaborate kinds. The checks should be printed three to the page and care should be taken that the duplicate forms are “in register” with the originals, otherwise, the carbon copy data will not appear opposite the proper notations.

Figure 28, (Reduced in size)