Loose Leaf Books in large Houses
CHARLES H. SWEETLAND IN MODERN METHODS
In view of the increasing use of loose leaf devices in book-keeping, the following article should prove of value, as supplying accurate data on the equipment required in wholesale houses. The writer is an authority and has written books on the subject.
THE proper application of system to office labor and accounting methods has worked a revolution. Not the excess of system which degenerates into “red tape,” but the proper and businesslike application of modern ideas and mechanical appliances where it can be done to simplify processes and reduce labor.
Large wholesale houses and manufacturing establishments have done much more to introduce modern methods than the rank, and file of business and professional men. The reason is obvious.
These large establishments have an office expense running up into the tens and hundreds of thousands of dollars, and a percentage of saving to them means a substantial sum of money which is clear gain.
Probably the largest number of loose leaf books now in use in America are in wholesale houses. They have been the first to recognize and adopt the looseleaf system, and have found it of such an advantage to them in handling their business, such a saving in time and such a convenience in general, that the use has spread very rapidly among the wholesale houses in different cities, not only of one commodity, but of all.
We sometimes meet individuals who say : “Loose leaf books may operate
very well in such and such a line, but they would certainly fail to give satisfaction in my line.” This, of course, is an assertion which it is not at all difficult to disprove. There are no vast differences in the bookkeeping departments of wholesale houses. It makes very little difference to the bookkeeper whether the final figures of a bill repre-
sent sugar, boots and shoes, drugs, hardware, millinery or any other commodity ; in fact, he seldom knows, except that he sees evidences of the character of the business in his transit from the office through the store. There is absolutely no wholesale business of any character wherein the loose leaf books are not available, and it might be said here, there is no business of any character, which requires bookkeeping, that loose leaf books are not both valuable and desirable.
The wholesale house pointed the way for loose leaf accounting books by the use of the original order as a salesbook, bound together on an ordinary post binder. It was found to be absolutely unnecessary and a great waste of time to copy bills in a sales book, and the first innovation made in order to lessen this work was to take an impression of the bill in a tissue copy book and post from the tissue. It was soon found unnecessary even to do this, as the order blanks are easily constructed so that the prices may be extended into the proper columns, the checking for shipment and for extensions made, and the charge ready for posting without a single item being transferred to another sheet. Using the loose leaf system, these loose charge sheets can be arranged in a manner conforming to the sales ledger arrangement, facilitating easy posting; the bill is made direct from these charge sheets, and after arrangement, the charge sheets are numbered consecutively, beginning usually with the beginning of the fiscal year. There are many houses who yet cling to the old idea of booking their sales, but it is absolutely unnecessary. A ■ very good plan is to use a loose leaf sales record, merely giving the date, number of the bill and the total upon loose sheets for country salesmen separately, citjr salesmen separately, mail orders, office sales and cash sales if desired. A recapitulation of the result of these daily postings of the separate salesmen and other accounts will give the entire sales of the day, and balance the recapitulation of the loose sheet records as entered for each ledger or series of ledgers. If the bookkeeper uses a slip system or the duplicate entry plan, the result of his work will balance the credit to sales accounts as represented by the recapitulation of the loose sheets in the order binders.
In the wholesale business, the city department would require the order blank system referred to the bill and charge system and credit memorandum plan— similar to the bill and charge, which duplicates the credit and is filed in a similar manner for direct posting, duplicate requisition blanks—which are used by their customers—and receiving blank —which is used in connection with the requisition system, a stock record book, an inventory book, city delivery receipts’ loose leaf price books, recapitulation books, loose leaf catalogues ; and in this connection I wish to say, the loose leaf catalogue is a very desirable thing for the wholesale firm, for the reason that any sheet in the catalogue can be changed without disturbing the balance of the work, and the catalogues in some lines of business are so very expensive that if they bécome obsolete on account of change of prices, it is a very costly matter to furnish each customer with new ones. This is not the only consideration. In the old-style printed catalogues where prices were raised or fluctuations occur, they frequently failed to be noted by the salesman, and goods sold from old catalogue, at old prices,
involving a considerable loss to the firm. It will be readily seen that by the loose leaf plan, the salesman would be furnished with the leaf from the house, giving the new figures and changes in prices, he would be instructed to insert that leaf at its proper place in his catalogue and “return the old leaf to the house;'’ this, of course, would prevent any errors in pricing goods.
Besides the books mentioned above, of course, the requisite number of city customers’ ledgers, monthly statement system and perpetual trial balance would be necessary.
In the buyer’s department of wholesale houses the use : Loose leaf stock
books, loose leaf quotation records, requisition system in duplicate, loose leaf price books—as mentioned above— and also the inventory system.
All the books used in the buyer’s department, as above noted, can be handled with binders and holders, the holders being used to carry as many sheets as are necessary for the current work of the month, and then they are transferred to the binder. In some cases, especially in the loose leaf stock book, where articles are given an account similar to individual accounts in sales ledger, and the debit and credit for goods received and delivered is maintained, it is necessary to have the alphabetical indexing arrangements and to use one binder for current purposes, and another similarly indexed for transfer purposes. Stock and warehouse records kept in this manner are easily available and handled without difficulty and with comparatively little labor. The advantage of loose leaf quotation records, price books and inventory system will be seen very readily from their application in other ways.
The sales department would find the loose leaf catalogue for salesmen mentioned above absolutely indispensable. The pi ice kook for salesmen, order registers, salesmen's expense record and the general sales record can all be handled in the loose leaf with ease, giving the greatest efficiency in this service. The character of information desired by the sales department, the necessity of constant and careful supervision of the work of salesmen is such that the interchangeable leaf system appeals directly to them as something which will vastly improve their methods.
It renders the book to be handled much lighter, and allows any size or shape page which may be necessary to convey exactly the information desired. It keeps a perfect record of all matter which has passed beyond the active stage, and at the same time it keeps the current record all together in one place and constantly before the operator. No other system can do this without the necessity of doing a large amount of superfluous work, and at the end of a period leave information stored away in bound books not easily available.
Under the head of loose sheets, of course, the manifold books for salesmen’s use—duplicate, triplicate, or quadruplicate as required. Order blanks for salesmen—duplicate or
triplicate. Receipt books for salesmen, expense report and all other necessary reports.
The entry departments require the bill and charge blanks in duplicate, triplicate and quadruplicate ; also require recapitulation blanks. The pricing department should be provided with the recapitulation blanks and loose leaf price books which are indexed especially for the purpose and which can be referred to instantly in regard to prices or changes of prices. The profit department should also be provided with loose leaf books, re-
capitulation blanks and salesmen's ledgers.
In the cashier’s department the books necessary to be carried are the records of cash received and disbursed.
The mail order department should have loose leaf records of advertising matter which has been sent to customers with prices quoted which can be arranged as desired. A key record for advertising should be kept in this department, which should be arranged so that the contract for the advertising is given at the head of the page and the credit for answers received under the key below. At the close of the contract or any given period thereafter, the number of answers received can be computed, the net cost per answer obtained, the number of orders received through the advertisement easily kept track of, and the final results of loss or gain upon the advertising contract determined. This information is of the greatest value to the advertising manager of the concern, as a reference to the results obtained through different mediums enables him to save a large amount of the firm’s money in placing his advertising contracts. In the mail order department should also be kept a loose leaf record of the orders received and such other data as may be deemed necessary or required by the business. The advertising department can use loose leaf books to the greatest advantage by carrying their advertising accounts the same as individual accounts, keeping a record of contracts and payments made thereon from information received from the cashier ; also as to returns from information received from the cashier ; also as to the returns from such advertising as is possible to trace from information received from the mail-order department, and thus keep the business well in hand.
We come at last to the Accounting department ; the official centre of information. In connection with this department, it is necessary to have General ledgers, Private ledgers, Stock ledgers, and Sales ledgers. A wholesale house usually requires in addition to the regular ledgers in this department a Bills Receivable book, a Suspense ledger, an Attorney’s ledger, Accounts Payable book, a Bills Payable book, Recapitulation books for the ledger system, Perpetual Trial Balance book, and in some offices a collection tickler. The Bills Receivable Register can be arranged in the manner best suited to the demands of the business ; the ruling and the columns can be made to suit any occasion and can be indexed for due dates if desired. The balance of the bills receivable represented in this book should at all times be the same as the balance of the bills receivable account in the general ledger.
Some firms carry their attorney’s account in a suspense ledger ; other firms prefer two ledgers—one called suspense carrying such accounts as are inactive and uncertain, but at the same time they have not been given to attorneys for collection for reasons. Such suspense accounts are frequently small accounts of disputed items and occasionally accounts of parties who are perfectly good, but on account of some misunderstanding are holding accounts open and unpaid.
Of course, the attorney’s ledger represents such accounts as have been passed over to the attorneys for collection. These ledgers should be in duplicate, as it is important that the suspense and attorney’s ledgers should be kept current. Perhaps
more so than anjT books in the house. The great advantage of being able to transfer the account in its entirety from any sales ledger direct to the attorney’s ledger, to keep all such accounts together and to be able to make notations furnished by the collection agent as to a settlement or prospective settlement upon an original account ; to have this information directly before the eye of the credit man without the necessity of going through a large amount of extraneous matter ; and the fact that they are collated and systematically arranged, renders it possible for the credit man to urge the collection very much more readily, and there is no question that the proper use of the suspense and attorney’s ledger will decrease to a very large extent the losses of the firm.
The uses of the accounts payable and bills receivable books are apparent to every bookkeeper.
The recapitulation book should be built up from the ledger system ; it should have columns for each ledger or series of ledgers in use and should run both debit and credit. It should be arranged with lines sufficient for the daily recapitulation for one month upon one page ; the debit postings for the day being inserted under its proper caption from whatever sources obtained will give in its entirety the total debit postings ; the credit, postings for the day arranged' in their proper columns will give in their entirety the total credit postings for the day ; these again taken in connection with the previous day’s balance will show the total balance for the day. The daily recapitulations added at the end of the month will give the monthly debit postings from every source which, taken in connection with the previous month’s balance, will give the present month’s balance. Monthly recapitulations should be kept in the back of the book for each number or series of ledgers, giving the monthly results, and the total of the twelve monthly recapitulations will give the total debit postings from every source for the year and the total credit postings from every source for the year when taken in connection with the previous year’s balance will give the required balance for the present year.
The Stock books of large houses can be kept admirably by this plan, so that at the close of any week or any given period, it will be but a small amount of work to tell the exact amount of stock on hand.
In each department of the vast wholesale establishments of the country, there are frequently special books required, adapted to their peculiar business. I have endeavored in this article to give a general idea of such books as are considered necessary in most large establishments, but I do not desire to have any one consider that I have mentioned all of the books to which the loose leaf can be adapted in connection with wholesale business, as it would be an impossibility to do this without knowing the particular requirements of the business. It is safe to say, however, that there are no special books used in any line of business
that cannot be successfully converted into loose leaf books, and by that conversion be more advantageously used and more satisfactory in every respect.
With the vast advantage offered by the loose leaf system in reducing the weight of books handled and in being able to multiply indefinitely divisions of the work so that any number^ of clerks can be employed at the same time ; in the fact that all dead or inactive matter is released immediately from the operator’s hands, and so held that it does not require to be disturbed except for reference, and consequently is kept in the best condition ; the additional fact that no new books have to be opened of ANY character after the loose leaf system is thoroughly inaugurated, as it is in itself a perpetual record ; and the fact that the time saved in handling any portion of the work by this method—runs from 20 to 40 per cent. —are ample reasons for its adoption by any wholesale house.
Thousands of the largest wholesale houses in every line are now using loose leaf systems to their satisfaction, and thousands more are changing annually from other styles of bookkeeping to the loose leaf ; surely there could be no strongec argument used favoring a model system than the successful operation of it by so many of the largest houses.
Poverty itself is not so bad as the poverty thought. It is the conviction that we are poor and must remain so that is fatal.