Contents The banking system The banker/customer relationship Procedures for banking cash Procedures for banking cheques Procedures for banking plastic card transactions Banking other receipts The banking system Central Bank: The Bank of England - controls the banking industry Clearing or retail banks Barclays Lloyds – TSB HSBC NatWest Smaller retail banks Co-operative Bank Yorkshire Bank Abbey National
Clearing is the mechanism for obtaining payment for
cheques E.g. of the cheque clearing system Clearing system principles Step 1 Receiving bank branches stamp their names and addresses in addition to the crossings on the cheques Step 2 Cheques from receiving bank branches sent to the head office Step 3 The head office delivers to the Bankers Clearing House Step 4 The Bankers Clearing House distributes these cheques to the head offices of the relevant paying banks. Step 5 The paying banks' head offices process the cheques using computers and distribute the cheques to the various branches The banker/customer relationship Banker Customer Put money and Bank opens an cheques received on account for him in a customer's behalf into his account. his name. Take out all cheques Bank accepts his and orders paid instructions and from the account by the customer. undertakes to Keep accounts on provide a service the customer's behalf. Contractual relationship Procedures for banking cash Procedures for preparing a paying-in slip Step 1 Count the cash Step 2 Add up, on a separate piece of paper Step 3 Compare: calculated total vs. cash register Step 4 Calculate any discrepancy Step 5 Enter the total for each denomination of note in the appropriate place on the paying in slip. Step 6 Add up the numbers again to check the total and enter it in the 'total cash' box. Example You are preparing the day's takings for banking. When you have sorted and counted the notes you find you have the following. (a) Five $50 notes (e) Six bags 20 $1 coins (b) 110 $20 notes (f) Two bags 10 50 cent coins (c) 560 $10 notes (g) Ten bags 50 20 cent coins (d) 40 $5 notes (h) Other silver worth $32.20 (i) Bronze worth 93 cents The float left in the till was $34.90 at the end of yesterday and $43.62 at the end of today. The till summary states that $8,517.41 was received today. Prepare the paying in slip and reconcile cash banked to the till records. Solution
Reconcile Procedures for banking cheques You are employed by Easter Co and have the following amounts to pay in to the bank.
Complete the paying-in slip and
counterfoil below for presentation to the Solution – the front Solution – the back Returned/dishonoured cheques Insufficient funds: not be enough money in the customer's account to cover the cheque. Banks will honour a cheque in the following circumstances Cheque amount lower than the cheque guarantee card limit There is evidence that a check was made between the cheque and the guarantee card Stolen cheques and cheque guarantee cards: Invalid and worthless even if a cheque is accepted with a cheque guarantee card and all details appear to agree Wrongly completed or out of date cheques
Cheque returned to you marked 'refer
to drawer‘ and You will return the Procedures for banking plastic card transactions The card issuers require the business receiver of card transactions to summarise all transactions on a summary voucher. The summary voucher consists of an original or 'top copy' and two copies with carbon paper in between. The bottom copy is the processing copy, on the back of it is a place to list the vouchers. The summary voucher has to be imprinted with the retailer's plastic card. Procedures for banking plastic card transactions You are asked to bank all card $ $ transactions at the Sale 26.41 Sale 12.95 Sale 32.99 Sale 14.48 end of a working Sale 32.99 Sale 136.48 day. You receive all Sale 100.4 Sale 12.95 the card vouchers Sale 22 Sale 112.95 for the day and you Sale 46.99 Sale 11.8 obtain a summary Sale 37.8 Sale 56.71 voucher. The Sale 12.95 Refund 22 transaction vouchers are as follows Solution – back of processing copy Solution – front of processing copy Queries arising from card transactions Banking other receipts Direct debits Banking and EFTPOS Standing orders Credit, charge or
Automated payments debit card receipts via
EFTPOS are credited Telegraphic transfers directly to the Banker's drafts retailer's bank same manner as account. He can cheques agree the amounts Bank giro credits received to the 'End paid into a bank of day' reconciliation account by the produced by the customer of the terminal business, in which case the amounts will appear automatically on the business's bank 1 What is 'clearing' in 1 Clearing is the banking terms? mechanism for 2 How long does a obtaining payment for cheque take to clear? cheques. 2 Cheques take three 3 What are the four
types of relationship working days to clear.
which may exist 3 The relationships are:
between a banker and receivable/payable,
customer? bailor/bailee, 4 What is a 'fiduciary principal/agent, relationship'? mortgagor/mortgagee. 4 A fiduciary 5 How should coins be
banked? relationship is one in
which the superior QB 15 A fiduciary relationship is A A contractual relationship B A special relationship recognized in law even though it may not be contractual where one party is in a position to exert undue influence on another and must therefore be shown to act in good faith C Not recognized in law unless it is contractual D Between principal and agent