144. Credit Men's Association

The credit man should be given a membership in the Credit Men's Association, and should attend its conventions when practicable. He will learn many new ideas from his association with other men in his own line of work, and the bank will receive a large share of the benefit.

145. Value Of Depositors' Accounts

Some banks have endeavored to determine the value of the accounts of depositors. It is evident that a large inactive account on which little or no interest is paid is a paying account. No theory or system can determine the value of a small account. In itself, it may be an expense to allow a depositor to maintain a small balance, but it frequently happens that if he is asked to withdraw his account he will influence other accounts of greater importance. Accounts with large balances, but with activity of peculiar type may be an expense instead of a gain to the bank. In order to form some conclusion in regard to this class of accounts, a record should be kept by the credit department of all foreign items sent for collection. The record should show the number of days required to collect these foreign items and the cost of exchange.

At the end of the month the sum of the amounts outstanding three days should be multiplied by three, the sum of the amounts outstanding seven days, by seven, etc., and the results added together and divided by the total number of foreign items. This will give the average amount outstanding during the month, which should be deducted from the average balance maintained. The net balance is then multiplied by the average rate received for loans, and furnishes the main receipt from the account.

The next is the total amount of exchange charged during the month. From the sum of these two items is deducted the various costs to the bank such as exchange paid, which may not be quite as much as the amount charged, special expense of collecting, interest credited to the depositor and any other direct expense incurred for account of the depositor. The balance will represent the gross income from the account.