Consigned Items and Other Customer Services

Collection Items

The collection department is one of the most diversified areas in the bank. It engages in receiving, collecting, and liquidating items, which generally require special handling. The customer normally receives credit only after the bank receives final payment. Some of the common types of collection items include drafts, notes, acceptances, bonds, or bond coupons presented for payment, and contracts in which the bank, on behalf of the holder, collects proceeds. As far as collection items are concerned, the bank acts as agent for its customers or correspondents and receives a fee for that service. General ledger accounts rarely are used in the collection process. The importance and value of customer assets under bank control, however, demand the use of accounting procedures adequate to provide a step-by-step historical summary of each item processed. The bank must also maintain an audit trail to substantiate the proper handling of all items and to reduce the bank’s potential liability.

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