Cash disbursements by branches;

              2 HASKINS & SELLS January
Cash Disbursements by Branches
BY C. R. OLIN, JR. (Supervising Accountant, Cincinnati Office)
ALARGE manufacturing company,
through its thirty sales branches, effi­ciently
makes and adequately controls
annual cash disbursements of about five
million dollars. It is done out of a fund
of $15,000.00. Less than two years ago
its branches numbered only twelve; its
annual disbursements through these
branches aggregated but one million dol­lars
or less; and the fund amounted to
$30,000.00 or more—indicating that the
present volume of business under the old
methods would have required a fund of at
least $150,000.00.
The present plan affords a number of
features which are interesting and desirable
both to public accountants and to any
institutions whose business transactions
and form of organization require that dis­bursements
be made by employes located
in widespread and distant points. One of
the more important is the absolute control
and check by the home office. This is of
particular interest at present in view of the
unusual attention which is being given to
the cash situation by accountants and
executives.
The plan can be better appreciated by
having in mind the methods it has super­seded.
These old methods, in this case,
were very similar to those which have been
and are being widely used by others. A
comparison of the old and the new will
make obvious many of the advantages
gained and it is to be hoped that it will
suggest beneficial adoption, either in part
or as a whole, of the new plan by others.
The outline of the old methods is brief and
confined to the essentials.
Formerly each branch was supplied with
an imprest fund. These funds varied from
$100.00 to $5,000.00, depending upon the
size and location of the branch. The
amount was expected to be sufficient to cover
their requirements for a reasonable length
of time. Actual practice showed that sea­sonal
requirements necessitated temporary
increases in these funds. It was, of course,
intended that such temporary increases
would be returned when the emergency
passed. However, they more often be­came
permanent ones or were retained by
the branch for a period considerably longer
than necessary. It is a human trait, it
seems, to like to control more money than
actual needs dictate. Naturally such ex­cess
funds were unprofitably idle.
At most branches a large part of the im­prest
fund was carried as cash in hand.
Purchases and expenses of varied size and
character were paid for out of it both in
cash and by check. Supporting vouchers
of various sorts were taken. These were
sent in to the home office for reimburse­ment
when the fund became diminished.
Geographical distance from the home
office necessitated larger balances at the
more remote branches to care for their
needs while the reimbursement checks were
in transit.
Audit and control of the branch funds
were more or less ineffective. When bank
accounts were maintained for part of the
funds these accounts could, of course, be
checked and audited with some degree of
satisfaction and safety. But when all of
the fund was in hand, or when part was in
hand and part on deposit, it can be seen
readily that proper control and simul­taneous
audit (with other funds of the
company) were not only difficult but per­haps
expensive, especially if made by the
company's own traveling auditors.
The new plan has all the advantages of
the old and few, if any, of the disadvan­tages.
Some of the requirements of the