by David Lowe,
Page 57
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MInstTA ALL BANKS will be closed on February 11 and February 12, 1971, the two bank days preceding Decimalization-day. During this close-down, banks will clear all items of business lodged with them before closing time on Wednesday February 10. All cheques will be cleared and accounts will be balanced in £sd and converted into 'fp. Decimal cheques will not be accepted before D-day but from opening time on D-day business will be conducted solely in decimals.
Cheques written before February 11 in £sd but not paid in before the bank closure will have to be converted into decimal style. Cheques written during the bank change-over period must be written in decimal amounts because they cannot be presented until D-day. It is advisable that any cheque to be mailed after Monday, February 8 should be written in decimal style.
To convert £sd cheques into decimal amounts the following style should be used. If the cheque is for an amount of whole pounds no amendment is required. If the amount includes shillings and pence the total £sd amount should be converted into fp in accordance with the bank conversion table (in the one without +p—in CM last week). The full decimal amount should be written in a different-coloured ink, immediately adjacent to the amount box, preferably above it, on the right-hand side of the cheque. The original £sd amount should not be crossed out.
When paying in such cheques the paying-in slip should be written in decimal amounts.
Cheques written in decimal should follow the same style as other written decimal amounts (for example an amount of £518!should appear on a cheque as "Five pounds 40" and in the amount box as £5-40; while £19/19/5 should appear as "Nineteen pounds 97" and £19-97).
On or after D-day, paying-in slips must be completed in pounds and new pence whether you are paying in decimal coins and cheques or £sd coins, and cheques altered in the manner described above. A new design of paying-in slip has been prepared by the banks and is in use. It is dual-purpose so that before D-day it can be used with £sd and after D-day with fp.
Cheque-writing machines should be converted to fp by D-day but if they are not, then cheques must be written by hand or typed. If the cheque-writing machine is not converted and is an integral part of a computerized syStem then cheques which it writes must be changed by hand before they are sent out.
Standing orders will be automatically converted by the banks to fp without the need to reauthorize your bank. Any order due for payment during the banks' close-down period will be paid on February 15 in £p.
Certain special facilities will be available at banks during the close-down period to help with the handling of large sums of money but only by prior arrangement and only for people using their normal branch.
Turning now to the accountancy aspect of the change-over, this time will present an unrivalled opportunity to review present accounting practices and it may well be found that an objective look at the system will suggest scope for streamlining, for refining processes and cutting out work which may have ceased or will cease to have meaningful results.
Greatest benefits
It has been said—that the opportunity for change is one of the greatest benefits decimalization can bring and it would be a pity if management were only to regard the change as merely entailing further problems to be solved.
The change-over of accounting systems need not be related to the change-over of cash handling. Accounts may be kept in fp while trading continues in £sd and the system can be changed in stages or in a single operation. A lot depends on the complexity of the system. However, it must be remembered that the system will need to be capable of processing both £sd and fp documents raised by outside organizations.
It may be convenient to make the changeover when the accounts books are balanced in the normal way; the beginning of the financial year is an ideal date when the change-over calculations can be combined with year end accounting work.
At the time of deciding when to Make the change a decision should also be taken about whether or not to use the new halfpenny for accounting purposes. As has been mentioned the banks, Giro and other government departments have decided against it because its use just would not justify the additional cost and time involved, and it will be found that many other businesses follow suit for the same reasons.
The first step if you decide to start the change-over before or on D-day will be to inform your customers in clear and simple terms exactly what you intend to do and when and what you expect of them in response to your new or revised paperwork.
Your rate schedule should be converted to decimal amounts and if discrepancies such as conversion differences arise these are best ironed out by rationalizing the rate structure without making more than marginal increases purely for the purposes of the conversion. If it is your practice to publish or circulate your customers with your scale of charges then copies should be prepared in plenty of time to be issued on the day.
Invoices will then automatically be easily calculable in decimal amounts but, if it is thought desirable for the convenience of customers who are still using £sd accounting, the total amount could also be shown in £sd.
It follows that invoice totals will be posted to the ledger in fp but again if customers have not yet changed their systems you will receive payment in £sd cash, cheque or other form of promissory note, in which case exact conversion may not be possible.
If this is likely to happen it would be wise to open a "conversion difference account" in which to record the small differences which arise in converting £sd to fp or vice versa. Such an account is a simple means of avoiding excessive book-keeping to account for trifling differences and it can be dispensed when both you and all your customers are fully decimalized, Next Week: More on accountancy changes and the payroll.