This story is from when cheques were still the main way of doing things with money. I was working in the financial industry — for a bank, but not banking itself.
We mostly dealt with contracts for individual customers running around £250 a month. These were significant amounts for individuals but small for a bank.
Because of varying fees and cumulative rounding errors — you know, the general bits and pieces of money unaccounted for each month — at the end of each contract, the computer would produce a final settlement statement.
For some people who had missed payments or varied contracts several times without notice, these could be quite large. For most people, it was literally pennies. It cost us more in admin time, toner, paper, and postage to collect 20p here and 90p there.
After three years in the job, I went to my bosses with a rundown of what collecting these things had cost us. It was far, far more than we’d gained in collecting them. In some cases, the customer had challenged demands for under £2 all the way to the government regulator and won. They’d saved £2 in a process that cost the company £10,000 all told.
I was surprised to find management to be receptive to my idea of not chasing these debts if they were less than the average cost of clawing the money back. Amounts under £1 were to be written off entirely in every case. A victory for common sense! Yay!
We got so much more done each month being able to put these not-really-debts to one side. For the first three months, it was great. Suddenly, we weren’t understaffed. Suddenly, we weren’t behind on the filing. Suddenly, we were meeting deadlines. Suddenly, we were able to concentrate on the big ticket problems: people who owed thousands, people skipping payments multiple times, salespeople not recording details correctly so we couldn’t even collect the first payment, that type of fundamental stuff.
In the fourth month, our figures didn’t make sense. There was a weird hole of missing money. I ended up printing out both sides of the ledger, taking it home, and manually connecting the two, in case of a computer problem. They balanced.
In the fifth month, we were severely down. I went to my bosses and requested that the bank’s independent auditors be brought in. We spent a month with various serious people double-checking everything we did. At the end of the month, we were still down and the auditors couldn’t explain it.
In the sixth month, I asked for the people behind our software to come in and watch every transaction. People flew in from San Francisco, Tokyo, and Kuala Lumpur and spent a month checking the computer against the paper transactions. They balanced.
In the seventh month, my accounting lead — effectively my deputy — went on holiday. I was pulling yet another eighteen-hour day trying to figure this nightmare out. At 11:00 pm, I had worn out my last pencil — don’t knock it; pencils are great for manually balancing ledgers — and went hunting for another one.
I opened my deputy’s top desk drawer. No pencil. I opened the larger second drawer below it.
There were over a thousand cheques in that drawer.
When she came back from her week away, my accounting lead was greeted by very senior management and the police. The interviews of her and the rest of us lasted hours a day for several weeks. In the end, she was fired but not prosecuted because she hadn’t profited: all she’d done was extend the “don’t chase customers for small amounts” policy from “a few pounds” to “a few thousand pounds”. So, when customers had sent in cheques based on their closing statements for £50 or £100 or £500 or £2000, she’d registered them with the computer, then stuck a yellow sticky note on each one marked “SPARE” — no, I don’t know either — and put them in her desk drawer rather than cashing them.
I don’t know whether the bank then cashed the cheques or wrote the debts off (neither is the perfect solution), but I do know that we immediately went back to nickel-and-diming the customers for every single penny, even when that meant spending £10 on chasing a claim for 12p.
