The Slip System; Meaning, Main advantages and Disadvantages.

 Meaning of Slip System of Posting

In this system, posting is made from slips prepared inside the organisation itself or from slips filled in by its customers. So entries are not made in the books of original entry subsidiary books, but posting of entries is done from slips. In a banking company, the main ships are pay-in-slips, withdrawal slips and cheques and all these slips are filled in by clients of the bank. These slips serve the basis of entry in the ledgers and control accounts in the General Ledger are prepared on the basis of analysis of these slips.

Main reasons for the adoption of the slip system of posting by the bank are the following: 

1. The bank must have customer's account up-to-date for a customer may present a cheque any time during hours meant for the public. Slip system helps in keeping the accounts up-to-date.

2. The number of transactions in a bank is very large. The adoption of slip system can suitably distribute the work of posting among many persons.

3. It ensures smooth flow of accounting work.

Main advantages of the slip system are: 

1. Saving of time and labour- The bank saves a lot of time and clerical labour as most of the slips are filled in by its customers.

2. No need of subsidiary books- Subsidiary books are avoided as posting is done from slips.

3. Minimum delay- Entries can be recorded with minimum delay as slips can easily pass from hand to hand among clerks concerned.

4. Division of labour- The slip system enables the division of work of posting among employees due to a large number of transactions in a bank. 

5. Smooth accounting- The writing of the day book and posting of the ledger can be done simultaneously without loss of time.

6. Reliable accounting system- Slip system provides a basis for reliable accounting system/as most of the slips are prepared by customers themselves. Moreover, each transaction is recorded in different books which are maintained on self balancing system.

7. Perfect basis of auditing- Individual slips (known as vouchers) are filled up by customers and becomes a proof for a transaction to the satisfaction of the auditor.

8. Proper evidence- Slip duly filled by a customer provides evidence of a transaction. When needed slips preserved by the banks can be shown to the customers for their satisfaction.

Disadvantages of the slip system are:

1. Risk of loss or destruction of slips- Slips may be lost, destroyed or misappropriated as these are loose.  

2. Difficulty in verification- Books cannot be verified if subsidiary books are not kept. 

3. Inconvenience to customers- This system causes great inconvenience to the illiterate and semi-literate customers as slips are to be filled in (especially the amount in words and figures) with the help of other customers and arrogant bank employees. 

4. Risk of manipulation and misappropriation- Dishonest employees can embazzle the money by destroying the loose and large number of slips and manipulating the amounts. 

5. Expensive system- Slip system becomes difficult due to large number of daily transactions in a bank and becomes expensive to keep a date-wise record of such slips.