6 MANAGEMENT OF DAIRY PLANTS 



inventories of raw material as well as of finished product; also, 

 such supplies as tubs, salt, butter color, etc. However, butter 

 wrappers, cartons, or other articles marked with a particular 

 trade-mark and which could, therefore, not be sold readily to 

 other factories should not be considered under the head of 

 quick assets. 



The amount of money required for working capital depends 

 mainly on the amoimt of business, method of pajdng for cream, 

 time of credit on supplies, amount of supplies carried on hand, 

 terms of credit to customers, and promptness in collecting out- 

 standing accounts, and, finally, on the amount of stock kept on 

 hand either in the form of finished products or as products in 

 process of manufacture. 



Where the raw material is bought on time and the finished 

 product is sold for cash or on a commission basis, only a small 

 working capital is required. Some cooperative creameries con- 

 duct their business on this basis, paying monthly or semimonthly 

 for the raw material and selling their butter on consignment. 

 In such cases the company often makes out a sight draft, with 

 bUl of lading, for two thirds the value of the butter shipped. 

 This draft is then sent through the bank, and the company's 

 account there is generally credited with the amount at the time 

 of deposit. If, however, a system is adopted by which the raw 

 material is bought on cash basis and the finished product sold 

 on two weeks' time, then the company will need suf5.cient cap- 

 ital to pay in advance for the month's supply of cream and sup- 

 plies needed. This is because the butter fat remains unsold in 

 the creamery for several days in the form of cream or butter. 

 Moreover some of the outstanding credit accounts will not be 

 collected even within three or four weeks after sale of butter. 



Banking Facilities. — Due consideration should be given 

 both to the financial responsibility and to the authorized capital 

 stock of the bank from which the creamery enterprise must 

 make loans. National banks by law are required to limit their 

 loans to one concern to 20 per cent of the bank's authorized 

 capital and surplus. A creamery transacting a big business 

 and buying its raw material for cash may often during the 



