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Statements of account

Rather than requiring immediate payment of invoices, a supplier may grant his customer credit (see also Unit 8 Credit) in the form of open account fac/7/f/esfor an agreed period of time, usually a month but sometimes a quarter (three months). At the end of the period a statement of account is sent to the customer, listing all the transactions between the buyer and seller for that period. The statement includes the balance on the account, which is brought forward from the previous period and listed as Account Rendered. Invoices and debit notes (see 7.5.1) are added, while payments and credit notes (see 7.5.2) are deducted.

Statements of account rarely have letters accompanying them unless there is a particular point that the supplier wants to make, e.g. that the account is overdue, or that some special concession is available for prompt payment. Note the expression as af, which means up to this date.

I enclose your statement as at 31 July. May I remind you that your June statement is still outstanding, and ask you to settle as soon as possible?

Please find enclosed your statement of account as at 31 May this year. If the balance of £161 is cleared within the next seven days, you can deduct a 3 per cent cash discount.

 

6.2

Settlement of accounts

 

6.2.1

Methods of payment: home trade

Here is a list of methods of payment which can be used in the home trade, which refers in this case to trade in the UK.

Postal Order

Postal Orders can be bought from the Post Office, usually to pay small amounts, and sent to the supplier direct. They can be crossed or closed, i.e. only to be paid into the supplier's account, or open for cash. Poundage, i.e. the cost of buying the Order itself, is expensive, so they would only be used for small amounts.

Stamps

It is possible to pay someone with postage stamps, but unusual in business.

Giro

This postal cheque system is run by the Post Office and allows customers to send payments to anyone whether they have a Giro account or not.

C.O.D.(cash on delivery) The Post Office offers a service by which they will deliver goods and accept payment on behalf of the supplier.

Cheque

You must have a current account, or certain types of savings accounts, to pay by cheque (see Unit 9 Banking). Cheques take three working days to clear through the commercial banks, and can be open, to pay cash, or closed (crossed), to be paid into an account. Unlike in most countries, UK cheques are valid up to six months.

Bank transfer

Banks will transfer money by order from one account to another.

Credit transfer

The payer fills out a Bank Giro slip and hands it in to a bank with a cheque. The bank then transfers the money to the payee.

Bank draft

The payer buys a cheque from the bank for the amount he wants to pay and sends it to the payee. Banks usually require two of their Directors' signatures on drafts, and make a small charge.



Bill of exchange

The seller draws a bill on the buyer. The bill states that the buyer will pay the seller an amount within a stated time, e.g. 30 days. The bill is sent to the buyer either by post, or through a bank, and the buyer signs (accepts) the bill before the goods are sent. If this is done through a bank, the bank will ask the buyer to accept the bill before handing over the shipping documents; this is known as a documents against acceptance (D/A) transaction. See 9.5 and 9.6 for bill of exchange transactions.

Letter of credit

This method of payment can be used internally, but is more common in overseas transactions. See 6.2.2 Documentary credit.

 

6.2.2

Methods of payment: foreign trade

Cheque

It is possible to pay an overseas supplier by cheque, but it takes a long time before the supplier gets his money. In a German/UK transaction, for example, the supplier could wait up to three weeks for payment.

International Giro

Payment by International Giro, which replaced Money Orders, can be made whether the buyer has an account or not, and to a supplier whether he has an account or not. The International Giro form is obtained from any Post Office, filled out, then handed to the Post Office who forwards the order to the Giro centre which will send the amount to a Post Office in the beneficiary's country where the supplier will receive a postal cheque. He can then either cash it, or pay it into his bank account. Giros are charged at a flat rate.


Date: 2016-01-03; view: 914


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