We have completed our investigation into Falcon Retailers Ltd, who you enqired about in your letter dated 9 April 19—.
The firm is a private limited company with a registered capital of £ 1,000 and consists of two partners, David and Peter Lorre. It has an annual turnover of £50,000 and has been trading since October 1971. As far as we know neither the company nor its directors have ever been subject to bankruptcy proceedings, but the firm was involved in a court case to recover an outstanding debt on the 17 January 19—. The action was brought by L.D.M. Ltd. and concerned the recovery of £2,150 which Falcon eventually paid. But we ought to point out that L.D.M. broke a delivery contract which accounted for the delayed payment.
From our general enquiries we gather that some of Falcon's suppliers have had to send them second and third reminders before outstanding balances were cleared, but this does not suggest dishonesty so much as a tendency to overbuy which means the company needs time to sell before they can clear their accounts.
We hope this information proves useful, and if you have any further enquiries, please contact us.
You will find our account for £175.00 enclosed. Yours sincerely,
Credit Investigations Ltd.
Points to remember
1. Credit is only given if the supplier knows his customer well, has a reference from a bank or business associate of his customer, or his customer has an excellent reputation.
2. When asking for credit, say why you want it and convince your supplier that you will pay on due dates. State how long you have been dealing with the company. Offer references to support you.
3. When agreeing to credit, your letter can be short and simple.
4. When refusing credit, you must give reasons and convince your customer that the refusal does not discriminate against him in particular. Using generalizations can help, e.g. we usually/as a rule/normally/do not offer credit facilities.
5. When taking up a reference, tell the firm who you are and who you are enquiring about. Tell them the type of credit involved, e.g. bill of exchange, monthly settlements, and let them know how much the credit is for.
6. Assure them that the information will be in confidence and that you will reciprocate should the occasion arise.
7. When writing a favourable reference, let the firm know you are pleased to offer a reference, and tell them why you think the credit should be offered, e.g. that you have been trading with the firm for a long time and have allowed them credit. Tell the firm the information is given in confidence and without responsibility.
8. When writing an unfavourable reply, if you are not sure what you want to say, simply write that you cannot give information about any of your customers. Or, alternatively, be brief, stating only the facts as they concern you, but do not give opinions.
Words to remember
to ask for credit
to grant credit
to offer/take up references
to treat something in confidence
a due date
to settle an account
settlement against monthly statements
to clear a balance
a bad debt
a bill of exchange
a banker's draft
open account facilities
documents against acceptance
Banks in the UK; commercial bank facilities (current accounts, deposit accounts, credit cards, standing orders, loans and overdrafts); international banking; bills of exchange; documentary credits.
Banks in the UK
These can be divided into two groups: merchant banks and commercial banks.
Merchant banks tend to encourage larger organizations to use their services, and while the facilities they offer are similar to those of the commercial banks, the former specialize in areas of international trade and finance, discounting bills, confirming credit status of overseas customers through confirming houses, acting in the new issue market (placing shares), and in the bullion and Eurobond market. They are, in addition, involved in shipping, insurance, and foreign exchange markets. Brown Shipley, Hambros, Keyser Ullmann, Schroders, etc. are merchant banking houses.
Commercial banks offer similar services but are particularly interested in private customers' accounts, encouraging them to use their current account, deposit account, savings account, and credit facilities. They will lend money, against securities, in the forms of overdrafts and loans, pay accounts regularly by standing orders, and transfer credits through the bank Giro system. Essentially the difference between the merchant and commercial banks is the letter's availability to customers with their numerous branches throughout the UK, their low charges, and the laws which govern the way each organization handles its affairs. The 'big four' commercial banks are Barclays, Lloyds, Midland, and National Westminster.