Chapter 29 - Business Documents Flashcards
A letter of enquiry goes from the …. to the ….
Buyer to seller
What is the first step a buyer should make before making an order for goods?
Make enquires to find out…
•prices available from different suppliers
•are the goods available when we need them?
•what discounts are being offered for bulk buying?
•terms of sale
•how long it will take to deliver goods and delivery charge
•how goods should be paid for
COD
Cash On Delivery
CWO
Cash With Order
The quotation goes from … to the …
Seller to buyer
Quotation
Written document showing prices available from the supplier for goods or services
After receiving an enquiry, an efficient firm will…
○Send out quotation as quickly as possible
○Send up-to-date copy of firm’s catalogue/brochure
○Send one of firm’s sales rep to visit the buyer
Terms of sale
Refers to any agreements between buyer and seller of goods regarding delivery and payment
After receiving a quotation, the buyer should…
○Check prices against other quotations received to see which offers the best value
○Check terms of sale against those offered by other suppliers
○Check how long quotation is valid for
The order goes from … to the ….
Buyer to seller
Effective purchasing
Means choosing the supplier who offers the best deal in terms of price, quality, delivery and terms of sale
Selling goods on credit
Giving goods to the buyer now but asking for payment sometime in the future
Why might a firm sell goods on credit?
○Customer needs time to sell the goods and raise money before they can pay for them
○Competitors give credit, so we have to as well
○Way of increasing our sales and therefore our profits
How would you check a customer’s creditworthiness?
- Ask customer to provide a reference from their bank
- ” “ “ “ “ trade reference from other firms they have done business with saying they always pay debts on time
- Take a look at the customers accounts
- Pay a credit enquiry agency to check if customer owes money to other firms
- Consult Stubbs Gazette
What is Stubbs Gazette?
Gives names of firms that have fallen behind in paying their debts
How would you reduce the chance of bad debts happening to us?
- Take out insurance against bad debts
- Offer discounts to customers who pay on time or early
- Only sell for cash
- Send out invoices and statements on time
The delivery docket goes from ….. to the …
Seller to buyer
The invoice goes from ….. to the …
Seller to buyer
What does the invoice include?
○Company name, address and contact details ○Date ○Details of goods purchased ○Price of goods ○VAT ○Total price of order ○Terms of sale ○E&OE
VAT
Tax on goods and services
Trade discount
A reduction in the price of goods and it is given by the seller to trade buyers
Who is a trade buyer?
Someone who:
►Intends to resell goods again e.g Retailer
or
►Uses goods to make other goods they will then sell on to the consumer e.g furniture manufacturer buying wood to make furniture
E&OE
‘errors and omissions excepted’. Printed at the end of all business documents and means the seller has the right to correct any errors discovered on the document
Before sending an invoice the seller should…
○Check goods listed on the invoice match goods ordered and delivered
○Check prices listed on the invoice are the same as those listed on the original quotation
○Check the correct discounts and terms of sale are written on the invoice
○Make sure the customers address is correct
○Use the details of the invoice to write up the sales book
○File the invoice
After receiving an invoice the buyer should…
○Check the goods listed on the invoice were actually received
○Check the prices listed on the invoice are the same as those in the quotation
○Check all calculations
○Use the details of the invoice to write up the purchases book
○Look at the terms of sale see what discounts are available if the bill is paid early
○File the invoice
The credit note goes from ….. to the …
seller to buyer
What information does the credit note contain?
○Company name, address and contact details ○Consumer's name and address ○Date goods were returned ○Details about goods being returned ○VAT ○Total ○E&OE
Before sending a credit note the seller should…
○Check the goods listed on the credit note match the goods returned
○Check prices listed on the credit notes are the same as those listed on the original invoice
○Check the correct discounts and terms of sale are written on the credit note
○Make sure the customers address is correct
○Check all calculations
○Check reasons for return and take any necessary action
○Use the details of the credit notes to write up the sales returns book
○File the credit note
After receiving a credit note the buyer should…
○Check the goods listed on the credit note are the same as the goods returned
○Check the prices on the credit note are the same as the prices we were originally charged
○Check the calculations
○Use the details on the credit now to write up the purchase returns book
○File the credit note
The statement goes from the … to…
Seller to buyer
Statement
A reminder to the buyer of how much they owe and when the payment is required
What information does a statement to contain?
- Company name, address and contact details
- Customers name and address
- Date the statement was sent out
- Details of all transactions between the buyer and the seller
- Total amount still owed at the date of the statement
- Terms of sale
- E&OE
Before sending a statement the seller should…
○Check all transactions between the firm and the customer are included
○Check the amounts listed on the statement are the same as those listed on the original invoices and credit notes
○Make sure all payments made by the customer have been included
○Check the correct discounts and terms of stale are written on the statement
○Make sure the customers address and details are correct
○Check all calculations
○Take whatever steps necessary to make sure the amount owed is paid on time
○File a statement
After receiving a statement to the buyer should…
○Check the amounts listed on the statement are the same as those listed on the original invoices and credit notes
○Make sure all returns and payments have been included on the statement
○Check all calculations
○Take whatever steps necessary to pay the amount due as to receive any discounts and avoid making late payment
○File statement
The receipt goes from the … to….
Seller to buyer
Receipt
A written document signed by the seller of the goods stating they received payment from the buyer
