These Are the Main Stages in a Home Trade Transaction

These are the main stages in a home trade transaction:

1.A retailer sends enquiries to suppliers (wholesalers, importers, distributors)

2.Suppliers send quotations. A supplier may send a pro-forma invoice if he wishes the prospective buyer to pay in advance.

3.The retailer/buyer sends an order (he may use the supplier's order form).

4.If the order is accepted, the supplier carries it out and sends an advice of dispatch or dispatch letter in which he gives the buyer all the information regarding the consignment, the means of transport adopted and when he can expect delivery.

5.The buyer will receive the commercial invoice. He will pay as per agreement.

The above procedure involves the completion of forms and the production of commercial documents which are:

Letter of enquiry / A retailer who wishes to make purchases from a wholesaler, an importer, or a distributor usually sends letters of enquiry asking for prices, discounts, catalogues, terms of payment, availability of goods, etc. An enquiry may be written in the style of a letter or may be made by filling in a printed form.
A letter of enquiry
James Wilson
15 North Street
Edinburgh
EH15 3FG
12 February 1991
Stationary Supplies Ltd
45, High Street
Oxford
OX31 E12
Dear Sirs,
Would you please quote your lowest price and earliest delivery term on the following items:
200 500-sheet reams of Eagle A4 white 80GSM
100 Parker ball pen refils
150 A4 multi-colour pads
200 soft leather shoulder bags assorted colours
We should be grateful if you would send us the latest copy of your illustrated catalogue.
Looking forward to receiving your quotation by return, I am
Yours faithfully
James Wilson
Catalogues and price lists / A catalogue is a list of items for sale giving details and illustrations. A mail order catalogue is a catalogue from which a customer orders items to be sent by mail. A price list is a sheet or a brochure giving prices of goods for sale.The net price is the catalogue price less trade discount.

Two priced catalogue items
Discounts / Discounts are distinguished into trade discount, cash discount, quantity discount. Trade discount is a percentage reduction on the catalogue prices allowed by a wholesaler to a trader. Cash discount is a small percentage allowed as a reduction when payment is made for cash. The terms of cash discount vary according to the period of credit and the terms of payment agreed upon. When no cash discount is provided for, the terms are said to be net.Quantity discount is the reduction which is generelly granted on large orders.
Quotation / It is the reply to an enquiry which quotes prices and states terms of sale for the purchase of goods.
A Quotation
Stationary Supplies Ltd
45, High Street
Oxford - OX31 E12
16 February 1991
James Wilson
15 North Street
Edinburgh
EH15 3FG
Dear Sir,
Thank you for your enquiry of 12th last. We have pleasure in quoting you as follows:
200 500-sheet reams of Eagle A4 white 80GSM @ £2.50 each
100 Parker ball pen refils @ 75p each
150 A4 multi-colour pads @ 99p each
200 soft leather shoulder bags assorted colours @ £6.00 each
Please take note that
- all prices are exclusive of VAT (15%)
- delivery within five days from order
- trade discount 20% including
- carriage paid
We await your order which we will execute to the best of your satisfaction.
Yours faithfully
David Key
Sales Dept.
A quotation generally includes terms and clauses concerning delivery, packing and transport. The terms concerning time of delivery are:
ready delivery which means that the goods are in stock and can be delivered on receipt of the order.
prompt delivery when delivery is effected within a few days of receiving the order.
forward delivery means that the goods are not ready in stock and can be delivered at some future date.
The terms concerning the place of delivery are:
ex-warehouse, that is, the buyer bears all costs to have the goods carried to his premises.
free on rail (for), that is, the supplier delivers the goods at the nearest railway station. All other costs must be borne by the buyer.
The main clauses concerning packing charges are:
packing free, that is, the cost of packing is included in the price
packing extra, that is, the cost of packing is paid separately
packing to be returned, that is, the buyer is credited with the cost of packing as soon as he returns containers.
The clauses concerning payment of transport are:
carriage free when the buyer does not pay delivery charges
carriage forward when the buyer pays delivery charges
Estimate / It is the reply to an enquiry for a commercial service or range of services provided by individuals or companies and regarding transport, insurance, financial service, etc.
the Order / It is a formal request for goods stating the quantity and type of goods required, the unit price per item and instructions regarding delivery and payment in accordance with the quotation received.
An Order
James Wilson
15 North Street
Edinburgh
EH15 3FG
22nd February 1991
Stationary Supplies Ltd
45, High Street
Oxford
OX31 E12
Dear Sirs,
We refer to your quotation dated 12th last and have the pleasure of placing with you an order for:
200 500-sheet reams of Eagle A4 white 80GSM @ £2.50 each
100 Parker ball pen refils @ 75p each
150 A4 multi-colour pads @ 99p each
200 soft leather shoulder bags assorted colours @ £6.00 each
Terms and conditions as per your quotation. Please fax your advice of dispatch.
Yours faithfully
James Wilson
Acknowledgement of order / Stationary Supplies Ltd
45, High Street - Oxford OX31 E12
27th February 1991
Mr James Wilson
15 North Street
Edinburgh
EH15 3FG
Dear Mr Wilson,
We thank you for your order of 22nd last and are pleased to inform you that, since the goods you ordered are ready in stock, we are going to process it in the next days.
You will be notified by fax as soon as the consignment is ready for despatch.
Very truly yours
Susan Walker
Advice of dispatch / Stationary Supplies Ltd
45, High Street - Oxford OX31 E12
March 5th, 1991
Mr James Wilson
15 North Street
Edinburgh
EH15 3FG
Dear Mr Wilson,
We are pleased to inform you that we have today forwarded your goods by British Carriers Ltd.
All the items are in compliance with your order and the consignment, which has been packed in four strong pasteboard cartons, should reach you in the course of next week.
According to our agreements previously arranged, payment will be effected cash on delivery.
We trust you will find the goods to your complete satisfaction and look forward to the opportunity of serving you again.
Very truly yours
Susan Walker
Dispatch documents / The main dispatch documents are the delivery note and the consignment note.
The Delivery Note is issued when the delivery of the goods is effected by the seller's private van. It is a list of the goods in duplicate which accompanies the consignment. A copy will be given back to the driver duly signed by the recipient as proof of delivery.
The Consignment Note is issued by a rail or road transport undertaking. It contains details of the goods carried and accompanies the goods. The recipient of the goods signs it as a record of delivery.
The invoice / It is a document sent from the seller to the buyer which states quantity and details of the goods, their prices, terms and methods of delivery, discount, the amount of VAT charged, terms of payment and total amount to be due. The invoice is sent soon after dispatching the goods.
A pro forma invoice is just like an ordinary invoice which is used in one of the following cases:
1. as a substitute of a quotation to give the retailer a full perspective of the amounts charged
2. as a request for payment when the seller wishes the retailer to pay in advance for the goods ordered.

EXAMPLE OF INVOICE

Stationary Supplies Ltd
45, High Street
Oxford - OX31 E12
INVOICE No F240
James Wilson
15 North Street
Edinburgh
EH15 3FG
Your Order No.37 of Feb. 22, 1991
QUANTITY / DESCRIPTION OF GOODS / UNIT PRICE / TOTAL PRICE
200
100
150
200 / 500-sheet reams of Eagle A4 white 80GSM
Parker ball pen refils
A4 multi-colour pads
soft leather shoulder bags assorted colours / £2.50
75p
99p
£6.00 / £ 500.00
£ 75
£ 148.5
£1200.00
£1923.50

EXAMPLE OF STATEMENT OF ACCOUNT

The statement of account / It is a list of invoices, credits due to any allowances, debits due to any undercharges, cash received, unpaid balance sent by a supplier to a customer every month or every quarter.
Stationary Supplies Ltd
45, High Street
Oxford - OX31 E12
STATEMENT OF JULY 1992
James Wilson
15 North Street
Edinburgh
EH15 3FG
August 2nd, 1992
DATE / DESCRIPTION / DEBIT / CREDIT / BALANCE
2 July
5 July
7 July
18 July
20 July
23 July
25 July
29 July / Invoice No.135
Invoice No.147
Debit Note No.14
Invoice No.165
Cheque No.Z194
Invoice No.178
Credit Note No.2
Invoice No.201 / 900
750
25
325
1500
1700 / 1200
150 / 900
1650
1675
2000
800
2300
2150
3850
(Amount owing)

PAYMENT FOR GOODS RECEIVED

The buyer may effect payment through the services provided by the Bank or the Post Office.

Banks provide the financial means for financing business transactions. They offer a range of services that are indispensable to both home and foreign trade. As regards payment, the most common methods of payment effected through a bank comprise the following instruments of credit:

Cheque

Credit Card

Banker's Draft

Bank Transfers

Travellers' Cheque

Letter of Credit

Bill of Exchange

Among the main services provided by the Post Office for making payments, the most common ones are:

1.The postal giro which is useful to effect money transfers both nationally and internationally.

2.The postal order for small amounts, generally issued in values up to £10.

3.The money order for a sum of money up to £100. It may be issued in a foreign currency (International money order) when payments are made to persons living in a foreign country.

Depending on the agreements made between the parties, payments may be effected CWO (cash with order) or COD (cash on delivery). This latter service is useful when firms want the buyer to pay for goods on delivery by paying their amount directly to the postman.