Letters Requesting Payment

PAYMENTSUPPLIER CUSTOMER

InvoicePro Forma Invoice

Statement of Account

Advice of Payment

Acknowledgment of Payment

Delayed Payment

Agreeing to the customer’s request

Offering a compromise

Refuse to the customer’s request

Request for Payment123

PAYMENT• Invoice

The main documents used in trading to record payment and transactions which give the buyer and seller information about what has been bought or sold, the terms of the sale, and details of the transactions

• Pro Forma Invoice-if the customer has to pre-pay (pay for goods before receiving them), they pay against the pro forma-If the customer wants to make sure a quotation will not be changed, the pro forma will say exactly what and how they will be charged-If goods are sent on approval, on sale or return, or on consignment to an agent who will sell them on behalf of the principal-As a customs document

• Statement of Account-At the end of the period, a Statement of Account is sent to customer, giving details of all the transactions between the buyer and seller for the period.-It includes BALANCE on the account, which is forward from the previous period and listed as account rendered

METHODS OF PAYMENT Bank draft Bank transfer Bill of exchange Cheque Credit transfer Debit/credit card payment Letter of credit Cash on delivery Post Office Giro Postal Order Documentary credit International bank draft International money order International Post Office Giro Promissory Note

LET’S FIND OUT !• Bank Draft

The customer buy a cheque from the bank for the amount he or she wants to pay and sends it to the supplier.

A type of check where the payment is guaranteed to be available by issuing bank. Typically, banks will review the bank draft requester's account to see if sufficient funds are available for the check to clear. Once it has been confirmed that sufficient funds are available, the bank effectively sets aside the funds from the person's account to be given out when the bank draft is used.

Sample

• Bank TransferA bank moves money by order from one account to another

• Bill of Exchange (B/E)It states that the customer will pay the supplier an amount within a stated time. The bill is sent direct to the customer or paid through a bank. If the bill is a SIGHT DRAFT, the customer will pay immediately. If the bill is a TERM DRAFT, the customer signs (accepts) the bill before the goods are sent and pays later

Or(the procedure is the same as that above), but shipping documents usually accompany bills when the bank acts as an intermediary in international transactions

Sample

• Cheque

A cheque (or check) is a document that orders a payment of money from a bank account. The person writing the cheque, the drawer, usually has a current account or chequing/checking account where their money was previously deposited. The drawer writes the various details including the monetary amount, date, and a payee on the cheque, and signs it, ordering their bank, known as the drawee, to pay that person or company the amount of money stated.

Sample

• Credit TransferThe customer fills out a bank GIRO slip and hands it to a bank. The bank then transfers the money to the supplier

• Debit/Credit Card PaymentIt can be made either direct on the phone or on the Internet

• Letter of Credit (L/C)

A letter of credit is a document issued by a financial institution, or a similar party, assuring payment to a seller of goods and/or services provided certain documents have been presented to the bank. These are documents that prove that the seller has performed the duties under an underlying contract (e.g., sale of goods contract) and the goods (or services) have been supplied as agreed. In return for these documents, the beneficiary receives payment from the financial institution that issued the letter of credit. The letter of credit serves as a guarantee to the seller that it will be paid regardless of whether the buyer ultimately fails to pay. In this way, the risk that the buyer will fail to pay is transferred from the seller to the letter of credit's issuer. The letter of credit can also be used to ensure that all the agreed upon standards and quality of goods are met by the supplier, provided that these requirements are reflected in the documents described in the letter of credit.

Sample

• Cash On DeliveryPayment is made when goods have been delivered

(or) It is a service by the Post Office. They will deliver goods and accept payment on behalf of the supplier

• Post Office GiroIt allows a customer to send a payment to a supplier, whether they have a Post Office Giro account or not

• Postal OrderIt can be bought from the Post Office, usually to pay small amounts, and send to the supplier direct. It can either be crossed , in which case the money can only be paid into the supplier’s account, or left open for the supplier to cash

• Documentary CreditWhen a letter of credit is accompanied by shipping documents, it is called a DOCUMENTARY CREDIT. The money is credited to the supplier’s account as soon as confirmation of shipment is made

• International Bank draftIt is a cheque which a bank draws on itself and sells to the customer, who then sends it to the supplier. The supplier’s bank should usually have either an account or an agreement with the customer’s bank

• International Money Order (IMO)They can be bought at most banks. The bank fills out the order for the customer then, for a small charge, hands the IMO over, and the buyer sends it to the supplier. IMOs can be either cashed or credited to the supplier’s account

• International Post Office GiroIt can be made when either the customer or supplier, or both, do not have bank accounts. An order for the amount to be paid is filled out at a Post Office, which forwards it to the Giro Centre. The Giro Centre will send the amount to a post Office in the supplier’s country, where the supplier will receive a postal cheque. They can then either cash it, or pay it into a bank acount.

• Promissory NoteIt is written promise from a customer to a supplier that the former will pay the amount stated, either on demand or after a certain date.

PT MAPHILINDO RAYAJln. Panarukan Baru No. 29 Banjarmasin 2002

Kalimantan SelatanYour Ref: AR/NA/2B 15th September, 1993Our Ref:SM/FA/12

Mr. Martin S. WengerAccounting MangerNew International Paint Company21 Jln. Pajajaran Raya Semarang 12020Jawa Tengah

Dear Mr. Martin,

Subject: Invoice No. 287/DC

We have received your letter of 8 September and enclosed invoice No. 287/DC.We have instructed our bank to remit the sum of US$ 19,980 for the credit of your account at Bank Panca Niaga Semarang.Please send us your official receipt for this settlement.

Yours sincerely,Surya M. KasmanSurya M. KasmanAccounts Manager

Enc: 1

ADVICE OF PAYMENT

NEW INTERNATIONAL PAINT COMPANYJln. Pajajaran Raya No. 21 Semarang 1020

Jawa Tengah

Your Ref: SM/FA/2C 25th September, 1993Our Ref:MS/T/2C

Mr. Surya M. KasmanAccounts ManagerPT. Maphilindo Raya29 Jln. Panarukan Baru Banjarmasin 2002Kalimantan Selatan

Dear Mr. Surya,

Subject: Invoice No. 287/DC

Thank you for your letter of 15 September advising that you have made a credit transfer to our account

at Bank Panca Niaga Semarang.Our bank has also advised us that they have received the transfer you made.We thank you for your prompt settlement of the account and enclose our official receipt.

Yours sincerely,Martin S. WengerMartin S. WengerAccounts Manager

Enc: 1

ACKNOWLEDGEMENT OF PAYMENT

Dear Herr Schubert,

I am sorry that we were not able to clear your November statement for $5,850 and December invoice, No. 7713 for $1,289. We had intended to pay the statement as usual, but a large cash shipment to one of our customers in Australia was part of the cargo destroyed in the fire on the Tippa when she docked in Bombay in late November.

Our insurance company have promised us compensation within the next few weeks. Once we have received this, the account will be paid in full.

We feel confident that you will appreciate the situation and hope you can bear with us until the matter is settled.

Your sincerely,D. Van BastenD. Van Basten (Ms)Director

Ask for apology

Give a precise date of payment

Explain the reason

ClosingDelayed Payment

Dear Ms Van Basten,

Thank you for your letter of 15 January regarding our November statement and December invoice No. 7713.

We were sorry to hear about the difficulties you have had, and understand the situation. However, we would appreciate it if you could clear the account as soon as possible, as we ourselves have suppliers to pay.

We look forward to hearing from you soon

Your sincerely,Dieter SchubertDieter SchubertDirector

Agreeing to the Customer’s

request

Dear Ms Van Basten,

Thank you for your letter explaining why you cannot clear your November statement for $5,850 and December invoice No. 7713 for $1,289.

I appreciate your difficulty, but we ourselves have to pay our own suppliers and therefore must insist on payment within the next ten days.

We look forward to receiving your remittance.

Your sincerely,Dieter SchubertDieter SchubertDirector

Refusing to the Customer’s

request

Dear Mr. Franksen,Bill No. B/E 7714I was sorry to learn about the embargo your government has placed on exports to Zurimba and of the problems this has created. However, the above bill already allows credit for 40 days, and although I appreciate your offer of an additional 6% interest on the outstanding $35,498.00, it is impossible for me to allow a further 60 days’ credit as I myself have commitments.I think the following solution might help us both.You need not add interest on the present amount, but I have enclosed a new draft (B/E 7731) for $17,749.00, which is half of the outstanding balance, and will allow you 40 days to pay it. But I expect you to pay the remaining $17,749.00 by banker’s draft.Please confirm your acceptance by signing the enclosed bill and sending it to me with your draft by return of post.I hope that your negotiations with the Brazilian importers have a positive outcome and trust that this setback will soon be resolved.

Your sincerely,

N. BhiskinN. Bhiskin (Mr)Director

Enc.Bill B/E 7731

Offering a Compromise

REQUEST FOR PAYMENT

BAVARIA MUSICAL MANUFACTURERJln. Cemani Raya Dua No. 25 Bogor 20019

Jawa BaratRef: RP/DG/13 25th July, 1993

Mr. Alwin B. TandoChief Accountant PT. Mahkota Raya Abadi21 Jln. Mahkota Raya Ujung Pandang 1007Sulawesi Selatan

Dear Mr. Alwin,Subject: Statement-May 1993We regret having to remind you that we have not received payment of the balance of Rp 15,500,000 due on our statement for May, sent to you on 15 June.We enclose a copy of the statement and would remind you that we quoted unusually low prices on the goods you ordered. We look forward to your remittance by return.

Yours sincerely,Rahardian P. RamlanRahadian P. RamlanAccounts Manager

Encl:1

Reminding the paymentStating the enclosure of the invoice/pro forma invoice/

statement of accountExpecting the settlement

First Request


Jawa BaratRef: RP/DG/13 1st August, 1993


Dear Mr. Alwin,Subject: Statement-May 1993

We regret having to remind you again that on 25 July we wrote reminding you that on 15 June we sent you our statement for May, showing a balance of Rp 15,500,000 is still outstanding.As settlement of this account is now more than two months overdue, we must ask you to send your remittance within the next few days, or at least you can give us an explanation of the delay in making payment.We hope it will not be necessary to send you any further reminder.


Second Request

Mentioning the previous correspondence and including any relevant

invoice/statement Insisting the settlement

Closing


Jawa Barat

Ref: RP/DG/13 21st September, 1993


Dear Mr. Alwin,Subject: Statement-May 1993

We have reminded you twice and it is still very difficult to understand why we have not heard from you any reply to our two previous letters about the sum of Rp 15,500,000 due on May statement.We are sure you will agree that we have shown you every consideration and now, you will understand that we cannot wait indefinitely for settlement.If payment is still not made within fourteen days, we shall instruct our solicitor to recover the amount outstanding


Third Request/Final Demand

Reviewing the situation from the time account should have

been paid.Explaining that you have been patient

Legal action is threatened

Letters Requesting Payment

Economy & Finance

Transcript of Letters Requesting Payment