When the buyer receives the goods delivered by the seller, he will examine them carefully; if he finds them to be in order, he will, in many cases, send the seller an acknowledgment of receipt. Should a remittance be made at the same time, an advice to this effect is included in the acknowledgment.
Before payment is effected, the buyer carefully checks the seller's invoice or statement and compares it with his own records. If he discovers any error or discrepancy, he will notify the seller immediately. The matter is then investigated by the latter and, if it is found that the buyer was right, a correction is made.
In settling indebtedness the following means of payment may be used:
1. cash,
2. postal orders and money orders,
3. cheques and bank drafts,
4. bank transfers,
5. bills of exchange and promissory notes,
6. documentary credits.
The means of payment most commonly used in foreign trade are bank transfers, bank drafts, bills of exchange and documentary credits.
Payments in foreign trade involve the conversion of one currency into another. Means of payment which represent a claim to the payment of a certain sum in a foreign currency are collectively known as foreign exchange.
A sum of money sent in the form of cash, a cheque, bank transfer, etc., to a person at another place is known as a remittance. (The word is also applied to the act of sending the money.) Remittances are accompanied by a remittance advice, or they are sent together with the order or the letter acknowledging receipt of the goods. If the sender of the remittance does not have any proof of payment, he will ask the recipient to send him a receipt.
Acknowledging Receipt of Payment
It is not necessary for the seller to acknowledge the buyer's remittance unless the buyer asks for a receipt. To many suppliers, however, such an acknowledgment is a welcome opportunity to build goodwill and to solicit further business.
Errors, misunderstandings and other difficulties in connection with payment have to be called to the buyer's attention. For example, the buyer may have made an error in remitting, he may have misunderstood the terms of payment, or he may have forgotten to mention the number and date of the invoice he is paying.
Statements
Customers who have a current account with a supplier receive statements of account at regular intervals, for example, once a month or once every quarter. The statement is, in effect, a copy of the customer's account since it was last balanced. It shows the balance at the beginning of the period, all invoices rendered and payments received during the period (including debit and credit notes, if any), and the balance at the end of this period. The statement enables the two firms to compare the entries in their books; it also acts as a reminder to the debtor that money is still owing.
Debit and Credit Notes
Debit and credit notes (US: debit and credit memoranda, debit and credit memos) are exchanged between two firms when faulty goods or empty containers are returned by the customer, or when an error or omission in an invoice or statement has to be corrected.
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When a debit note has been received and found correct, it is acknowledged by a credit note, and vice versa.
Terms and phrases
| a. Receipt of Goods, Invoices, etc. | , .. |
| We acknowledge receipt of the goods ordered and thank you for the prompt delivery. | . |
| The goods covered by your invoice of... arrived by S.S. "Hamburg" yesterday. | - (), "". |
| The shipment has reached us safely and has turned out to our complete satisfaction. | . |
| Your statement for the last quarter has been received and found correct. | . |
| We are glad to advise you that your statement for December 20... corresponds with our books. | , 20... . |
| b. Arranging Payment | |
| In payment of (In settlement of) your invoice we enclose crossed cheque for £... on District Bank Ltd., Manchester. | - £... , . |
| We enclose cheque for £.., which please credit to our account (place to the credit of our account). | £..., ( ). |
| We enclose bank draft for $..., which covers your invoice after deduction of 2% cash discount. | $..., 2% . |
| We have instructed our bank to transfer (to remit) the amount of £... to your account with Barclays Bank Ltd., Bedford. | £... , . |
| We have accepted your draft and shall not fail to honour it promptly at maturity. | . |
| c. Errors in Invoices and Statements | |
| On checking your invoice, we find that an error has occurred. | , . |
| We are returning your invoice, as you have made an error in totaling. | -, . |
| There is a discrepancy between the goods delivered and your invoice. | . |
| We should like to draw your attention to two credit items which have been omitted from your statement. | , . |
| We should be obliged if you would correct the statement (issue a corrected statement). | , ( ). |
| As we are having difficulty, owing to this error, in obtaining the release of the goods from the customs, we should be glad if you would send us an amended invoice. | - , , . |
| Please confirm to us the adjusted balance of | , ... |
| d. Receipt of Payment | |
| We acknowledge receipt of your cheque for..., which we have placed to the credit of your account. | ..., . |
| Our bankers have just advised us that they have received your remittance in the amount of... | , ... |
| We thank you for your prompt remittance and enclose our official (formal) receipt. | . |
| e. Errors in Payment, etc. | .. |
| We are returning your cheque because it is postdated. | , . |
| We have noticed that your cheque is not signed. | , . |
| Since payment was made after expiry of the discount period, we cannot agree to your deducting a 2% discount. | , 2% . |
| You have made a deduction of... from our invoice without giving any reason for it. | ... , . |
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Specimen letters
