Varying the terms of payment

[10] Customer asks for open account terms

Dear Sirs

Today we have arranged payment of your invoice no. 162 for goods received on 24 April.

The material arrived in good condition and has now been sold.

As we have now done business with you for a year on the basis of payment on invoice, we

would like to ask you to grant us open account terms, with quarterly settlement. Our two

other main suppliers, Messrs.... and ..., have recently agreed to supply us on these

terms.

Yours faithfully

[11] Customer asks for monthly account terms

We have now been doing business with you for nearly a year and are pleased to say that we are more than satisfied with the goods you have supplied. In the coming year we will probably place regular orders with you and our present method of payment by letter of credit will become inconvenient. We would also find a short credit of advantage to our trading capacity.

We would therefore like you to supply us on monthly account terms, payment against statement within 30 days. You may refer to Messrs.... and Messrs..... with whom we have credit accounts.

[12] Supplier agrees to account terms (Reply to letter no. 13)

Many thanks for your letter of... in which you ask us to place you on monthly account terms.

We are pleased to hear that you propose to increase your business with us and are quite willing to comply with your request. The new arrangement will operate immediately.

We look forward to serving you and are delighted to hear that you are satisfied with the goods we have supplied.

EXTENSION OF CREDIT

[13] Customer asks for time to pay

Dear Sirs

Your quarterly statement reached us yesterday and has been found correct. As you know, we have always settled your account promptly and regret very much that we now find it necessary to ask you for an extra few weeks in which to clear the current liability.

Our difficulties are temporary and have been caused by the failure of the early fruit crop here, on which many of our customers are dependent. We are confident of being able to settle in full within 6-8 weeks.

We would appreciate it as a helpful gesture if you could grant us this concession.

Yours faithfully

[14] Supplier's reply to request for time to pay

Dear Sirs

We have received your letter of... asking us to allow you 60 days in which to clear your current statement.

While appreciating your difficulties, we think it unreasonable to expect us to wait a further 2 months for payment for goods, many of which were supplied 2—3 months ago. However, we are taking your good record of settlement into consideration and are willing to help you as far as possible.

If you send us a remittance for half the amount of our statement we will draw on you at 60 d/s' for the remaining half. '

We hope this will be acceptable to you and wish you a speedy recovery from your difficulties.

Yours faithfully

THE COLLECTION OF OVERDUE ACCOUNTS

There has probably never been a trading firm whose accounts department has not had to spend a considerable amount of time in trying to get customers to pay overdue accounts. In the home trade this is fairly common, but in foreign trade it is fortunately less frequent, as sellers usually insist on terms which secure payment when dealing with custom­ers they do not know. Accordingly the only risk comes from customers with open accounts, and as these are normally buyers with a proven reputation this risk is small. However, it can and sometimes does happen that an account is not paid when due. A buyer may run into a period of bad trade and find himself temporarily short of money; he may have a complaint about the goods sent; he may refuse to accept a bill of exchange(See Banking); or delays and misunderstandings may be caused by cus­toms regulations in his country. A wise customer will inform his supplier of any such situation and try to get some concession from him if he does not, and an account becomes overdue, the seller has the task of asking for payment.

As in the home trade, it is usual to make the first request for payment brief and polite. After all, the matter may be an oversight, and the simple act of sending a copy of the account with a remark such as 'Overdue— please settle' or 'Kindly remit' may be all that is necessary. Alternatively, a cable or telex may be sent. This saves time, gives a sense of urgency to the matter, and has in many cases proved effective.

If, however, a firm decides to send a letter requesting payment, the style or tone of the letter will depend on the kind of customer for whom it is intended; how long overdue; whether customer has previously allowed accounts to become overdue; how valuable the business is, etc.

A first request will usually be friendly in tone, be accompanied by a copy of the account, and show neither annoyance nor any hint of doubt about the customer's intention to pay.