Invoice

Johnson Tools & Co Ltd Your order no: AW 25

112 Kingsway Date: 18 August 19—

LIVERPOOL L20 6HJ Invoice no: В 832

Quantity	Item(s)	Unit Price	Total £
10 21 12	Polyester shirts, small	15.00	150.00
	Polyester shirts, medium	16.00	336.00
	Polyester shirts, large	17.25	207.00
			693.00
	VAT(@ 17.5%)		121.28
	One case (returnable)		13.25
	Terms 2/4% one month		827.53

E&OE Registered in England No 523807

Invoice

The invoice informs the buyer of the amount due for goods supplied on credit.

VAT: Value Added Tax. A tax on goods and services, payable to HM Customs and Excise.

E & OE: Errors and omissions excepted. This statement reserves the supplier's right to correct any errors which the document may contain.

(a) Non-regular customer

Dear Sir/Madam

YOUR ORDER NUMBER AW25

We are pleased to enclose our invoice number В 832 for the polyester shirts ordered on 13 August.

The goods are available from stock and will be sent to you immediately we receive the amount due, namely £312.28.

Yours faithfully

(b) Regular customer

Dear Sir or Madam

YOUR ORDER NUMBER AW 25

Our invoice number В 832 is enclosed covering the polyester shirts ordered on 13 August.

These shirts have been packed ready for despatch and are being sent to you, carriage paid by rail. They should reach you within a few days.

Yours faithfully

Debit and credit notes

If the supplier has undercharged the buyer a debit note may be sent for the amount of the undercharge. A debit note is in the nature of a supplementary invoice.

If the supplier has overcharged the buyer then a credit note is sent. Credit notes are also issued to buyers when they return either goods (as where they are unsuitable) or packing materials on which there is a rebate. Credit notes are usually printed in red to distinguish them from invoices and debit notes.

Varying the terms of payment

When a customer is required to pay for goods when, or before, they are delivered, he is said to pay 'on invoice'. Customers known to be creditworthy may be granted 'open account' terms, under which invoices arc charged to their accounts. Settlement is then made on the basis of statements of account sent by the supplier.

When a customer finds it necessary to ask for time to pay, the reasons given must be strong enough to convince the supplier that the difficulties are purely temporary and that payment will be made later.

Customer requests time to pay (granted)

1. Customer's request

Dear Sirs

Acknowledge We have received your letter of 6 August reminding us supplier's -letter that payment of the amount owing on your June

statement is overdue.

Explain why payment We were under the impression that payment was not due has not been made until the end of August when we would have had no

difficulty in settling your account. However it seems that we misunderstood your terms of payment.

Request deferred In the circumstances we should be grateful if you could payment and give allow us to defer payment for a further 3 weeks. Our assurance present difficulty is purely temporary. Before the end of

the month payments are due to us from a number of our regular customers who are notably prompt payers.

Express regret We very much regret having to make this request and

hope you will be able to grant it.

Yours faithfully

2. Supplier's reply

Dear Mr Jensen

Respond to request Having carefully considered your letter of 8 August, we for deferred payment have decided to allow you to defer payment of your

account to the end of August.

Explain reason for This request is granted as an exceptional measure only granting request because of the promptness with which you have settled

your accounts in the past. We sincerely hope that in

future dealings you will be able to keep to our terms of

payment.

Reminder about We take this opportunity to remind you that

future terms they are as follows discount for payment within 10 days

Net cash for payment within one month

Yours sincerely

METHODS OF PAYMENT

Various methods of payment may be used in settling accounts. The form of pay­ment to be used is a matter for arrangement between the parties concerned.

1. Cash (coins and notes).

2. Payments through the Post Office

(a) Postal orders and money orders (the latter for foreign payments only). British postal orders and money orders are issued and paid in many coun­tries abroad. Payment is made in the currency of the country of payment at the current rate of exchange. Postal orders are used for small sums (up to £20 in the United Kingdom).

Money orders (other than telegraph money orders) are no longer issued for payment in the United Kingdom but are issued for amounts up to £50 for payment abroad. This method is used by senders who have no bank or giro (postal cheque) account. A person sending a money order should ask the payee for a receipt since there is no other evidence of payment.

2. Giro transfers. 'Giro' is a term commonly applied to the postal cheque system run by post offices in most Western European countries and Japan. Apart from cash transactions, giro transfer or postal cheque is the chief means of payment. Anyone can make a deposit or receive a payment, whether or not a giro account is held.

3. The COD system. In the COD (cash on delivery) system the buyer pays for the goods at the time they are handed over by the carrier (this includes the postal system). In this way the supplier makes certain of receiving payment for goods supplied to unknown customers.

3 Payments through banks

(a) Home trade relies on cheques, credit transfers (bank giro), banker's drafts and letters of credit.

• Cheques: A bank cheque is always payable on demand. It is by far the most common form of payment used to settle credit transactions in the home trade of countries where the bank cheque system has been developed. It may also be used to pay debts abroad. A receipt is the best, but not the only, evidence of payment and cheques which have been paid by a banker and later returned to customers may be produced as receipts. When payment is made by cheque a separate receipt is therefore unnecessary but the payer may legally demand a receipt if required.

• Credit transfers: The system of credit transfers operated by banks is in many ways similar to the postal cheque (giro) system and is now commonly referred to as a bank giro. The payer completes a credit transfer or giro transfer slip for each separate payment and enters it on a list, which is passed (in duplicate) to the banker together with the slips and a cheque for the total amount. The banker then distributes the slips to the banks of the payees concerned and their accounts are then credited. Payees receive the transfer slips from their bankers. A separate advice of payment by the payer is therefore unnecessary but some payers make it their practice to send one,

•Banker's drafts: A banker's draft is a document bought from a bank. It orders the branch bank, or the agent on whom it is drawn, to pay the stated sum of money on demand to the person named in the draft (the payee). In foreign transactions the payee receives payment in the local currency at the sums of money in circumstances where a creditor would hesitate to take a cheque in payment. Like cheques, they may be crossed for added safety.

(b) Foreign trade may use bank transfers (mail, telegraphic and telex); bills of exchange and promissory notes; bank commercial credits (documentary credits if a documentary bill is used); banker's drafts; and letters of credit.

Supplier asks customer to select terms of payment

Dear

Thank you for your letter of 3 April, but you do not say whether you wish this transaction to be for cash or on credit.

When we wrote to you on 20 March we explained our willingness to offer easy credit terms to customers who do not wish to pay cash, and also that we allow generous discounts to cash customers.

We may not have made it clear that when placing orders customers should state whether cash or credit terms are required.

Please let me know which you prefer so that we can arrange your account accordingly.

Yours sincerely