Miscellaneous phrases and sentences on Accounting

Debit, credit, balance

29. Kindly place these funds to the credit of our account.

30. This payment balances our account to date.

21. We are opening a credit of £... in your favour.

32. Please apply these funds to clear our account, and carry the balance forward to19...

Charge, charges

33. You may charge this item to us.

34. Our charge for this service is...

35. This item represents charges for costs incurred.

36. Transport and dock charges are included.

37. We make no charge for this item.

38. Any incidental costs are chargeable to us.

39. We are sure that this is an overcharge.

40. We regret having undercharged for item XX.

41. This payment discharges our liability.

Enter, entries

42. Please enter this item in your records.

43. After entering these credits we find our figures agree with yours.

44. After making these entries we can confirm your total.

45. Kindly make similar entries in your books.

46. On checking your statement we find that you have missed a credit entry for £... on 3 Jan.

Note: In the above examples the words debit, credit, and charge can be used both as nouns and verbs. The same is possible with invoice.

Books, audit

47. Our books are due for audit.

48. Please clear this amountat once...

49.... as we wish to close our books.

OPENING A NEW ACCOUNT—CREDIT STATUS

Any buyer who finds he is likely to make regular purchases from a particular seller will almost certainly ask for open account terms, i.e. he wishes to be supplied without payment for each order separately at time of delivery. He may want to pay monthly or quarterly (i.e. 3-monthly). In other words, he wants credit from his supplier just as his own customers will probably want credit from him. Credit is the life-blood of trade. Modem commerce has been built up on it and it has in recent years penetrated to the retail buyer to such an extent that today many people spend half their income on credit buying, and large credit finance com­panies have sprung up to finance this kind of spending.

In international trade, credit is of even greater importance than in the home trade, partly because of the time lag between the placing of the order and delivery of the goods. It is not only buyers who intend to place regular orders who will want credit terms, but also buyers who may want to place a single—but very large—order. Very often the banks will cover the credits required, and this is dealt with in Chapter 9. In the present chapter we shall deal only with credit given by the seller himself.

Let us suppose a seller has received a request for account terms. The seller needs to know immediately what kind of reputation the buyer has, the approximate size of his business, how he pays his accounts and even something about his trade activities, before the seller can calculate how much credit he can grant. This level of credit is called credit standing or credit status.

The seller can obtain information from (a) references given by the buyer, (b) his bank, (c) various trade associations and (d) enquiry agen­cies.

In writing letters asking for information of this kind, the writer must remember that the whole matter ^confidential and that in the cases of (b) and (c), the giving of information is a favour on the part of the givers. Letters should therefore be polite and appreciative and should give assurance of confidential treatment.

[23] Seller's enquiry to reference given by buyers

CONFIDENTIAL

Dear Sirs

We have had a request from Messrs. J. L. Dyer & Co. of Port Elizabeth S.A. for supplies of our products on open account terms. They have given your name as a reference, saying they have done business with you for the past 5 years.

We would appreciate it as a very great favour if you would kindly let us know in confidence whether you have found Messrs. Dyer & Co. reliable in their dealings and prompt in settling their accounts. As we understand that their requirements may be to the amount of £1,000 monthly, we should be grateful to you for an opinion on their ability to meet'" a liability of this size.

Any other information which you could supply would be very welcome, and would of course be treated as strictly confidential.

Yours faithfully

[24] Seller's letter to his bank manager, asking for information

The Manager

North-Eastern Bank Ltd.

Hadley St

Newcastle ND2 7GF

Dear Sir

I am thinking of granting credit to Messrs... of..., of whom I have only slight knowledge gained during a few months of trading on a cash basis.

If you can find out anything about their financial and credit standing, I shall be very grateful to you. They give me only their bankers. The Bank Ltd. of..., as a reference, and they estimate their monthly orders at about £500.

I hope that you will be able to assist me.

Yours faithfully

Some phrases for use in letters enquiring about a customer's credit status

50. (Can you please) (Will you kindly) give us information regarding...

51. …their credit status.

52. … their activities and financial standing

53.... their reputation and creditworthiness.

54.... their ability to meet a credit of.

55. Would you consider a credit of £. a reasonable risk

56. Have you any reason to doubt their creditworthiness

57. Are they reputed to meet their liabilities promptly?

58. As far as you know, is their business financially sound?

59. Should we be safe in granting them a credit of £

60. We should also welcome information regarding

61. Any other information you may be able to pass on to us will be treated as confidential.

62. We realise that what you may be able to tell us is without responsibility.

63. We would be very grateful to you for an answer, and enclose a postal reply coupon 94. If we can at any time render you a similar service, we shall be glad to do so.

64. We thank you very much for your assistance

Letters asking for information, such as we have just studied, are part of recognised business procedure. The receivers of these letters regard it as a duty to answer them honestly, although there is no necessity for them to do so. They act on the fairly certain assumption that they themselves will one day need assistance of the same kind.

Replies to these enquiries should therefore be helpful but brief. It is not necessary to write a history of the firm in question, but enough should be said to give the enquirer a fair basis for reaching a decision. Banks usually answer very briefly indeed, private firms somewhat more fully, while enquiry agencies usually go into much more detail.

One must be very careful when giving negative or unfavourable infor­mation. To write a letter saying that someone is unreliable can lead to trouble in almost any country, and in Great Britain it might easily be libel. A safe course in such cases is to say that you cannot give any favourable information, and let the enquirer draw his own conclusions.

[25] Favourable reply to letter no. 26

STRICTLY CONFIDENTIAL

Dear Sirs

Replying to your letter of... under ref. no AB/A we can give you the following informa­tion.

The firm you mention are well-known in local business circles and appear to have a good reputation. They have been established for over 10 years, to our knowledge, and conduct a fairly extensive import trade in our line

We have been doing business with them for just over 5 years on quarterly account terms and can say that their obligations to us have been punctually met" at all times Although their credit with us has never reached the level mentioned in your letter we would have no hesitation in granting them this amount, if asked

This information is given without responsibility," of course

Yours faithfully

[26] Favourable reply from a bank to letter no. 28

Dear Sirs

With reference to your enquiry of... concerning the firm named on the enclosed slip, we can advise you that they are old established dealers of the highest repute and standing, and are considered safe for the credit you mention. This information is for your own use only and is given without responsibility."

Yours faithfully

[27] Unfavourable reply from a bank to letter no. 28

Dear Sirs

Replying to your enquiry DD/CC of... we regret to say that we cannot give information in this case. We would advise you to act with caution.

Yours faithfully

[28] Unfavourable reply from business reference

Dear Sirs

We regret we are unable to help you very much with regard to the firm mentioned in your letter of...

It is true that we did business with them during the period 1974-75, but the amount involved was not large and accounts were nit always satisfactory kept.

This is, of course, in strict confidence.

Yours faithfully

Phrases and sentences used when answering credit enquiries

65. The firm (you name) (named in your letter) (mentioned)

66.... are reputed to be sound. 99... have a high standing 100... enjoy the respect and confidence of...

67... have a sound and prosperous business.

68....are considered worthy of credit.

69.... have an excellent record.

70. We are of the opinion that you would run no undue risk in granting them quarterly account terms

71. We should not hesitate to allow them the credit asked.

72. They should be safe for almost any amount.

73. We advise caution in granting credit terms.

74. In view of their position, credit of £... would be risky.

75. Credit should be restricted to one month.

76. Long credit would involve you in serious risk.

77. They have the capital to back this expansion.

78. They are known to be heavily committed and have overrun their reserves. Caution is advisable.

79. They are being pressed by several creditors and their position is precarious.

80. They suffered heavy loss in the... bankruptcy case and recovery is uncertain.

81. They are inexperienced in this business and extreme caution is advised in granting credit.

82. We would rather not express an opinion of this firm.

83. We are unable to recommend them.

84. They often defer payment of their accounts until a second reminder is sent to them.

85. Their record does not give grounds for confidence.

CHAPTER 6.

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