METHODS OF PAYMENT

Learning outcomes In this module you will learn how to: how to fulfill an invoice, statement how to write a request for late payment use words and phrases dealing with money

MONEY
Money is any object that functions as a medium of exchange that is socially and legally accepted in payment for goods and services and in settlement of debts. Money also serves as a standard of value for measuring the relative worth of different goods and services and as a store of value. The history of money is a story spanning thousands of years. Related to this, Numismatics is the scientific study of money and its history in all its varied forms. Money itself must be a scarce good. Before money was invented, payments were made in two ways; the first was to use currency other than coins and the second way was to barter one object or commodity for another. Many items have been used as money, from naturally scarce precious metals and conch shells through cattle, tobacco,grain, cocoa beans, furs, olive oil, slaves or wives to entirely artificial money such as banknotes and coins. Paper currency is perhaps the most common type of physical money today. However, goods such as gold or silver retain many of money's essential properties. Modern forms of money include cheques and credit cards which have become very popular and widely accepted. Credit cards offer the consumer the opportunity to buy and pay later, but you must be careful not to lose them, since they might be misused. Money includes both currency, particularly the many circulating currencies with legal tender status, and various forms of financial deposit accounts, such as demand deposits, savings accounts, and certificates of deposit. In modern economies, currency is the smallest component of the money supply. Each country has its own currency. The amount paid in one currency for another is the exchange rate. Exchange rates can change from day to day as currencies become weaker or stronger. Each country needs foreign currency in order to pay for the necessary imports. Money is not the same as real value, the latter being the basic element in economics. Money is central to the study of economics and forms its most cogent link to finance. The absence of money causes an economy to be inefficient because it requires a coincidence of wants between traders, and an agreement that these needs are of equal value, before a barter exchange can occur. The efficiency gains through the use of money are thought to encourage trade and the division of labour, in turn increasing productivity and wealth.

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Comprehension Answer the questions 1. What is money? 2. What is Numismatics? 3. How did people do the payments before money was invented? 4. What are the modern forms of money? 5. What is the exchange rate? 6. Why do we need foreign currency? 7. Which foreign currency can you mention? Write these amounts in full 17.20 56 $1780 18 800

Fill the gaps with borrow or lend in the correct form. 1. Can I ______________ your mobile for a minute, please? 2. Don't ______________ him the money. He should ask the bank, not you. 3. She never gave me back the 100 Euros she ______________ off me. 4. Sometimes Dad ______________ me his car for the weekend. 5. Could I ______________ your calculator, please? 6. Could you ______________ me your calculator, please? 7. You wouldn't ______________ me a $1000, would you?

Do you agree with the following statement. Give reasons. Money is a headache, and money is the cure. Everett Mmor Waste your money and you're only out of money, but waste your time and you've lost a part of Honour and money are not found in the same purse. Spanish proverb There's no money in poetry, but then there's no poetry in money, either. Robert Graves

your life. Michael Leboeuf

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I'd Wealth is like seawater; the more we drink, the thirstier we become. Arthur Schoppenhauer Id like to live as a poor man with lots of money. Pablo Picasso No matter how hard you hug your money, it never hugs back. Quoted in P.S. I Love You, Money made is the accepted measure of brains. A man who makes a lot of money is a clever When money speaks, the truth keeps silent. Russian Proverb Money never made a man happy yet, nor will it. There is nothing in its nature to produce

compiled by H. Jackson Brown, Jr. fellow; a man who does not is not. Bertrand Russel, The Conquest of Happiness

happiness. The more a man has, the more he wants. Instead of its filling a vacuum, it makes one. Ben Franklin He who knows how to be poor knows everything. Michelet Rich or poor, it's good to have money. Sid Lance In God we trust, all others must pay cash.American Saying Money is good for nothing unless you know the value of it by experience. - - - P.T. Barnum If you want to know what a man is really like, take notice of how he acts when he loses money. A penny saved is a penny earned. Ben Franklin All progress is based upon a universal, innate desire on the part of every organism to live beyond Economy is half the battle of life; it is not so hard to earn money as to spend it well. C. H. When it is a question of money, everybody is of the same religion.- Voltaire Never invest your money in anything that eats or needs repairing. - Billy Rose With money in you pocket, you are wise and you are handsome and you sing well, too.- Yiddish

Simone Weil

its income. Samuel Butler Spurgeon

Proverb

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INVOICES AND STATEMENTS

An invoice or bill is a commercial document issued by a seller to a buyer, indicating the products, quantities and agreed prices for products or services with which the seller has already provided the buyer. An invoice indicates that payment is due from the buyer to the seller, according to the payment terms. A typical invoice contains: A unique reference number (in case of correspondence about the invoice) Date of the invoice Name and contact details of the seller Tax or company registration details of seller (if relevant) Name and contact details of the buyer Date that the product was sent or delivered Purchase order number (or similar tracking numbers requested by the buyer to be mentioned on Description of the product(s) Unit price(s) of the product(s) (if relevant) Total amount charged (optionally with breakdown of taxes, if relevant) Payment terms (including method of payment, date of payment, and details about charges late

the invoice) payment) An invoice can be accompanied by a short covering letter or e-mail offering additional information the customer might need.
Please find enclosed our Invoice No. M1236 for 500.00. The appliances you ordered have been already despatched to you, C/F, and you should receive them within the next few days. The enclosed invoice (B2255) for 826.00 is for the uniforms at 20 each less 30% trade discount. We look forward to receiving your remmitance and will then send the uniforms C/F.

A pro forma invoices are used in the case of pre-payment, when they are needed for documentation or to inform the customerof the price. A covering letter may accompany a pro forma invoice.

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The enclosed Pro forma No.1167 for 4,890.00 is for your order No.c3344, which is now packed and awaiting despatch. As soon as we receive your cheque we will send the goods which should then reach you within few days. Pro forma invoice No.DB4455, is for your order, No.890, in corfirmation of our our quotation.The total of 23,456.98 includes cost, insurance,and freight

A statement of account is a document which is sent monthly or quarterly, and includes details of transactions within the period. The statement includes the BALANCE on the account, which is brought forward from the previous period and listed as ACCOUNT rendered. Invoices and DEBIT NOTES are added, while payments and CREDIT NOTES are deducted. Statements are rarely accompanied by covering letters, unless the account is overdue or some special concession is available for prompt payment, but a compliments slip may be attached.
I enclose your statement as at 31 December. May I remind you that your November statement is still Please find enclosed your statement of account as at 28 February this year. If the balance of 400 is Note: as at means up to this date outstanding , and ask you to settle it as soon as possible? cleared within the next seven days, you can deduct a 3% cash discount.

Invoice 1

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ATKINSONS ELECTRICAL plc

Invoice
7 Benton Street Yeovil BA21 3BT Telephone: Fax: E-mail: knowhow@gmail.com

Invoice No. 34567 To: Montesky Ltd 28 Damerham Road Bournemouth BH8 OB4 Your order No. Z89/34 Date: 23 April 2007

Number 40

Description RWA 250 volt plugs @ 65p each Add VAT1 17.5% Add p&p2

Total 26.00 4.55 4.00 34.55

E&OE3

Invoice 2

Gingerwood Potteries Ltd

Invoice
Telephone: Fascimile Email: www.gingerwood.com

1 2

VAT- Value Added Tax postage and packaging 3 errors and ommisions excepted

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Invoice No. 34567 To: ONeill Bros ltd 34 Dove Drive Hamilton Canada Your order No. Z89/34 Date: 23 April 2007

Number 35 10 15 10

Description Elinware Gingerwood Bone/Tea Yorkshire Blue CIF

Cat. No M14 W231 BT21 Y73

each @ 55.00 @ 47.50 @ 23.00 @ 52.60 3,271.00 347.00 292.00 2,632.00 Less Disc Total set set set set

1,925.00 475.00 345.00 526.00 3,271.00

Less Cost & Freight Liverpool- Hamilton Less Insurance 10% discount off net price

263.20 2,368.80

E&OE4

Statement

L&M ELECTRICAL plc

Statement
7 Benton Street

errors and ommisions excepted

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Yeovil BA21 3BT Telephone: Fax: E-mail: knowhow@hotmail.com 31 March 2009

Montesky Ltd 28 Damerham Road Bournemouth BH8 OB4

DATE 2009 1 March 2 March 8 March 12 March 14 March 20 March 25 March

ITEM Account rendered Inv. L3478 D/N 367 Cash Inv. L3481 C/N C569 Cash

DEBIT 260.00 52.00

CREDIT

BALANCE 270.00 530.00 582.00 482.00 1,202.00 1,122.00 522.00

100.00 720.00 80.00 600.00

BANK DRAFT BANK TRANSFER BILL OF EXCHANGE (B/E)

the customer buys a cheque from the bank for the amount he/ she wants to pay and sends it to the supplier. bank moves money from one account to another the seller prepares a bill in the buyer's name ordering them to either pay the amount when the bill is presented, or a specified number of days

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if the bill is a sight draft, the customer pays immediately if the bill is a term draft the customer signs/accepts the bill
CHEQUE before the goods are sent and pays later a printed form that can be written on and signed as a way of paying for CREDIT TRANSFER DEBIT/CREDIT CARD PAYMENT LETTER OF CREDIT (L/C) a document issued by a bank on a customer's request that orders an amount of money to be paid to a supplier something the customer fills out a giro slip, hands it in to abank with a cheque and the bank transfers the money to the supplier.

A letter of credit may either be irrevocable and thus, unable

to be changed unless both parties agree; or revocable where either party may unilaterally make changes. A revocable letter of credit is inadvisable as it carries many risks for the CASH ON DELIVERY (COD) POST OFFICE GIRO exporter the customer pays immediately the goods delivered the customer sends a payment, whether they have or not Post Office Giro POSTAL ORDER Account document bought from a post office thet represents a certain sum of money

BANK TRANSFER

customers order a bank to transfer to the supplier's account if telgraphed, transfer is known as TELEGRAFIC TRANSFER (TT) transfers are made within SWIFT system (Society for Worldwide Interbank Financial Communications) the seller prepares a bill in the buyer's name ordering them to either pay the amount when the bill is presented, or a specified number of days

BILL OF EXCHANGE

if the bill is a sight draft, the customer pays immediately if the bill is a term draft the customer signs/accepts the bill
before the goods are sent and pays later

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DOCUMENTARY CREDIT INTERNATIONAL BANK DRAFT INTERNATIONAL MONEY ORDER (IMOs) PROMISSORY NOTE

a letter of credit accompanied by shipping documents; the money is credited to the supplier's account as soon as confirmation of shipment is made. a cheque which bank draws on itself and sells to the customer, who sends it to supplier; the supplier's bank should usually have either an account or an agreement with the customer's bank. the bank fills out the order for the customer, hand the IMO over, and the buyer sends it to the supplier a written promise from a customer to a supplier that the former will pay the amount stated, either on demand or after a certain date.

Name given methods of payment: 1. Bank moves money by order from one account to another 2. Customer fills out a bank giro slip and hands it in to a bank with a cheque to transfer it to the supplier 3. The customer accepts the bill before the goods are sent and pays later 4. The customer will pay immediately 5. Payments which can be made on the phone or on the internet. 6. A letter accompanied by shipping documents 7. A promise from a customer to a supplier that the former will pay the amount stated What do these abbreviations mean? 1. 2. 3.
COD ........................................... B/E .............................................. L/C ................................................ 4. TT ................................................ 5. IMOs ............................................ 6.IOU ................................................

I With difficult customers, it is common practice to send a series of three letters of increasing strength (first, second request and final demand) a) Look at the say in which order you think they were sent? Why b) What information is included in all of the letters?

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Our Ref. LM / 881 / 239 Our Ref. LM / 881 / 239 Your Ref. 2617 / iM Dear Mr Peters, Dear Mr Peters, With reference to our letter LM / 881 Our Ref. LM / 881 / 239 / 239 if the amount of 500.00 is Your Ref. 2617/ IM not received within seven days, we With reference to our letter LM / 881 / 239 dated 22 Mayr, the amount of 500.00 on account number is now significantly overdue. If this amount is Your Ref. 2617/ IM

shall refer this matter to our not forthcoming within the next seven Dear Mr Peters, RE: Non solicitor. payment of account number 731. days, we will be unable to provide you I would like to bring the above item to your attention. The amount of 500.00 relating with any other services. to our invoice number 239 (a copy of which is enclosed) is now 30 days overdue. Yours sincerely, Would you please ensure payment within the next seven sincerely, Yours days. Yours sincerely, Linda Mason Note: Please disregard this letter if payment has already been made.

II Read the notes about the style of the three letters and find examples in the letters. The first letter is usually simple request for payment. It includes usually a simple request for payment. It should include details of the previously agreed payment date (e.g. 1..............) and a set a new time limit (e.g. 2..............) It should mention that copies of relevant invoices / statements are enclosed (e.g. 3..............). It usually asks the customer to ignore the letter if they have already paid (e.g. 4..............) The second letter is a further request for payment and should include a reference to previous correspondence (e.g. 5..............). It should remind the customer that the payment has not been yet received (e.g. 6..............) and if appropriate, that no reply to the first letter has arrived. It should insist on payment within a certain time (e.g. 7..............) and say what action will be taken if this does not happen (e.g. 8..............) The third letter is a final demand and is shorter. It will sometimes threaten legal action (e.g. 9..............) III Which of this expressions would be appropriate in a first request for payment and which is second request a) b) c) d) I am writing to say that your account is now overdue. I understand that your account still hasn't been cleared. If you cannot pay, we are afraid that we still have to stop supplies immediately. Would you please ensure payment within the next fortnight.

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III Which of these expressions bellow would not be suitable in a third payment request (final demand) a) b) c) d) e) If you don't pay immediatelly, we will phone your husband/wife. We now insist on immediate payment. Pay now or we'll remove tyres from your car. Unless the payment is made immediately, you'll be in serious trouble. Although, i am reluctatnt to take legal action, your silence leaves me no alternative.

IV Write an email based on the following brief. Write about 5060 words. Your biggest and best customer, HJG International, on an open account, has unexpectedly been late in making a number of recent payments, and two large payments are overdue by 60 days. Write an email to Angie Petersen, the finance manager: Point out that there are two overdue payments for 12,598 GBP and 6,758 GBP Say that other payments have been late Ask her to make the payments immediately
To: Angie Peterson Cc: Subject: Overdue accounts Dear

Grammar in use unless, provided/ providing, as/so long as These two are interchangeable and standard; they mean since, during the time that, if, and the like: e.g .As [So] long as youre satisfied, I am too. suppose/ supposing These words are interchangeable when they introduce a hypothetical situation

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e.g Suppose [Supposing] he wont agree. Or in proposing something e.g. Suppose [Supposing] I offer them money.

Underline the correct answer 1. You can borrow my car (unless/as long as) you promise not to drive too fast. 2. I'm playing tennis tomorrow (unless/providing) it rains. 3. I'm playing tennis tomorrow (unless/providing) it doesn't rain. 4. I don't mind if you come home late (unless/as long as) you come in quietly. 5. I'm going now (unless/provided) you want me to stay. 6. I don't watch TV (unless/as long as) I've got nothing else to do. 7. Children are allowed to use the swimming-pool (unless/provided) they are with an adult. 8. (Unless/Provided) they are with an adult, children are not allowed to use the swimming-pool. 9. We can sit here in the corner (unless/as long as) you'd rather sit over there by the window. 10. You won't pass the exam (unless - as long as) you try a bit harder.