SS3 Commerce Lesson Note on Business Documents

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TOPIC: – BUSINESS DOCUMENTS

CONTENT:

1. Essential Business Documents (Letter of inquiry, invoice, credit, receipt, quotation etc)
2. Trade terms and abbreviation e.g. COD cash on delivery, CIF Cost Insurance Freight etc
3. Terms of trade e.g. cash, credit payment in arrears etc
4. Means of payment e.g. legal tender, standing order etc

SUB-TOPIC 1:  Essential Business Documents (Letter of inquiry, invoice, credit, receipt quotation

LETTER OF INQUIRY:

The inquiry is usually the first stage in a transaction. It is sent by potential buyer to a seller, or many sellers, requesting information, prices and delivery terms related goods or services required. The enquiry may a letter or it may be standard printed form on which the information required can be filled. An alternative way to receive quotations is to invite tenders, i.e., offers of supply from any number of firms interested in supplying whatever is required. A tender is a competitive quotation one submitted in competition with other potential supplies. Tender may be invited by advertising an interest in receiving open quotations, or bids, in competition with others.

INVOICE:

An invoice is a form in which the seller lists the items sold to a buyer. The following particulars are usually contained in an invoice:

1. Name and address of the supplier or seller
2. Date and reference number of the invoice
3. The goods sold and their prices
4. Discount granted and other trade terms
5. Total amount payable on the invoice including taxes if any
6. Signature of the seller

An ordinary invoice is used along side with the goods. An invoice is sent without goods accompanying it (in advance of the goods) is called a pro forma invoice. It is sent under the following circumstances:

1. When the sellers insist that buyer pays before the goods are delivered to them
2. When the buyers need the particular of the goods he wants to buy in order to clear some custom formalities
3. When the buyer does not place an order for the goods but the seller wishes to explore his readiness to buy.

RECEIPT:

A receipt is a written acknowledgement of money received. When the buyer receives goods and is satisfied with the details as contained in the invoice, he remits the money due on the invoice. On receiving the money, the seller sends a receipt tom the buyer as evidence that the goods have been paid for. A receipt usually contains the following important particulars

1. Name of the issuer (seller)
2. Date and reference number
3. Name of the payer(buyer)
4. Reason for the payment
5. Amount of the payment in word and figures
6. Signature of the receiver of the payment.

EVALUATION:

1. List five particulars that are contain in the receipt
2. What do you understand by the word receipt?

QUOTATION:

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