Trade Documents For POB

Letter of enquiry- the initial document sent to a supplier by a prospective customer asking for
details about a product.

Quotation- a formal statement of promise by the potential supplier to supply goods requested at
a given price and in a given time period. It will have details such as: the number of units
supplied, the price, transport charges
Order form- a form used to place an order, usually from a manufacturer or wholesaler. There
should be three copies of this: one copy to the supplier, one copy to the stock controller to check
on goods when they are delivered, one copy kept by the order department to check against the
invoice when that is received. The order form should have a full description of the good and the
requested delivery time.
Advice note- a formal notice from a supplier to a customer that goods have been dispatched. It is
sent ahead of the goods to advise the buyer that the goods are on the way.
Delivery note- written document from the supplier to the customer which accompanies the
delivery of goods, giving details of quantity and type of goods. It allows the buyer to check that
the goods have been received and are in good condition.
Pro forma invoice- a bill sent to the buyer when the supplier requires payment in advance of
delivery. A pro forma invoice may be sent to a buyer when the buyer is not well known to the
supplier.
Invoice- it is sent from the supplier to the buyer, giving precise details of how much is owed to
the seller. An invoice will have details such as: quantity supplied, price per unit, total amount
owed and invoice number.
Debit note- a note issued to adjust the accounts and increase the amount owed by the customer.
A debit note might be issued when: the seller undercharged the buyer, more goods than ordered
were sent to the buyer, transport costs were not included yet they had been in the original
quotation.
Credit note- a note issued to adjust the accounts and reduce the amount owed by the customer. A
credit note might be issued when: an incorrect higher price has been stated, discounts were left
off the invoice, too much was charged for transport.
Statement of account- a document that gives the total amount owed by a customer, usually at
the end of the month. It provides details such as: the purchases made during the month; the total
amount outstanding that has to be paid.
Purchase requisition- this is generated by a department of a business that needs a particular
item, informing the purchasing department of the items, the quantity it will need and when the
items are required.
Stock card- a stock or inventory control document that lists the available quantity of a particular
product.
Bill of lading- a document used when goods are sent by ship and is used to acknowledge receipt
of a shipment of goods. It has details such as: who the goods are being sent to; name of the ship;
serial number
Airway bill-it is similar to a bill of lading but it is used in air transport.
An Import licence- issued by the government of the importing country and gives permission to
the importer to bring a certain quantity of the product into the country. The licence indicates the
quantity to be imported and the names of the importing and exporting countries.
An export licence- is a similar document to an import licence and gives permission for the
export of certain products in certain quantities.
Insurance certificate- document which indicates that the goods being traded are insured.
Certificate of origin- Document that indicates the country of origin and the materials the
products are made from.
Cheque- a written instruction to a bank to transfer a certain sum to the account of the payee. It
has details such as: date; payees name, the amount to be transferred in words and numbers; the
account number; the signature of the person drawing the cheque
A crossed cheque- has two parallel lines drawn across its face with thw words A/C payee
printed between them. This type of cheque must be paid into the bank account of the payee. If a
cheque is not crossed it would be an open cheque. This means the payee can: ask the bank to
cash the amount shown on the cheque; pay it into their own bank account. A crossed cheque
provides more security than an open cheque.
Money order- a guaranteed instrument of making payment issued by banks and post offices.
Debit card- issued by banks or credit unions to account holders to allow them to make
immediate payment for purchases, by transferring money from the account holders account to
that of the trader.
Credit card- issued by banks and other financial institutions to account holders to enable them
to buy goods from traders. The trader is paid by the card issuing company, which then collects
the payment from the card holder.
Standing order- a payment instruction is given to the bank to make a regular payment on the
same date each week, moth or year until further notice. This method is used when the payment
amount does not change (e.g fixed utility charges)
Direct debit- allows the payees bank to withdraw regular payments- but usually different
amounts. This method is commonly used by gas and electric companies.
Telegraphic money transfer- an electronic means of transferring money from one bank account
to another, usually overseas. The banks communicate by computer, telex or cable in orer to effct
the transfer of money.
Internet banking- This is transforming the banking system as customers directly access their
own accounts online.
Documentary credit- letter from the buyers bank which guarantees that payment will be made
to the seller. Documentary credit takes the risk out of dealing with a buyer whose
creditworthiness is unknown to the supplying business.
Insurance- a promise of financial compensation in the possible event of specific future losses, in
exchange for a periodic payment e.g fire insurance.
Assurance- a promise of financial compensation following an inevitable event e.g death
Indemnity- this means the insured should be returned to the position they were in before the
loss.
Pooling risk- those at risk pay premiums into a pool, managed by the insurance company, to
compensate for losses suffered by themselves or others.
The principle of insurance is that by paying a small and regular contribution (called a premium)
to an insurance company, a very large sum could be paid out in compensation. The insurance
company is able to make this payment by using the principle of pooling risk. The insurance
company makes collects many relatively small premiums from businesses and other property
owners and it can make just a few very substantial payments to policy holders who may suffer
major accidents of fires.

Trade Documents For POB

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Letter of enquiry- the initial document sent to a supplier by a prospective customer asking for

details about a product.

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