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  1. 1. BANKING A. Local Transaction Banking - Opening a Current Account - Change of Information detail - Cancellation of a cheque - Advice of an Overdrawn Account -Request for an Overdraft or Loan B. Bills of Exchange (B/E) C. Letter of Credit (L/C)
  2. 2. Local Transaction Banking 1. Opening a Current Account Dear Mr. Day, I would appreciate it if you could open a current account for me under my trading name R&S Fashions Ltd. Enclosed you will find two specimen signatures, my own and that of my partner Ms. Catherine Sidden. Both signatures will be required on all cheques. I also enclose a reference from Mr. Stephen Young, who banks with your branch, and a cheque for $357.00 with a paying-in slip. Yours sincerely, Anne Roberts Anne Roberts (Ms)
  3. 3. Local Transaction Banking 2. Change of information detail Dear Mr. Winston, Please note that as from 11 August 2013 the two signatures that will appear on cheques for our number 1 and 2 accounts will be mine and that for our new accountant, Mr. Henry Lloyd, who is taking over from Ms. Diane Kibbs. I enclose a specimen of Mr. Lloyd’s signature and look forward to your acknowledgement. Yours sincerely, Frank Wearing Frank Wearing
  4. 4. Local Transaction Banking 3. Cancellation of a cheque Dear Mr. Mathers, Please cancel cheque No. 17892165001 for $ 1,627 in favor of B. Gelt Ltd. The cheque appears to have been lost in the post and I am sending another in its place. Yours sincerely, B. Steward B. Steward
  5. 5. Local Transaction Banking 4. Advice of an overdrawn account Dear Mr. Hughes, I am writing to inform you that you now have an overdraft of $1,358.63 on your current account. We passed your last credit transfer to Homemakers Ltd. As you have a substantial credit balance on your deposit account. If you require overdraft facilities on your current account, I suggest that you contact me and we can discuss a formal arrangement. Yours sincerely, David Collis David Collis
  6. 6. Local Transaction Banking 5. Request for an Overdraft or Loan Dear Mr. Evans, I would like to make an appointment with you to discuss an overdraft or a loan to enable me to expand my business. I have been testing the market with a new line of furniture assembly kits, and have found that demand for these kits, both here and overseas, has exceeded my expectations. In the past six months alone I have had over $60,000 worth of orders, half of which I have been unable to fulfill because of my limited resources. I would need a loan for about $18,000 to buy additional equipment and raw materials. I can offer $8,000 in ordinary shares, and $3,000 in local government bonds as part security. I estimate it would take me about nine months to repay a loan of this size. I enclose an audited copy of the company’s current sheet, which I imagine you will wish to inspect prior to our meeting. I look forward to hearing from you. Yours sincerely Richard Cliff Richard Cliff Director
  7. 7. Bills of Exchange B/E is a financial document sent by the drawer (the person asking or the money/exporter) that requires the drawee (the person paying/importer) to pay a specified amount of money on a specified time. Several ways to conduct transactions in accordance with B/E: 1. B/E is paid via bank 2. B/E is sent directly to the drawer
  8. 8. Bills of Exchange 1. B/E is paid via Bank The bill might be paid to a bank stated by the drawer or to a bank named by the drawee. The bill will be kept at the drawer’s bank until the payment is made. The bill is presented to the paying bank if the bill is due.
  9. 9. Bills of Exchange 2. B/E is sent directly to the drawer - Sight Bill/Sight Draft The customer will pay immediately - Term Draft The customer will sign (accept) the bill before the goods are sent and paid.
  10. 10. Bills of Exchange Several types of transactions using B/E: 1. Documents against Payment (D/P) The sight bill is delivered to the importer with the shipping documents. Afterwards, the importer makes payment that is on presentation or at sight. 2. Days after Sight (D/S) The bill might be paid on or within the number of days stated on the bill, e.g. 30 days after sight (30 D/S) which means that the bill can be paid thirty days after it has been presented. 3. Documents against Acceptance (D/A) The banks ask the drawee to accept the bill before receiving the shipping documents.
  11. 11. Example of Bills of Exchange B / E No. 8787 December 18, 2003 21 days after sight pay to the order of Karachi Publishing Co. Ltd., Karachi One thousand and one hundred dollars only value received payable at the current rate of exchange for Banker’s sight draft on Karachi. To: S. Amidjojo BRILLIANT BOOK STORES Wisma Metropolitan Jl. Jend. Sudirman Kav. 31 Jakarta 12920
  12. 12. Letter of Credit (L/C) L/C is a document issued by a bank on a customer’s request, ordering an amount of money to be paid to a supplier.
  13. 13. 15 July, 2003 American Outfitters 126 New Your Ave New York City, NY 10022 USA Dear Sirs, L/C for invoice No. 0784 Thank you for the pro-forma invoice No. 0784, invoicing our order No. 345-113. As it was agreed, we have instructed our bank, Eximindo Bank, Surabaya, to open an irrevocable credit for $2,500 in your favor, effective until September 25 2003. The credit will be confirmed by Eximindo Bank New York branch, who will accept your draft on them at 60 days for the full amount of your invoice. When submitting your draft, would you please enclose the following documents: Bill of landing (in duplicate) Invoice (in triplicate) Insurance policy for $2,400 Please notify as soon as you have arranged shipment. Yours faithfully, Faiz Rizal Arifin Faiz Rical Arifin Purchasing Manager