1. CREDIT
Two forms of credit arrangements:
1. Bills of Exchange or Bank Draft
It signifies that supplier gives credit to the
customer for the specified period.
2. Open Account Facilities
It signifies that customer is allowed to pay for
products against monthly or quarterly statement.

2. There are several considerations for supplier to
give credit facilities:
1. Reputation
2. Long-term trading
association
3. References

3. Dear Heri Getlach,
I intend to place a substantial order with you in the next
few weeks. I would like, if possible, to settle future accounts
every three months with payment against quarterly
statements.
As you know, over the past months I have placed a
number of orders with you and settled promptly, so I hope
this has established my reputation with your company.
Nevertheless, if necessary, I am willing to supply references.
We hope for a favorable decision and look forward to
your reply.
Yours sincerely,
P. Gerard
P. Gerard
Manager
Stating the demand and
specifying the kind of
credit required
Convincing the supplier by
mentioning the previous
experiences with the
suppliers
If necessary, offering
referencesExpecting the prompt
confirmation

4. Stating the demand and specifying the
kind of credit required:
• I am writing to ask if it would be possible for us to have
credit facilities in the form of payment by 60-day bill of
exchange.
• Thank you for your catalogue and letter. As there was
no indication of your credit terms, could you let me
know if you would allow us to settle on monthly
statements?
• We appreciate your prompt answer to our enquiry. As
I pointed out in my letter, our suppliers usually allow us
open account facilities with quarterly settlements, and
I hope this method of payment will be acceptable to
you.

5. Convincing the supplier by mentioning
previous experiences with the suppliers:
• As we have been dealing with you for more
than a year, we feel that you know us well
enough to grant our request.
• We believe we have established our reliability
with you over the six months and would now
like to settle accounts on quarterly basis.
• During the past few months we have always
settled promptly, and therefore we feel we
can ask for better credit facilities from you.

6. Mentioning the reputation of the
customer and offering references:
• We are well-established company and can offer
references, if necessary.
• We can certainly pay on the due dates, but if you
would like confirmation concerning our
creditworthiness, please contact any of the
following who will act as our references: …
• We deal with most of our suppliers on a quarterly
settlement basis and you may contact any of
those listed below for a reference.

7. Expecting the prompt confirmation
and the credit to be granted
• We hope for a favorable decision and look
forward to your reply.
• We hope you will follow up the references we
have submitted. We look forward to your
confirmation that payment by 30-day bill of
exchange is acceptable.
• As soon as we receive your confirmation that you
will allow the open account facilities we have
asked for, we will send you our next order.

8. PRACTICE
Write a letter requesting credit to Sukma Jaya
Abadi Ltd. You are a purchasing manager of
Kembang Kertas Ltd. You want to have credit
facilities in the form of payment by 60-day bill
of exchange for the future orders. Give a
reference to convince the supplier.

9. Arrange the sentences below into a good letter
of demanding credit.
• If you require a reference, please contact either Mr. M Pierson
or Mr. J Tane at our other suppliers, Pierson & Co. Louis Drive,
Dawson, Ontario, who will be happy to vouch for us.
• Yours sincerely,
• Our bank has advised us that the proceeds of our letter of
credit against your invoice, No G1197/S, have now been
credited to your account.
• And as we feel you know us well enough by now, we would
like to make future payments on quarterly statements by
international banker’s draft.
• Richard MacKenzhie
• Please confirm that these new terms are acceptable for you.
• Although we have paid for some time on this basis, it does
not really suit our accounting system.
• Dear Mr. Merton,
EXERCISE

10. Dear Mr. Merton,
Our bank has advised us that the proceeds of our letter of
credit against your invoice, No G1197/S, have now been
credited to your account.
Although we have paid for some time on this basis, it does
not really suit our accounting system. And as we feel you
know us well enough by no, we would like to make future
payments on quarterly statements by international banker’s
draft.
If you require a reference, please contact either Mr. M Pierson
or Mr. J Tane at our other suppliers, Pierson & Co. Louis Drive,
Dawson, Ontario, who will be happy to vouch for us.
Please confirm that these new terms are acceptable for you.
Yours sincerely,
Richard MacKenzhie
Richard MacKenzhie