Unit 7 Money matters

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Objectives

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Focus

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Warming up

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7.1 Dealing with figures

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7.2 Cash flow

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7.3 Changing prices: Dealing with invoicing errors

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7.4 Letters of Credit

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7.5 Chasing payment

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Sum-up

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Assignment

Objectives

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Deal with figures

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Use letter of credit

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Chase payment

Focus

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Invoicing and billing customers

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Reminding a customer of non payment

Warming up

 There are many occasions when people have to deal with money and talk about money. We know that a company always has its own Accounts department to deal with monetary problems. They pay their suppliers and receive money from buyers by invoice, letter of credit or other forms. Sometimes they need to chase money, and sometimes they owe money to other companies.

7.1 Dealing with figures

A Read the numbers 1) 1795 2) 3.66 3) 1¼% KEY: 1 ） seventeen hundred and ninety-five 2 ） three point six six  3 ） one and a quarter per cent

7.1 B

 Read through the report beforehand and then listen to the recording. Play the recording three times. 

Answers

7% 239 million 1.21 billion 4.5% 9.68 billion 2.35 billion 4.76 billion 890 million 2.05 billion 321 million

7.2 Cash flow

 This section covers the general issue of cash flow by means of an article.

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Suggested answers

a 5, b 3 , c 8 , d 10, e 1, f 4 , g 9 , h 6 , i 2 , j 7

7.3 Changing prices: Dealing with invoicing errors

 In this section we have an integrated activity which involves billing and invoicing. It includes a number of complications. The first step involves completing the invoice according to the price list given and the information contained in the customer file. The second step, the role-play, then introduces numerous complications in the form of additional information and snags. In all there are four pieces of information which are listed below in step B for clarification purposes.

7.3 A

Explain the vocabulary items which students may have problems. Remind the students that

gross

is a unit of quantity equivalent to 12

dozen

in this context (i.e. 144). Then students look at the various documents before they begin to fill in the invoice.

Seller (name, address, VAT reg. no.)

FINNTEC P.O.Box 325 SF – 33200 TAMPERE FINLAND

Consignee VAT no.

NA

Invoice number

04276

Invoice date (tax point)

1 February 20___

Buyer ’ s reference

645

Seller ’ s reference

LS 43352/91

Other reference Buyer (if not consignee) VAT no.

Frigorifocp Ameglio S.A.

Colonia 1023 Monte video URUGUAY

Country of origin f goods

FINLAND

Country of destination

URUGUAY

Vessel/flight no. and date

MS JUPITER

Port/airport loading

HELSINKI

Terms of delivery and payment

FOB HELSINKI Payment against sight draft accompanied by documents through Rabobank

Port/airport of discharge

MONTEVIDE O

Place of delivery

MONTEVIDEO

Shipping marks: container number No. and kind of packages: description of goods Commodity code Total gross wt (Kg) Total cube (m3) WLS 433 Total net wt (Kg) Item/packages 1 Gross/net/ Description Sensor switches Type A6D Quantity 35 gross Unit US $1.80

Less 10% discount Amount $ 9072.00

-907.20

Invoice total $ 8164.80

7.3 B Read the letter in File 85 and draft an answer.

FINNTEC P.O.Box 325 SF – 33200 TAMPERE FINLAND Frigorifco Ameglio S. A.

Colonia 1023 Montevideo Uruguay 20 February 20__ Ref: Customer No: 645 Dear Mr. Martinez, Account No. 645/A6D/03764 Invoice No. 04276 We refer to your letter of 14 February 20--, concerning the payment of Invoice No. 04276.

As you state in your letter, the sum of $81,648.00 was incorrectly entered into the invoice.

Since our accounts department has recently received new computing equipment we can only conclude that the error occurred before the program had been fully tested.

The correct amount due for the 25 gross actually delivered is $5, 832.00. This means the difference now due is $648.00.

We apologize for any inconvenience we may have caused you and look forward to doing further business with you in the future.

Yours sincerely, G.Aaltio

G. Aaltio Accounts Department

Reference to 7.3 B

   FINNTEC have only delivered 25 gross switches, instead of the 35 gross ordered. But they have billed 35 gross.

 There has been a change of price since the quotation was given to Julio Martinez and the order was taken. The A6D was quoted at $1.60, but Frigorifico Ameglio S.A. should be charged at $1 ． 80.

Payment of last month’s account has not yet been received by FINNTEC.

The Accounts Department of Frigorifico Ameglio S.A. have paid for the 25 gross at the old price, i.e. $1.60 each.

Answer to 7.3 B

 Frigorifico Ameglio S.A. have received 25 gross (=144) A6D switches and have paid the old price of ＄ 1.60 Χ25 gross=$5,760.00 minus 10% discount, total $5,184.00. FINNTEC have, however, billed them for 35 gross A6D switches at the new price of $1.80, i.e. x 35 gross ＝ $9,072.00 minus 10 ％ discount, total $8,164.80. (The invoice they sent, according to Julio Martinez later on, had the decimal point in the wrong place: $81,648.00!

）  The correct price for 25 gross at the new price of ＄ 1.80 x 25 gross ＝ $6,480 minus 10% discount, total $5,832.00. This means that the difference between the amount due ($5,832.00) and the amount paid ($5,184.00) is $648.00.

7.4 Letters of Credit

Q: What is Letters of Credit?

Letter of Credit

 the most commonly used method of payment for imports.

 With it, exporters can be sure that they will be paid when they dispatch the goods and importers have proof that the goods have been dispatched according to their instructions.

A partial glossary of some of the technical terms:

  revocable: a letter of credit, etc. which can be cancelled bills of exchange = documents containing an instruction, usually to a bank, to pay a stated sum of money at a specified future date or on demand   of a particular tenor = according to stated terms or in a specified manner or at a specified time  drawn at sight = a bill of exchange, payable when the beneficiary presents it at the bank, is said to be `drawn at sight' port of discharge = the port at which the cargo is unloaded, etc.

7.4 A

Reading comprehension.

 Go through the items of terminology with the whole class before letting them loose on the pair work phase. It may help to introduce briefly the method of payment.

7.4 B

Listening for detail.

 We will listen to a banker discusses problems that may arise when using letter of credit. Students read through the summary before hearing the recording. Then play the recording three times with sufficient time in between for students to think about what they are hearing.

Suggested answers to 7.4 B

1 expired 2 after 3 late 4 spelling 5 weights 6 money value 7 marks and numbers 8 smaller than 9 shipment 10 were missing 11 signatures had not been witnessed 12 facsimile signatures

7.5 Chasing payment

 This section deals with the problems of cash flow from both sides of the fence: people who have to make apologies for non-payment and people who are insistent on receiving their rightful payments. It consists of an integrated activity. After step A the main skill practiced in this section is that of writing.

7.5 A

 This is an exercise in listening for gist. Students should compare their answers in pairs.

Answers

True: 4,6 False: 1,2,3,5

7.5 B

Complete the first reminder letter.

        Dear Hr Becker, According to our records, payment of our invoice, no. 35823, sent to you last March, has not yet been made.As specified on all our estimates and invoices our terms of business are 30 days net. Your invoice has now been outstanding for 90 days. In the case of unsettled debts of this duration it is our company policy to take legal action. We would naturally prefer not to have to go so far. Would you please send us a cheque by return? In case you have lost/mislaid the original I am enclosing a copy of our invoice.

We look forward to receiving your payment by return.

Yours sincerely, Valentina SantinelliValentina Santinelli (Credit Controller)

Answer to 7.5 B

       Dear Mr. Becker, May we again remind you that this account is still overdue?  I would like to remind you also that our business terms are 30 days. We supply goods on the understanding of payment by the proper time. May we ask to settle your account. by return.

Yours sincerely, Valentina Santinell Valentina Saxttinelli (Credit Controller)

Sum-up

In this unit, we learnt:  To use and practice monetary English in some of the most relevant settings.

Assignment

 Role-play the telephone conversation, exchanging information.

 Write to make enquiries by letter and fax.

 Write to answer enquiries by letter and fax.