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viii. Term of Credit and Means of Payment
Terms of credit refer to the credit period allowed by the seller for the payment of
the trade value. After the goods are received, the buyer should make the payment of the
value of trade before or at the due date. There are many modes and means of payment
like postal order, money order, TT, bank drafts, etc. The most reliable and common means
of payment should be chosen for the remittance of money or it should be as instructed by
the seller.

Points to Remember

i. Quantity of goods ii. Kinds and quality of goods iii. Size and colour
iv. Price and discount v. Packaging of goods vi. Mode of delivery
vii. Insurance viii. Terms of credit and means of payment

d. Documents Used in Home Trade
Documents are the proofs which help us to settle any kinds of disputes and can be
used as evidence in the future. The following documents are used in home trade:

i. Inquiry Letter
The customers generally come to know about a number of manufacturers through
their advertisements and publicity. Then, after identifying them, they make the necessary
inquiries about their goods. Thus, an inquiry letter refers to the letter which is written by
a probable buyer to the producer / supplier or seller by asking about the information of
the goods like quality, size, quantity, colour, price, discount and the terms and conditions
of payment, etc. Sometimes, inquiries are made through telephone, trade representatives,
telegram, etc. but mostly, a letter of inquiry is written for the inquiry of the goods.

ii. Reply to the Inquiry or Quotation Letter
It is the second document of home trade. The sellers/suppliers write quotation
letters as the reply to the inquiry letters of the probable buyers or against the invitation of
quotation published by the customers. Thus, quotation letter is that letter which is written
by a seller to the probable buyer by replying his inquiries about the goods. It is known as
quotation letter in the sense that it quotes the price of the goods. Sometimes the samples
of the goods may also be sent along with this letter. Since, this letter becomes the basis for
future trade dealing, it should be written with due considerations.
iii. Follow-up Letter
It is the follow-up of a quotation letter. Sometimes, a supplier/seller may wait till the
response of the probable buyers to his quotation letter. If there is no response from the
buyers for a long time, he may forward an another letter by reminding the buyers about
their quotations. It does not take place in the regular course of documentary dealing and
thus, is not a regular procedure.
iv. Order Letter
When a buyer finds the specification of the goods and the trade terms and conditions
favourable to him, he places the order for the goods. Sometimes, the buyers may give some

46 Aakar’s Office Practice and Accountancy - 10 Trade 47