HOME TRADE Documents used for trade serve as: - Proof of transaction Written records Basis for recording transactions in account book Letter of enquiry – is a document buyer sends to seller to find out more about the goods they want to buy. Quotation – document sent by seller to the buyer on the receipt of letter of enquiry. It informs the buyer on availability of goods, prices, brands, terms of delivery and payment Order form – document sent from the buyer to the seller when he wants to place an order for goods. Advice note– sent from the seller to the buyer to inform him of the date goods are going to be delivered, often used if delivery takes longer period. Delivery note – document send from the seller to the buyer along with parcel and should be signed in by the buyer which is going to state that all the goods are in good condition, and nothing is broken. Invoice – sent by the seller to the buyer to inform him the amount due on the goods supplied and when the payment is due. Credit note – used if the seller has overcharged the buyer. It is sent to inform the buyer that certain sum of money will be credited into his account. Debit note – used if the seller has undercharged the buyer. It is sent to inform the buyer that certain sum of money will be deducted from his account. Statement of account – sent by the seller to the buyer at the end of the month to show and overview of all transaction that took place over a period. Cheques – issued by the buyer to the seller to make payment A receipt of payment – issued by the buyer to the seller as proof that payment for the goods has been made. - Letter of enquiry: Name and address of seller and its company Name and address of buyer and its company Terms of payment/delivery Price Delivery date - Quotation: Name and address of seller and its company Name and address of buyer and its company Terms of payment/delivery Goods with code and references Cash discount - Order form: Name and address of seller and its company Name and address of buyer and its company Terms/time of delivery Cash discount (terms of payment) Trade discount (terms of payment) Type, brand, quantity, and price of the goods - Invoice: Name and address of seller and its company Name and address of buyer and its company Terms of payment/delivery Invoice number Date Order number Errors & omission excepted TERMS USED FOR PAYMENT FOR DELIVERY Carr.pd. (carriage paid) Carr.fwd. (Carriage forward) F.o.r (Free on rail) F.o.b (Free on board) C.i.f (Cost, insurance, freight) The delivery cost has been included in the quotation; the seller pays for cost of delivery. The delivery cost has not been included in the quotations; the buyer pays for the cost of delivery. The seller only pays delivery cost from his warehouse to the nearest railway station. Buyers must pay delivery cost of transport by rail. The seller only pays delivery cost from his warehouse to the ship. Buyer will have to pay shipping and insurance costs. Price stated in buyer. The quotation includes the cost of goods, insurance, and freight (transportation costs), to be paid by the TERMS FOR PAYMENT C.w.o (cash with order) C.o.d (cash on delivery) Prompt cash Net cash Trade discount Cash discount (terms of payment) Buyer must make payment along with his order Payment must be made when the goods are delivered to buyers. Post offices usually perform this service. Buyer must make payment to seller within a few days after the goods are received. The amount to be paid by the buyer after all additional costs or discounts and taken into his account. A certain percentage on a listed or quoted price granted by the seller to the buyer in the same trade. A discount of certain percentage given to the buyer if he has managed to make payment within a period stated by the seller. FOREIGN TRADE What is foreign trade? - buying and selling of goods and services between countries. Why do countries trade with each other? - Because country find it difficult to produce all the goods and services which they might need. Every country specialises on a certain good and sell it around the world. What are visible imports and exports? - Visible imports and exports are goods that can be seen physically such us electronic goods, machinery, raw materials, and food stuff. What are invisible imports and exports? - Things that cannot be seen physically. Those are called services, such us tourism, banking, insurance. 8 problems of Foreign Trade: - Extra costs in terms of packing, delivery, and redistribution Language differences Risk Difficulties in setting the standard for goods produced Long distance delivery Different currencies Differences in the standard of unit Different import controls in different countries Customs and Excise department FUNCTIONS OF DEPARTMENTS: - To collect custom duties from imported or exported goods To prevent people from not paying custom duties and smuggling in contraband goods (weapons, drugs) To control the bonded warehouse CUSTOM DUTY - A certain sum of money the government collects on certain type of goods that are imported or exported. CUSTOM DUTY IS COLLECTED: - To give the government revenue to spend and invest to schools, infrastructure, buildings To make imported goods more expensive allowing more local goods to be sold in the country To control the accessibility of certain goods that are sold in the country. DIFFERENT TYPES OF CUSTOM DUTIES: - Import duty – custom duty that is collected on the goods that are imported Export duty – custom duty that is collected on the goods that are exported Protective duty – custom duty that is collected on imported goods to protect the livehood of local manufactures. Excise duty – tax which is collected on locally manufactured goods that are meant to be sold in a local market. EXAMPLES WERE BUYER OR SELLER MAY NOT HAVE TO PAY CUSTOM DUTIES TO IMPORT OR EXPORT GOODS: - Free port - a port where goods enter and exit freely without the need for the buyer or seller to pay custom duties. Free trade zone - an area where it is officially free of custom duties. BONDED WAREHOUSE: Dutiable goods are kept here before custom duties are paid on the goods. FUNCTIONS OF A BONDED WAREGOUSE: - Goods on which taxes must be paid are kept here and released once taxes are paid. Goods are packed and labelled to make it easier for businessmen to easily carry goods on trade when the taxes are paid off. ADVANTAGES OF A BONDED WAREHOUSE: - Payment of duties can be postponed Goods for re-export can be stored and processed in a bonded warehouse Goods can be sold while in bond PORTS DEPARTMENT Wharves and anchorage for the docking of ships. Provision for loading and unloading of goods. Transit shed. Fresh water to refill ship’s store. Repair facilities for small vessels and ocean-going ships. Provides bonded warehouse for storage of goods. DOCUMENTS USED IN FOREIGN TRADE Bill of lading – issued when the goods are sent by ship. Includes: - Quantity, Value, Description, Destination of the goods - Name of the ship - Port of departure It is document of title meaning that the owner of the goods can show it to the Ports Department to prove his ownership. Charter party – contract between a ship owner and the person who charters the entire ship or its part to transport his goods. Airway Bill – shows that the airline has agreed to carry the goods. It is not a document of title and thus cannot be used to prove ownership - Consignment notes – advice note prepared by the shipper for the transport company. Includes: Quantity, description, and destination of the goods Date of dispatch (departure) *It may be used as the receipt for the consignee (person who receives the goods) to be signed once it is received. COMMUNICATION Communication - exchange of information or messages between individuals and organisation. It is the most important aids to trade. IMPORTANCE OF COMMUNICATION: ⁃traders can keep in touch with each other, no matter how far apart they are. ⁃traders can order goods from their suppliers ⁃allows people to see information up to date about a new product or news in a global market ⁃banks can contact other banks quickly to help traders with financial problems. ⁃allows to quickly send and receive important documents ⁃helps to keep stuff of organization or company quickly informed ⁃it allows immediate response from an organization or company POST OFFICE Services provided by post office: ⁃Facilitates communication between individuals and organizations ⁃Allows buyers to make payments to sellers ⁃Act as an agent of collection FACILITATION OF COMMUNICATION: *Ordinary post: ⁃Delivers local and foreign first and second class mail at low cost *Register mail ⁃By paying additional fee, Important mail can be sent through the post via first class register mail to make sure that the mail is delivered ⁃Confirms that delivery is made because receipt acknowledges that the mail has been delivered. ⁃If there is a loss during delivery compensation is made. *Recorded delivery ⁃provides a record of posting and delivery ⁃Used for sending and delivering important documents which require proof of delivery. *Express mail ⁃used to send urgent letters, document, and parcels ⁃speed-post provides safe, fast, and efficient delivery service of documents and packages to 58 countries. ⁃EMS - Pos Laju is used for urgent deliveries of letters, documents, packets, parcels and hampers within Brunei Darussalam. ⁃Pos Gagas is an additional new premium service, which has faster delivery time then Poslaju. *Parcel post ⁃used to send parcels locally and abroad ⁃there is a weight limit on the parcel ⁃can be sent through register post ⁃insurance can be bought for the parcel *Airmail ⁃sends mail and parcels aboard ⁃used to send urgent mail or parcels to distant countries as normal shipping takes 2 weeks ⁃more expensive than ordinary post *Business reply post ⁃used by mail order business which receives replies from potential and current customers without charging cost for them ⁃Special envelopes of standard size are used for this service ⁃The firm must have license to operate this service MONEY CAN BE SEND THROUGH THE POST OFFICE BY: *Money order: ⁃Used to transit money in a country or to other countries. A person cannot transit more than $1000 to Brunei Darussalam or Malaysia and not more than $400 to other countries. ⁃Remitted - person who sends money using money order ⁃Payee - person who receives the money that has been sent by remitted. Advantages of money order: ⁃not expensive - low commission ⁃convenient - there are many post offices around the countries ⁃safe - identity of the payee is verified before payment is made *Telegraphic money order: ⁃used to send money urgently and quickly ⁃money would reach the payee after couple of hours ⁃the service cost much more as the commission charged is higher ⁃the payee will be informed by telegram to collect the amount sent to him at the post office payment counter *Postal order: ⁃used more payments of small amounts (not more than $100) ⁃sold in fixed values ($1.00 $50.00 $100.00) ⁃not expensive - commission charge is low ⁃it has a counterfoil (like a receipt) ⁃if postal order is lost counterfoil is used to claim back money from post office AS A COLLECTING AGENT: *Collect payment for: ⁃water bills ⁃electric bills ⁃telephone bills ⁃road taxes/ renews driving licenses TELECOMMUNICATION: *Important telecommunication services provided by TelBru are: ⁃Telephone ⁃Telegraph ⁃Telefax/ Facsimile ⁃Videoconferencing ⁃Email/Internet ⁃Mobile phone/ 3G Services/ SMS TELEPHONE SERVICES: ⁃A firm that wants to instal telephone line must apply to TelBru ⁃Subscriber of telephone service - person who leases (rental, book) a telephone line from the service provider. Advantages - Immediate replies to any question - Conversation can be carried out TYPES OF TELEPHONE SERVICES: ⁃Long distance calls ⁃Subscriber Trunk Dialing Service (STD) Disadvantages No written records of conversation (email, SMS) - Expensive for long conversations LONG DISTANCE CALLS: ⁃calls to other countries can be made by: • operator (trunk calls) • International Direct Dialing service (IDD) allows telephone calls to be made to foreign numbers without using the services of the operator. A LONG-DISTANCE CALL IS CHARGED ACCORDING: ⁃Distance - the further the country that is called, the higher the charge ⁃Time taken by the caller - the longer the conversation, the higher the charge ⁃Types of call - extra cost is levied for using manually operated assistance. ⁃Time of the day - day calls are usually more expensive than night calls SUBSCRIBER TRUNK DIALLING SERVICE (STD) ⁃a service when telephone subscriber can make trunk calls by dialling direct without the aid of an operator by sharing a set of channels USING THE TELEPHONE DIRECTORY Allows to find the telephone number of a subscriber. 3 sections in the telephone directory: White pages – lists all private companies and individual subscribers Yellow pages – lists all professional and commercial organizations (hotels, layers, clinics, shops) Green or blue pages – lists all government departments. TELEGRAPH SERVICE - Used for transmission of messages. It is easy and quick, but expensive mode of sending brief messages locally and oversea. Telegram – message that is sent by telegraph and printed on paper TEMEFAX SERVICE - Allows individuals to send pictures, drawings, documents and graphic locally and overseas. This can only work if sender and receiver have telefax machines and be subscribers of telephone lines. VIDEO CONFERENCING SERVICE: - Allows individuals in different cities or countries to hold discussions face to face without the need to live their office. EMAIL/INTERNET SERVICE: - E-mail – is a system for delivering messages from one computer to another’s through internet. MOBILE PHONE/ 3G/ SMS - Mobile phone service allows user to call another person from all around the globe. Modern 3G phones allow direct allow direct video calls and other service. RADIO AND TELEVISION - Businessmen use them to get their messages across to a wide audience since many people listen to radio and watch television. FACTORS INFLUENCING THE CHOICE OF METHOD OF COMMMUNICATION: - Cost Urgency Record of information Safety and security Distance Information to be transmitted Speed of connection
