Republic of the PhilippinesPOLYTECHNIC UNIVERSITY OF THE PHILIPPINESSta. Mesa, ManilaCollege of Tourism, Hospitality and Transportation Management

Business Communication in Report Writing

CREDIT LETTERPrepared by:

Samantha Louise HerreraDanica Ann CruzRaiza Ara Torreflores

BSTM 2-2NProfessor Xavier Velasco

What is a 'Letter Of Credit?

A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade.

VOCABULARY

• Credit - the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.

• Creditor - a person or company to whom money is owed.• Debtor - a person or institution that owes a sum of money

Credit is a sensitive topic on many levels. Denying or reminding someone that he owes money is a difficult job. The main goal is to remain neutral and professional.

CREDIT LETTERHere are some tips on how to write a credit letter:

• Keep a courteous tone, no matter what the circumstances is. If you must deny a person credit, discontinue credit, or begin the collection process, maintain a professional tone as you explain your reasons for taking this action. Remember, by all means you want to keep this customer's business even if you must ask for cash payments.

• If you must deny a request for credit, leave the door open to future applications from the same party.

• If payment is more than a month later, encourage the customer to contact you to discuss the lapse in payment.

• Include enough information to convey to your client or potential customer your request or offer.• Be brief: credit letters should be straightforward and businesslike.• Be confident and persuasive. Be assertive but not overbearing.• Assure your reader that any information that he or she gives you will remain confidential.

EXAMPLE OF LETTER GRANTING CREDIT

Dear Sir,

Your application for financing on the acquisition of your new XP-700 digital writer has been approved. Your order will be shipped by truck within five days.

As the enclosed lease documents indicate, your monthly lease payment is P2,500. Since your lease covers the entire purchase, including cost, installation and training, additional fee or payment is required.

We look forward to serving you and we hope you will call us to service, supplies and support.

Please keep in touch, and let us know XP-700 is working to improve sales and customer service in our shop.

Truly Yours,

Marie D. Balmores

The first paragraph announces the approval of credit. The next part discuss the mode of payment and , and the last paragraph expresses appreciation and opens the door for business.

EXAMPLE OF LETTER DENYING CREDIT

Dear Mr. Dallas,

Thank you for your application for credit in our company. We appreciate your show of interest.

Your personal reference are remarkably outstanding and your record of hard work indicates that your business prospects are excellent.

However, your financial condition only partially meets our company's requirements. We can extend the P100, 000 open credit you requested only when you fully meet our total requirements.

I am sure we can set up a program of gradually increasing credit that will benefit both of us. Let me hear from you soon. We are interesred in your business venture. Please call me at your convenience.

Truly Yours,

Samantha H. Mendes

The first introduces the acknowledgementnof the appplication for credit. The second part strikes a positive note to prepare the creditor's mindset for the denial of credit. The third paragraph presents the reason/s for the denial the credit. The last paragraph cushions the impact of the refusal by leaving the door open through a suggestion to maintain the credit. If further expresses support for the applicant's business venture.