Unit 4 Empire of WealthUnit 4 Empire of Wealth

ObjectivesObjectives FocusFocus Warming upWarming up 7.1 Dealing with figures7.1 Dealing with figures 7.2 Cash flow7.2 Cash flow 7.3 Changing prices: Dealing with invoicin7.3 Changing prices: Dealing with invoicin

g errorsg errors 7.4 Letters of Credit7.4 Letters of Credit 7.5 Chasing payment7.5 Chasing payment Sum-upSum-up AssignmentAssignment

ObjectivesObjectives

Deal with figuresDeal with figures Use letter of creditUse letter of credit Chase paymentChase payment

FocusFocus

Invoicing and billing customersInvoicing and billing customers Reminding a customer of non-Reminding a customer of non-

paymentpayment

Warming up Warming up There are many occasions when people There are many occasions when people

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

7.1 Dealing with figures 7.1 Dealing with figures

A Read the numbersA Read the numbers1) 1795 2) 3.66 3) 1¼%1) 1795 2) 3.66 3) 1¼%

KEY:KEY:11 ）） seventeen hundred and ninety-five seventeen hundred and ninety-five 22 ）） three point six six three point six six 33 ）） one and a quarter per centone and a quarter per cent

7.1 B7.1 B

Read through the report beforehand anRead through the report beforehand and then listen to the recording. Play the rd then listen to the recording. Play the recording three times. ecording three times.

AnswersAnswers7% 239 million 1.21 billion 4.5% 9.68 b7% 239 million 1.21 billion 4.5% 9.68 b

illion 2.35 billion illion 2.35 billion 4.76 billion 890 million 2.05 billion 321 4.76 billion 890 million 2.05 billion 321

millionmillion

7.2 Cash flow 7.2 Cash flow

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

Suggested answersSuggested answers

a 5, b 3 , c 8 , d 10, e 1,a 5, b 3 , c 8 , d 10, e 1,

f 4 , g 9 , h 6 , i 2 , j 7f 4 , g 9 , h 6 , i 2 , j 7

7.3 Changing prices: Dealing with 7.3 Changing prices: Dealing with invoicing errors invoicing errors

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

7.3 A7.3 A

Explain the vocabulary items which Explain the vocabulary items which students may have problems. students may have problems. Remind the students that Remind the students that grossgross is a is a unit of quantity equivalent to 12 unit of quantity equivalent to 12 dozendozen in this context (i.e. 144). Then in this context (i.e. 144). Then students look at the various students look at the various documents before they begin to fill in documents before they begin to fill in the invoice. the invoice.

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

FINNTECFINNTEC P.O.Box 325P.O.Box 325 SF – 33200 TAMPERESF – 33200 TAMPERE FINLANDFINLAND

Invoice numberInvoice number 0427604276

Invoice date (tax point)Invoice date (tax point) 1 February 20___1 February 20___

Seller’s referenceSeller’s referenceLS 43352/91LS 43352/91

Buyer’s referenceBuyer’s reference 645645 Other referenceOther reference

Consignee VAT no.Consignee VAT no. NANA

Buyer (if not consignee) VAT no.Buyer (if not consignee) VAT no. Frigorifocp Ameglio S.A.Frigorifocp Ameglio S.A. Colonia 1023Colonia 1023 Monte videoMonte videoURUGUAYURUGUAY

Country of origin f Country of origin f goodsgoods

FINLANDFINLAND

Country of Country of destinationdestination

URUGUAYURUGUAY

Terms of delivery and paymentTerms of delivery and paymentFOB HELSINKIFOB HELSINKIPayment against sight draftPayment against sight draftaccompanied by documentsaccompanied by documentsthrough Rabobankthrough Rabobank

Vessel/flight no. and dateVessel/flight no. and date

MS JUPITERMS JUPITERPort/airport loadingPort/airport loadingHELSINKIHELSINKI

Port/airport of discharge Port/airport of discharge

MONTEVIDEOMONTEVIDEO Place of deliveryPlace of delivery MONTEVIDEOMONTEVIDEO

Shipping marks: container number No. and kind of packages: description of goods Commodity code Total gross wt (Kg) Total cube (m3)Shipping marks: container number No. and kind of packages: description of goods Commodity code Total gross wt (Kg) Total cube (m3)

WLS 433 WLS 433 Total net wt (Kg)Total net wt (Kg)

Item/packagesItem/packages 11

Gross/net/ DescriptionGross/net/ DescriptionSensor switches Type Sensor switches Type

A6DA6D

QuantityQuantity35 35

grogrossss

Unit Unit US $1.80US $1.80Less 10%Less 10%discountdiscount

AmountAmount$ 9072.00$ 9072.00

-907.20-907.20

Invoice totalInvoice total $ 8164.80$ 8164.80

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

FINNTECFINNTECP.O.Box 325P.O.Box 325SF – 33200 TAMPERESF – 33200 TAMPEREFINLANDFINLANDFrigorifco Ameglio S. A.Frigorifco Ameglio S. A.Colonia 1023Colonia 1023MontevideoMontevideoUruguayUruguay20 February 20__20 February 20__Ref: Customer No: 645Ref: Customer No: 645

Dear Mr. Martinez,Dear Mr. Martinez,Account No. 645/A6D/03764 Invoice No. 04276Account No. 645/A6D/03764 Invoice No. 04276We refer to your letter of 14 February 20--, concerning the payment of 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.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 oSince our accounts department has recently received new computing equipment we can only conclude that the error o

ccurred before the program had been fully tested.ccurred 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.The correct amount due for the 25 gross actually delivered is $5, 832.00. This means the difference now due is $648.

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

the future.the future.Yours sincerely,Yours sincerely,G.AaltioG.AaltioG. AaltioG. AaltioAccounts DepartmentAccounts Department

Reference to 7.3 B Reference to 7.3 B

There has been a change of price since the quotation There has been a change of price since the quotation was given to Julio Martinez and the order was taken. Twas given to Julio Martinez and the order was taken. The A6D was quoted at $1.60, but Frigorifico Ameglio S.he A6D was quoted at $1.60, but Frigorifico Ameglio S.A. should be charged at $1A. should be charged at $1 ．． 80.80.

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

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

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

Answer to 7.3 BAnswer to 7.3 B Frigorifico Ameglio S.A. have received 25 gross (=144) AFrigorifico Ameglio S.A. have received 25 gross (=144) A

6D switches and have paid the old price of6D switches and have paid the old price of ＄＄ 1.60 Χ25 g1.60 Χ25 gross=$5,760.00 minus 10% discount, total $5,184.00. FIross=$5,760.00 minus 10% discount, total $5,184.00. FINNTEC have, however, billed them for 35 gross A6D switNNTEC have, however, billed them for 35 gross A6D switches at the new price of $1.80, i.e. x 35 grossches at the new price of $1.80, i.e. x 35 gross ＝＝ $9,072.0$9,072.00 minus 100 minus 10 ％％ discount, total $8,164.80. (The invoice thediscount, total $8,164.80. (The invoice they sent, according to Julio Martinez later on, had the decy sent, according to Julio Martinez later on, had the decimal point in the wrong place: $81,648.00!imal point in the wrong place: $81,648.00! ））

The correct price for 25 gross at the new price ofThe correct price for 25 gross at the new price of ＄＄ 1.80 1.80 x 25 grossx 25 gross ＝＝ $6,480 minus 10% discount, total $5,832.0$6,480 minus 10% discount, total $5,832.00. This means that the difference between the amount 0. This means that the difference between the amount due ($5,832.00) and the amount paid ($5,184.00) is $648.due ($5,832.00) and the amount paid ($5,184.00) is $648.00.00.

7.4 Letters of Credit 7.4 Letters of Credit

Q: What is Letters of Credit? Q: What is Letters of Credit?

Letter of CreditLetter of Credit

the most commonly used method of the most commonly used method of payment for imports.payment for imports.

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

A partial glossary of some of the A partial glossary of some of the technical terms:technical terms:

revocable: a letter of credit, etc. which can be revocable: a letter of credit, etc. which can be cancelledcancelled

bills of exchange = documents containing an bills of exchange = documents containing an instruction, usually to a bank, to pay a stated sum instruction, usually to a bank, to pay a stated sum of money at a specified future date or on demandof money at a specified future date or on demand

drawn at sight = a bill of exchange, payable when drawn at sight = a bill of exchange, payable when the beneficiary presents it at the bank, is said to the beneficiary presents it at the bank, is said to be `drawn at sight'be `drawn at sight'

of a particular tenor = according to stated terms of a particular tenor = according to stated terms or in a specified manner or at a specified timeor in a specified manner or at a specified time

port of discharge = the port at which the cargo is port of discharge = the port at which the cargo is unloaded, etc.unloaded, etc.

7.4 A 7.4 A Reading Reading comprehension. comprehension.

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

7.4 B 7.4 B Listening for detail. Listening for detail.

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

Suggested answers to 7.4 BSuggested answers to 7.4 B

1 expired 2 after 3 late 1 expired 2 after 3 late

4 spelling 5 weights 4 spelling 5 weights

6 money value 7 marks and numbers 6 money value 7 marks and numbers

8 smaller than 9 shipment8 smaller than 9 shipment

10 were missing 10 were missing

11 signatures had not been witnessed 11 signatures had not been witnessed

12 facsimile signatures 12 facsimile signatures

7.5 Chasing payment7.5 Chasing payment

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

7.5 A7.5 A

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

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

7.5 B 7.5 B Complete the first reminder Complete the first reminder letter.letter.

Dear Hr Becker,Dear Hr Becker, According to our records, payment of our invoice, no. 35823, sent 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 eto 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 stimates and invoices our terms of business are 30 days net. Your invoice has now been outstanding for 90 days. invoice has now been outstanding for 90 days.

In the case of unsettled debts of this duration it is our company pIn the case of unsettled debts of this duration it is our company policy to take legal action. We would naturally prefer not to have tolicy to take legal action. We would naturally prefer not to have to go so far. o go so far.

Would you please send us a cheque by return? In case you have lWould you please send us a cheque by return? In case you have lost/mislaid the original I am enclosing a copy of our invoice.ost/mislaid the original I am enclosing a copy of our invoice.

We look forward to receiving your payment by return.We look forward to receiving your payment by return. Yours sincerely,Yours sincerely, Valentina SantinelliValentina SantinelliValentina SantinelliValentina Santinelli (Credit Controller)(Credit Controller)

Answer to 7.5 BAnswer to 7.5 B Dear Mr. Becker,Dear Mr. Becker, May we again remind you that this account is sMay we again remind you that this account is s

till overdue? till overdue? I would like to remind you also that our busineI would like to remind you also that our busine

ss terms are 30 days. We supply goods on the uss terms are 30 days. We supply goods on the understanding of payment by the proper time. nderstanding of payment by the proper time.

May we ask to settle your account. by return.May we ask to settle your account. by return. Yours sincerely,Yours sincerely, Valentina SantinellValentina Santinell Valentina SaxttinelliValentina Saxttinelli (Credit Controller)(Credit Controller)

Sum-upSum-up

In this unit, we learnt:In this unit, we learnt: To use and practice monetary To use and practice monetary

English in some of the most relevant English in some of the most relevant settings.settings.

AssignmentAssignment

Role-play the telephone Role-play the telephone conversation, exchanging conversation, exchanging information.information.

Write to make enquiries by letter and Write to make enquiries by letter and fax.fax.

Write to answer enquiries by letter Write to answer enquiries by letter and fax.and fax.