A. Local Transaction Banking
- Opening a Current Account
- Change of Information detail
- Cancellation of a cheque
- Advice of an Overdrawn Account
-Request for an Overdraft or Loan
B. Bills of Exchange (B/E)
C. Letter of Credit (L/C)
2. Local Transaction Banking
1. Opening a Current Account
Dear Mr. Day,
I would appreciate it if you could open a current account for me under
my trading name R&S Fashions Ltd. Enclosed you will find two
specimen signatures, my own and that of my partner Ms. Catherine
Sidden. Both signatures will be required on all cheques. I also enclose
a reference from Mr. Stephen Young, who banks with your branch, and
a cheque for $357.00 with a paying-in slip.
Anne Roberts (Ms)
3. Local Transaction Banking
2. Change of information detail
Dear Mr. Winston,
Please note that as from 11 August 2013 the two signatures that will
appear on cheques for our number 1 and 2 accounts will be mine and
that for our new accountant, Mr. Henry Lloyd, who is taking over from
Ms. Diane Kibbs.
I enclose a specimen of Mr. Lloyd’s signature and look forward to your
4. Local Transaction Banking
3. Cancellation of a cheque
Dear Mr. Mathers,
Please cancel cheque No. 17892165001 for $ 1,627 in
favor of B. Gelt Ltd. The cheque appears to have been
lost in the post and I am sending another in its place.
5. Local Transaction Banking
4. Advice of an overdrawn account
Dear Mr. Hughes,
I am writing to inform you that you now have an overdraft of
$1,358.63 on your current account. We passed your last credit
transfer to Homemakers Ltd. As you have a substantial credit
balance on your deposit account. If you require overdraft
facilities on your current account, I suggest that you contact me
and we can discuss a formal arrangement.
6. Local Transaction Banking
5. Request for an Overdraft or Loan
Dear Mr. Evans,
I would like to make an appointment with you to discuss an overdraft or a loan to enable me to
expand my business.
I have been testing the market with a new line of furniture assembly kits, and have found that
demand for these kits, both here and overseas, has exceeded my expectations. In the past six
months alone I have had over $60,000 worth of orders, half of which I have been unable to fulfill
because of my limited resources.
I would need a loan for about $18,000 to buy additional equipment and raw materials. I can
offer $8,000 in ordinary shares, and $3,000 in local government bonds as part security. I
estimate it would take me about nine months to repay a loan of this size.
I enclose an audited copy of the company’s current sheet, which I imagine you will wish to
inspect prior to our meeting.
I look forward to hearing from you.
7. Bills of Exchange
B/E is a financial document sent by the drawer (the
person asking or the money/exporter) that requires
the drawee (the person paying/importer) to pay a
specified amount of money on a specified time.
Several ways to conduct transactions in accordance
1. B/E is paid via bank
2. B/E is sent directly to the drawer
8. Bills of Exchange
1. B/E is paid via Bank
The bill might be paid to a bank stated by the
drawer or to a bank named by the drawee.
The bill will be kept at the drawer’s bank until
the payment is made. The bill is presented to
the paying bank if the bill is due.
9. Bills of Exchange
2. B/E is sent directly to the drawer
- Sight Bill/Sight Draft
The customer will pay immediately
- Term Draft
The customer will sign (accept) the bill
before the goods are sent and paid.
10. Bills of Exchange
Several types of transactions using B/E:
1. Documents against Payment (D/P)
The sight bill is delivered to the importer with the
shipping documents. Afterwards, the importer makes
payment that is on presentation or at sight.
2. Days after Sight (D/S)
The bill might be paid on or within the number of days
stated on the bill, e.g. 30 days after sight (30 D/S)
which means that the bill can be paid thirty days after
it has been presented.
3. Documents against Acceptance (D/A)
The banks ask the drawee to accept the bill before
receiving the shipping documents.
11. Example of Bills of Exchange
B / E No. 8787 December 18, 2003
21 days after sight pay to the order of Karachi Publishing Co. Ltd., Karachi
One thousand and one hundred dollars only
value received payable at the current rate of exchange for Banker’s sight draft on Karachi.
To: S. Amidjojo
BRILLIANT BOOK STORES
Jl. Jend. Sudirman Kav. 31
12. Letter of Credit (L/C)
L/C is a document issued by a bank on a customer’s
request, ordering an amount of money to be paid to
13. 15 July, 2003
126 New Your Ave
New York City, NY 10022 USA
L/C for invoice No. 0784
Thank you for the pro-forma invoice No. 0784, invoicing our order No. 345-113. As it was
agreed, we have instructed our bank, Eximindo Bank, Surabaya, to open an irrevocable
credit for $2,500 in your favor, effective until September 25 2003. The credit will be
confirmed by Eximindo Bank New York branch, who will accept your draft on them at 60 days
for the full amount of your invoice. When submitting your draft, would you please enclose
the following documents:
Bill of landing (in duplicate)
Invoice (in triplicate)
Insurance policy for $2,400
Please notify as soon as you have arranged shipment.
Faiz Rizal Arifin
Faiz Rical Arifin