Introduction to Business Finance Essay

Used when a business wishes to buy a good. It lets the business supplier know the requirements of the company making the order. The form will include both purchaser and supplier contact details, along with an order and reference number. It will also show the quantity required, descriptions and prices. This will be the beginning of the process. It will be processed by the business, who will then get the order ready for dispatch. The use of these is an ongoing process. Delivery Note The delivery note is used by the business who is providing the goods. It gives the purchaser a list of all the products they will be receiving. It details any goods that are unavailable. It will also state the relevant order and reference number. This follows the purchase order in the sequence of events. Again, this is a document that is used in an ongoing process. Goods Received Note This document is sent from the buyer to the seller. It gives both businesses a record of what goods have actually been received. The businesses can use it as a check with the purchase order, delivery note and with their stock levels. This document will follow the delivery of goods. The buyer will check through all received and then produce the document. Invoice An invoice is a document that shows a business what payment is required. It gives all the details of the goods ordered and delivered, including the quantity and the price. It will also show any discounts, and if any VAT is being charged. This again will have the relevant reference and order numbers. Invoices are sent to businesses once delivery has occurred. Usually, invoices are sent on a regular basis. Credit / Debit Notes This will reduce the amount the buyer owes the seller. If payment has not been received, the buyer pays less, or the note can be used with future purchases. Reasons for this includes: * The business has been overcharged on the invoice. * There has been an error on the invoice e. g. the prices. * When damaged, faulty or unsuitable goods are returned. This will follow the invoice. The document will be sent after either the buyer or seller has highlighted the error or fault. Statements of Account sent by the Business The seller will send this document on a regular basis. It highlights to the buyer the current situation of their account. It will show what payments have been received and how much the business still owes. It also records all the invoices and credit notes the buyer has been sent. This is an ongoing process. It will occur on a regular basis – often monthly. It does not specifically follow the issue of any other document. Remittance Slips Advice The buyer sends this document to the seller advising that payment is being made to them. If the buyer is paying an invoice by cheque, they will usually include this with the remittance advice. These will be used on a regular basis. They will always follow the invoice. Cheques Businesses that have accounts with banks or building societies will be issued with a cheque system. A cheque is a method of payment for the buyer and seller to use. Usually, the buyer will write a cheque to make payments according to an Invoice or the amount on the Statement of Account. It is a safe method of payment, as it can be sent through the post and only the payee can use the cheque. These will be used on a regular basis. They will always follow the purchase and the business receiving its goods. It may be sent after the Invoice has been received or after the Statement of Account.