Oral Test 2011

When goods are sold for cash, there is no need for the seller to enquire into the financial standing of the buyer; but where they are sold on credit, the seller will want to be satisfied that the buyer will be able to pay. He will want to know what his / her reputation is like, what is the extent of their business and, more particularly, whether they pay their accounts promptly. It is on this information that the seller will decide whether to allow credit, if so, how much. He can obtain his information from four different sources, namely trade references supplied by the customer himself, the customer's banker, various trade associations and credit enquire agencies.

When a customer places an order, with a supplier with whom he has previously done business, it is customary to supply trade references, that is the names of persons or firms to whom the suppliers may refer to for information. Alternatively, or in addition, the customer may give the name and address of his banker-references of this kind, supplied as they are by the customer himself, must be accepted with caution since a customer will naturally name as referees only those who are likely to report favorably...

When a new customer places an order but fails to provide references, the supplier will naturally want some evidence of the customer's credit worthiness, especially if the order is a large one. The supplier's letter asking for references must avoid suggestion that the customer is not to be trusted.

An Adapted Text By Gamar Robertson