Discussion

1. What factors determine the pricing policy?

2. Express your opinion on the nature and computation of markup.

3. Do you agree with the statement “Buyers and sellers are said to be price takers in the sense that all prices are market – determined”?

4. “Monopoly power is the ability of a firm to control its prices”. Do you support this statement? Give your arguments in writing.

Unit 9. Selling on credit

Assignment 1. Learn the following terms:

sell on credit sell for cash trade credit consumer credit total retail sales finance business transaction credit standing grant credit consumer credit accounts open account charge account charge total charges statement revolving account external indebtedness set an upper limit to the amount specified percentage installment account down payment amount due budget account handle payments remit total price equal payments pay on schedule become overdue eventual losses to the effect that credit status impair reasons for nonpayment turn over collection agency attorney certified copy of the statement delinquent pick the credit customer safe-keeping security bear interest immediate payment hire-purchase agreement loose-leaf sheet true copy corporation tax FIFO (first in, first out) method upturn downturn dip retain incur costs deferred taxation production capacity

продавать в кредит продавать за наличные торговый кредит потребительский кредит общий объем розничных продаж финансировать сделки кредитоспособность выделять кредит кредитные счета потребителей открытый счет (амер.), текущий счет (англ.) кредит по открытому счету записывать на счет суммарные расходы, издержки выписка счета, расчет автоматически возобновляемый счет внешняя задолженность установить верхний предел на сумму специально установленный процент счет для уплаты в рассрочку первый взнос причитающаяся сумма бюджетный счет, счет потребительского кредита обращаться с платежами перечислить общую цену равные платежи платить по графику становиться просроченным возможные (конечные) потери следующего содержания показатель кредитоспособности испортить, ухудшить, подорвать причины для неуплат перепоручить агентство по взысканию адвокат, поверенный (в суде) заверенная копия счета неуплаченный, просроченный выбрать клиента для кредитования сохранение залог приносить залог немедленный платеж договор о купле в рассрочку ведомость со вкладными листами верная копия налог на прибыль корпораций метод обслуживания в порядке поступления подъем, улучшение падение, спад деловой активности незначительное изменение цен удерживать нести расходы отложенное налогообложение производственная мощность

Assignment 2. Practice the pronunciation of the following words:

axiom, previously, alluring proposition, appeal, competent, final user, basis, currency, coin, to finance transactions, deposit, to exceed, actual, key, throughout, essential, success, basic types, ordinary, to appear, external indebtedness, automatically, to approve, specified percentage, specifically, to design, preferably, practice, installment, due, budget, ordinary, equal, reminder, schedule, to cause, course, overdue, eventual, status, to impair, reason, agency, attorney, to register, certified copy, through, to resort, delinquent, to anticipate.

Assignment 3. Read and translate the text:

TEXT

There are few axioms in the world of business, but one of them is “if you sell on credit you will increase sales even to the same customers to whom you previously sold for cash only”. This alluring proposition has great appeal to small business firms. Sales are the foundation of profits, and anything that will help to increase sales commands the attention of competent business owners.

Trade credit is credit extended from one business firm to another. Consumer credit is credit given by retailers to their customers, who are the final users of the products or services sold. Sales by manufacturers and wholesalers are almost always made on a credit basis. Retail sales on credit are about half of the total retail sales in the country.

Our business world could not operate without credit. There is not enough currency and coin in the country to finance business transactions carried on every day. Total bank deposits exceed the actual money in the country several times over. The key is credit extended throughout the economy. A good credit standing is essential to business success. Business owners must look for good credit standing of firms or individuals to whom they grant credit. There are at least four basic types of consumer credit accounts.

Open accounts are ordinary charge accounts. With this type of account the customer charges all purchases throughout the month and is expected to pay the total charges when a statement is sent by the firm. Most firms send out statements monthly, but full payment each month is not insisted upon.

Revolving accounts. It would appear that revolving accounts were designed for customers who live with external indebtedness. The firm sets an upper limit to the amount that may be charged, and any purchases below that limit are automatically approved for credit sale. The customer must then pay a certain amount or a specified percentage of the total charges at the end of each month.

Installment accounts were specifically designed to make possible the sale on credit of larger purchases. The customer makes a down payment, preferably at least 20% of the total purchase price, and the balance is spread over a monthly payment plan. Good business practice limits such payments to not more than 3 years. Many installment accounts are for a shorter period. Carrying charges are added to the amount due, usually up to 1 percent per month.

Budget accounts are designed to handle payments that ordinarily fall between short-term open accounts and longer-term installment accounts. No down payment is required, and customers are normally given 3 months to remit the total price in equal payments. Customers are expected to make payments without reminders in the form of statements from the seller.

Credit customers who do not pay on schedule cause the firm several problems. The best course of action when accounts become overdue is to minimize the eventual losses by taking the following steps:

- Send a second statement 60 days from purchase. This could include a note to the effect that “Perhaps our first statement was not received or was mislaid. We know you would not want your credit status impaired”.

- Telephone the customer or send a telegram in 70 days, asking the reasons for nonpayment.

- Send a third statement in 75 days. Include a note to the effect that “Your credit status is at stake. We are forced to turn over accounts 75 days old to our collection agency or attorney”.

- Send a registered letter in 80 days, including a certified copy of the statement, saying that the account is being referred to the collection agency.

- Turn the account over to the agency or the firm’s attorney for legal action in 90 days.

Small firm owners usually have an advantage over large firm owners in this situation, since they know their customers better. If this is so, they can usually accomplish more through personal contact with the customer than by resorting to the steps just described. But the possible delinquent situation should always be anticipated by picking the right credit customers in the first contact.

Notes to the text:

1. over – свыше, сверх, больше

2. throughout – по всему, в продолжение

3. to look for – искать

4. at least – по крайней мере

5. to send out – рассылать

6. below – ниже

7. up to – вплоть до

8. per month – в месяц

9. on schedule – точно, вовремя

10. in 70 days – через 70 дней

11. to be at stake – поставить на карту

Assignment 4. Answer the following questions:

1. What are the main types of credit?

2. What is the difference between trade credit and consumer credit?

3. How many basic types of consumer credit accounts do you know? What are they?

4. How does a revolving account work?

5. Is an installment account different from a revolving account? How?

6. When would you recommend use of a budget account?

7. What steps should be taken when accounts become overdue?

Assignment 5. Fill in the gaps with the words and expressions from the text.

1. … … is credit given by retailers to their customers, who are the final users of the products or services sold.

2. There is not enough currency and coin in the country to … … … carried on every day.

3. Business owners must look for good … … of firms or individuals to whom they … … .

4. With this type of account the customer charges all purchases throughout the month and is expected to pay the … … when a … is sent by the firm.

5. It would appear that … … were designed for customers who live with ... … .

6. The customer makes a … …, preferably at least 20% of the total purchase price, and the balance is spread over a monthly payment plan.

7. … … are designed to … … that ordinarily fall between short-term … … and longer-term … … .

Assignment 6. Match the words with their definitions.

indebtedness, down payment, currency, deposit,

purchases, charge, statement, certified copy, price, to finance

1. Those goods that a business buys with the intention of selling by way of trade, not goods bought for use by the business.

2. The rate at which a commodity can be exchanged for another commodity or for money.

3. To provide or arrange means of payment.

4. A sum owed; debts in general.

5. Money or its equivalent deposited by a person or organization, especially a bank for safe-keeping or as security, or to bear interest.

6. Immediate payment; the first payment under a mortgage or hire-purchase agreement.

7. Any kind of money that is in general used as cash; any generally accepted means of payment.

8. A loose-leaf sheet supplied by a bank to each customer, giving details of all debits and credits made.

9. A copy of a document which has on it a formal declaration signed by an official that it is a true copy.

10. A sum of money that has to be paid as a price, especially for services.

Assignment 7. Supply the sentences with the missing words.

payments, user, customer, price, statement, amount,

attorney, advantage, non-payment, accomplish

1. She explained the … of the new system over the old one.

2. The early computer … had to learn to speak the language of the computer.

3. We estimate month by month the … of cash that will be needed.

4. Was the … of rent to be optional?

5. He later became a prominent … .

6. How were they able to … so much so quickly?

7. There were two … in the shop at the moment I came.

8. Oil … are stable for the first time in years.

9. He was in prison for … of fines.

10. I get a bank … at the start of every month.

Assignment 8. Complete the sentences with one of the following:

much, many, few, little, fewer, less

1. … people realize how … tax they could avoid paying if they studied the tax laws.

2. … people believe they pay too … tax.

3. There is too … time and too … problems to talk about irrelevant issues.

4. There isn’t … evidence to support these figures.

5. You’ll pay much … tax here than in other places.

6. Very … tax authorities have clear plans for corporation tax in the future.

7. There are … opportunities to avoid tax nowadays.

8. … companies operate the FIFO method at present.

Assignment 9. Complete the following sentences with one of the prepositions:

over, at, during, since, for, in

1. … the last few months sales have been disappointing.

2. We have been expecting an upturn … the beginning of the last year.

3. … the end of the last year there was a sudden downturn.

4. He was appointed finance director two years ago and … then he has reduced the staff by 200.

5. We went through a difficult period … the middle of April.

6. We have raised prices in line with inflation … three years.

7. The dips of the price index happened … April and July.

Assignment 10. Change the following sentences from active to passive or vice versa.

1. The profit and loss account summarizes the profitability of the company.

2. This company pays 1,8 million dollars in tax.

3. The preference shareholders received a fixed dividend of 50.000 dollars.

4. The accountants calculate the taxable profit.

5. Considerable costs have been incurred by investing in property.

6. We will maximize our profits by deferring taxation.

7. Savings would have been made by reducing production capacity.

8. Earnings of 1.5 million dollars are retained by the company.