Types of Business Letters in Business Communication
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Types of Business Letters
Q.27. What are the different types of business letters? Explain in brief the important types of business letters.
Ans. According to the need and changes in business situations and circumstances, business letters may be of many types. On the basis of the purpose of message, nature of message and expected
reaction of receiver, business letters can be classified as follows (1) Good New Letters : Good news letters are written to convey the pleasant news to the reader. These letters gain the positive
reaction of the reader. Thus a good news letter is a letter which conveys a positive message to the reader. Following information’s are included in the good news letters:
(i) Information regarding the acceptance of an order.
(ii) Information regarding the acceptance of credit.
(iii) Letters for announcing price cut.
(iv) Letters for granting an adjustment.
(v) Congratulation letters.
(vi) Selection letters for providing job.
These letters are very common in business affairs and most of the business letters are good news letters. Good news letters are easiest to write as they convey the information which is readily accepted by the reader.
(2) Bad New Letters: Bad News Letter are written to convey the negative information. The purpose of writing such letters is to convey the negative message in a manner acceptable to the reader
and to avoid reader’s negative reaction. These are the letters which are expected to displease or disagree the receiver. Following matter may be included in the bad new letters:
(i) Letter to refuse credit.
(ii) To reject an application or request,
(iii) Declaration? Fun pleasant policies for the consumers.
(iv) Negative as easement of demonstration.
(vi) Information regarding the returning off acuity goods.
For writing such letters, indirect approach is considered better so that it may cause minimum frustration to the receiver. Writing these letters are difficult because along with. Negative message it aims to attain the positive attitude of the reader. In the first part same favorable news or statement should be given and then bad news is given with explanation lf necessary and possible, reasons for rejections should also be given.
(3) Persuasive Letters: Persuasive letters are written the reader is not ready to comply with the request. These letters are written in indirect way to persuade the reader for particular action.
Such letters include proposals and recommendations, job application letter, circular letter, sales letter etc. In the present era of competition, persuasion skill has assumed great importance. Salesmen
have to persuade their customers to buy products, fund raising agencies have to convince the donors about the emerging need of fund, Job seekers have to convince the authorities about their
potential strength. The main purpose of persuasive letters is to motivate the reader for desired action, to overcome his mental resistance and to build goodwill. Indirect approach is suitable for writing such letters. Information favoring the receiver should be given in the beginning and then supporting data and facts to encourage the receiver what you say, should also be given. Thus persuasive letters require identifying the needs and interest of the reader, using appealing arguments, using selling words and to motivate for desired action. Therefore, writer should design the message in such a way that will change the mental filter of the reader.
(4) Request Letters: The letters which are written in the ordinary course of business activities to get a specific response from the reader is termed as request letters. Usually direct approach is
used for writing such letters, Letters ‘to get enquiry about any Product, placing an order, requesting claims, request for financial assistance, quotation letters, requesting debtors to make payments
etc. come in the category of request letters. The courteous and friend lines language should be used while drafting these letters.
Q.28. what do you mean by Request Letters? How are they planned? Give a specimen of imaginary request letter.
Ans. MEANING OF REQUEST LETTERS
The letters which are written in the ordinary course of business activities to get a specific response from the reader is known as request letters. Business organization has to write letters for getting
things done through others. It may be to make enquiry regarding goods, to receive goods, letters for routine information, request for credit etc. Situations when request letters are written may be of fol.
(i) asking about the quotation before placing an order.
(ii) Requesting routine information related with product.
(iii) To get agency dealership.
(iv) Asking for the adjustment for defective goods.
(v) Request for a loan from a bank or a financial institution.
(vi) Asking customers to give their opinion.
(vii) Request letters to establish relationship with formal customers etc.
PLANNING OF REQUEST LETTER
In order to write an impressive request letter, it may be divided into three parts as follows :
(1) Opening Section : Writing of request letter does not require any formality, therefore direct approach is considered suitable for writing these letters. The beginning of the letter should contain
the direct request, you are going to make. It is wrong to start the request letter giving an elaborate introductioal of one’s own self. In the first or the second sentence, the direct request should be stated and then the explanation, if necessary may be given. The tone of the request letter should be polite and soft. Expression like “would you please”, “May we request you”, “We would feel obliged” should be
used frequently. For example :
-We woul feel obliged if you provide the following information.
– Please sent us the following information
Middle Section : After making the request in the opening section, necessary details of request is given. This section emphasizes how the providing of information would go in favor of the reader
also. If more than one question is to be asked, then most important question should be written first and less important question should be written at the last. For example:
_ We can assist you if you want to expand your business in south.
_ We will help you in creating new distribution channels in our country.
Ending Section : The ending of the request letter is as important as the beginning. A stress on desired response from reader should be laid in/ this section. Ending part should be positive, personal and toward looking. The emphasis should be shifted from the message to the specific reader, so that he feels that by granting your request he would be benefitting himself. For example:
_ “We wish success and bright future for you.”
_”Please send a draft for Rs. 27,825/- today in order to continue your credit facility.”
SPEIMEN OF AN IMAGINARY REQUEST LETTER
Request For Agency
Sadar Bazar, Meerut
Date : May 20, 2007
Reference : 215/Agency
The General Manager,
Jyoti Electronics Ltd.
New Delhi- 51
Subject: Request for Dealership in Electronic Items.
We are pleased to know that you are manufacturing electronic items under the trade mark ‘Jyoti’. Here in Meerut we are running a electronic store since last 20 years. We are dealing .with a large
variety of electronic goods. There is a great demand of new models and items of electronics.’ We, therefore are interested in getting a dealership of electronic items of a reputed manufacturer like you.
Please, let me know at the earliest the terms and conditions regarding above said agency business so that I could think on joining with you. It remains to state again that in case an opportunity
for sale of products once be given, your concern shall also be benefited to the desired extent.
Thanking you and expecting a favorable response.
Q28. Give a specimen of Enquiry letter along with its reply.
Ans. MEANING OFENQUIRYLWITER
A major part of any business activity consists of enquiry. When a buyer wants to get some information about the product price, quanity, terms and conditions of sales, availability of goods etc., he writes a letter of enquiry to the sellers. While writing enquiry letter, direct and straight forward approach should bé used with positive and confident tone. Enquiry letter should be written in simple, clear
and precise way saying about our requirement. At last, express your gratitude for the time, the reader has spent in reading the letter.
Request Letter for Enquiry
Gupta Pustak Bandar
Phone: 534567 152, Court Road
Reference : 1229/06 Lucknow
18 Sep., 2006
54, Sadar Bazar,
Subject : Trade Enqiry
Please send us your latest illustrated catalogue and price list and inform us of your business terms and conditions.
We expect to place the order with you if quality and prices are suitable to our satisfaction.
Gupta Pustak Bhandar
Quotation Letter : The letter written for replying the enquiry letter is known as quotation letter. Generally, replies contain prices, quotations and other terms of trade such as, discount, credit,
delivery etc. Price list and quotation may be attached with the letter. These letters convey all the information clearly and correctly, sought by the customer. A! last, word of thankfulness should be
mentioned in the letter.
Reply of Enquiry letter
(Publishers and Distributors of Books)
Telephone : 234677 54, Sadar Bazar
Reference : 289/06 Meerut
25 Sep., 2006
M/s. Gupta Pustak Bhandar
Court Road, Lucknow
Subject: Reply of trade inquiry
We are pleased to receive your letter dated Sep. 18, 2006 enquiring about the terms and conditions regarding trading with us. Thank you very much for the interest you have shown in our publication. Latest catalogue and price list of our publication have been enclosed herewith.
We allow 22.5% discount of the catalogue price for cash sale and 20% for credit sale if payment is made within 1 month. Packing and forwarding charges will be borne by us, if the order exceeds Rs.
We hope that the rates of discount will surely suit you and you will give us a chance of service by sending a valuable-order. Enclosure: Price List
For Swati Prakashan
Q. 29. What do you mean by “Good News Letters” ? Give a specimen of good news letter.
Ans. MEANING OF GOOD NEWSLETTER
Good news letters are written to convey the pleasant news to ‘the reader. These letters gain the positive reaction of the reader. Thus a good news letter is a letter which conveys a positive message
to the reader. These letters are written mainly for conveying the following information’s:
(i) Information regarding the acceptance of an order.
(ii) Information regarding the acceptance of credit.
(iii) Information for announcing price cut.
(iv) Letters for granting an adjustment.
(v) Congratulation letters.
(vi) Selection letters for providing job.
These letters are very common in business affairs and most of the business letters are good news letters. Good news letters are easiest to write as they convey the information which is readily accépted by the reader.
SPECIMEN OF GOOD NEWS LETTERS
(1) Letter on Execution of an Order
Mod Fashion House
Ref. No. : 23/2006
Selection Fashion House,
Meston Road, Rampur
Subject : Acceptance of Order
28 Oct., 2006
We are pleased to receive your order No. 213/06 dated 20 Oct.,
2006. We are happy to write you that we confirm supply of these
goods before 10th Nov., 2006.
In a separate cover we are sending you Bill, RJR and Insurance
receipt. We hope that the goods will meet your quality requirement
and this Will lead to further business between us and develop our
happy working relationship.
For Mod Fashion House”
Ram Sundar Agrawal
(2) .Letter for Sanction of Loan
State Bank of India
Court Road, New Delhi
Ref. No. : 159/2006
M/S. Sarvesh Traders,
Subject : Sanctioning of loan.
Date 20 sep. 2006
I am pleased to inform you that your loan application dated 12
Sep. 2006 has been accepted. You have granted overdraft limit ofRs.
for a period of two years. Minimum interest @ 8% with
monthly rest will be charged with subject to change in interest rates.
Your business premises being evaluated at market price will be
hypothecated as a security against the overdraft. The hypothecated
premises will be insured against the risk of fire, burglary etc.
Please confirm the arrangement of overdraft by signing the
agreement and hypothecation letter alongwith guarantor’s signa-
nclosures : 1. Agreement letter
2. Hypothecation letter
(3) SPECIMEN OF CLAIM ACCEPTANCE LETTER
R.K. Toys. co.
(Manufacturer and Distributor of toys)
Phone : 2982346
Ref. No. : 184/06
M/S. Mohan Gift Centre
19, Ramjas Road,
Date 18 Jan; 2006
Subject : Acceptance of claim.
We are very sorry to know that the packet of toys which we had
sent to you on 8th Jan., 2006 was received by you in a damaged con-
dition. It is obvious from your letter that the damage is made due to
weak packaging rough handling by the Ved Transport Company.
You are our permanent customer and we have not given any
chance-of complaint as yet. As for the loss suffered by you due to
weak packaging and rough handling, we are enclosing a credit note
of Rs. 5,000 herewith. Hope that you will be satisfied with our be-
h aviour and provide your co-operation as before.
For R.K. Toys Company
Q.30. What do you mean by “Bad News Letters” ? Give a
specimen of bad news letter.
Ans. MEANING OFBADNEWSLETTER
The letters which convey some unfavourable or unpleasent in-
formation to the reader, are termed as bad news letters. These let-
ters-convey the negative information to the reader. Writing these
letters is very difficult because these letters aim to convey the nega-
tive message in a manner which is acceptable to the reader and to
avoid reader’s negative reaction. These are the letters which are ex-
pected to displease or disagree the receiver. Following informations
may be lhcluded in the bad news letters.
(i) To reject an application or request.
(ii) Declaration of unpleasent policies for the consumers.
(iii) Negative assessment ofdemonstration.
(iv) Information regarding the returning of damage and faulty
For writing such letters, indirect approach is considered better
so that it may cause minimum frustration to the receiver. In the first
part some favourable news or statement should be given and then
bad news is given with explanation. If necessary and possible,
reasons for rejeccions should also be given. A bad news letter should
be written in such a way that help in maintaining a good image of
the writer and his organisation. It should produce the impression
that writer is helpless to do with the circumstances and he is not
rejecting a request on his own. He must come to realise that if he
were in the same position, he would also have taken the same
PURPOSE OF WRITING BAD NEWS LETTERS
The main purposes of writing bad news letters are as follows :
(i) To give bad news to the reader.
(ii) To have the reader to read, understand and accept the mes-
(iii) To maintain as much goodwil! as possible.
(iv) To build a good image of the writer and his organisation.
(v) To reduce or eliminate future correspondence on the same
(vi) To make assure the reader that he has been taken seriously
and the decision is quite reasonable.
(vii) Not to make the reader unhappy.
Bad news letters make the reader disappointed, therefore bad
news messages need a right attitude and appropriate tone.
SPECIMEN OF BAD NEWS LETTERS
(1) Letter for Refusing Credit
ef. No. : 234/Credit/07
M/S Satish Brothers
Mall Road, Meerut
Date : Jam 12, 2007
We are pleased to receive your order dated Jan. 8, 2007 and are
thankful to you for showing interest in our products. But due to our
own financial constraints and our policy decision, we are not in a
position to supply goods on credit.
We are expanding our business for which we need finance. We
do not like our finance to be blocked in debtors and we have to ar-
range from bank by paying interest. Meanwhile, we would be glad to
supply you goods at special discount of 4% on net invoice prices, if
you send us bank draft of the net amount.
We hope that you will understand our limitations and will ac-
cept this offer.
Thanking you and expecting a favourable response from you.
(2) Complaint Regarding Damaged Goods
15, M. G. Road,
Date 20 Jan., 2007
Ref. No. : 234/07
The Sales Manager
star Mill Ltd.
We are thankful to you for your prompt action in supplying
paper as per our order No. 325/07 dated 5 Jan, 2007.
On opening the package of consignment, we found that four
reams of Gold-paper of 30 kg. are jn a damaged condition. Since the
other reams in a good condition, we feel that the damage was not
caused in transit.
We require this paper to print the magazine of one of our client.
Would you be kind enough to replace these defective reams before 30
Ref. No. : 4256/07
(3) A Letter Refusing Claim
Surya Insurance Company
Lai Kuan, Delhi
Date : 15 Jan, 2007
Mahesh Book Corner,
17, College Road,
Kamla Nagar, Delhi
Subject : Refusal of Claim
Kindly refer to your letter 123/06 Dated 25 Dec. 2006 in which
you have claimed for a loss ofRs. which was caused due to
fire in your shop. We have made on the spot inspection with the help
ofour inspecting team.
We are extremely sorry to write that with the intention of get-
ting insurance amount, you have put on fire in your shop yourself.
There was nothing in the shop at the time of fire except some empty
boxes. Therefore, your claim is not acceptable. We hope that you
would not make such type of act again in future.
For Surya Insurance Company
Q.31. What is meant by Persuasive Letters ? How will you
plan a persuasive letter ? Give specimen of this type
Ans. MEANING OF PERSUASIVE LETTER
The letters which are writen for convincing and influencing
other persons to obtain the desired objective, is termed as per-
suasive letters. These letters make change in the thoughts, views
and opinion of reader accordance with desired action. These letters
are written when the readek is not ready to comply with the request.
Such letters include proposals and récommendations, job applica-
tion letter, circular letter, sales letter etc.
According tp Ronald Sparkman,
“Persuasion is much more than simply asking somebody to do
something. In formal terms, it is the process of changing people’s
attitudes or influencing their action either immediately or at
some time in the future. ”
“Persuasion is the art of influencing or seeking to influence an
individual’s opinion and actions ostensible by reading or intel-
lectual appeal though defending for its effectiveness in more
cases a non-rational factors. ”
In the present erg of competition, persuaton skill has assumed
great importance. Salesmen have to persuade their customers to
buy products, fund raising agencies have to convince the donors
about the emerging need of fund, job seekers have to convince the
authorities about their potential strength.
PURPOSE OF WRITING PERSUASIVE LETTERS
Main purpose of writing persuasive letters can be summarised
as follows :
To motivate the reader for desired action.
To overcome his mental resistence by providiiib
formation and clarifying the doubts ofreader.
To build the image of writer and his organisation.
To strengthen the relationship between the writer and
To reduce or eliminate the future correspondence on the
PLANNING FOR THE PERSUASIVE LETTERS
There are two approaches for planning persuasive letters :
( 1) Direct Approach (2) Indirect Approach.
(1) Direct Approach : Thic approach is used, when there is no
fear of having any protest on part of readers or when there is no spe-
cial need to persuade the people. These letters are written in a
straight way manner. It involves stating the request and explaining
the reasons later on. In direct approach, the letter is drafted in three
(i) Main Idea : In this part, main idea of letter is given in the
form of a request, statement, question etc. It helps to attract the at-
tention ofthe reader. For example :
e Why buy the inferior when you can get the best at the same
O Save 40% on your electricity bill.
O Invest Rs. 1,000 a year in these Bonds, retire with Rs.
1,00,000 in 10 years.
(ii) Explanation : This part contains an elaborate details
alongwith data or evidences in support ofmain idea.
(iii) Courteous close : In this part of letter, request for
desired action should be made politely and friendly with assurance
ofco-operation in future.
(2) Indirect Approach : When the situation is complex and
complicated, it needs rnore efforts to persuade the readers, then in-
direct approach and problem solving approach is followed. This ap-
proach should be used when :
When any protest or objection on the part of readers is an-
O When logic expected to be more important than emotion in
When data and evidence are required for emphasising on re-
O When there is need to get action from everyone.
Persuasive letters are often planned on the basis of AIDA for-
(ii) • Arousing
(1) Attracting Attention : Persuasive letters should be such
that it can get the attention of the reader. For attaining this pur-
pose, good stationery, attractive letter head, good printing, attrac-
tive envelope etc. must be used.
(2) Arousing interest : A persuasive letter should begin in
such a way that the reader get into the subject matter with interest
and curiosity to know its full message. In order to do this, the open-
ing sentence can be designed to arouse the reader’s interest in the
product or service.
(3) Creating Desire : This part contains the main idea of the
letter. This part educate the customer by giving the full descriétion
of the product or service. It increases the desire and willingness of
reader to take the action suggested in the letter. This part must be
presented so skillfully as to compel the reader to think, “I really
(4) Securing Action : Special emphasis gained by the reader
by accepting this proposal is to be given in this part. Limited time or
quantity offer, discount offer, free samples and such other technique
can be proved helpful in securing prompt action from the reader.
SPECIMEN OF SALES PROMOTION LETTER
Ref. No. : 324/06
Super Textiles Ltd.
17, Karol Bagh
Date : sep 18, 2006
Why buy the inferior when you can get the best at the
We are determined to offer of services on modern clothes
having numerous varieties that too at a single avenue. Here you will
find invaluable treasure of cotton, synthetic and fancy readymade
shirts and trousers. Readymade garments of modern style in dif-
ferent and new shades, yet their prices is so less as you will not
believe at once. Besides these, a special discount of 20% on purchase
up to Rs. 5000/- value will also be allowed. Please do haste and come
first get first, the item of your choice.
Mysore Electrical Ltd.
14, Balaji Road,
Dec. 19, 2006
With summer approaching, you may be thinking of how to keep
your office cool so that your employees can work with more efficiency
To meet your needs, we offers the widest choice in Air-con-
ditioners. We provide guarantee for six years against all manufac-
turing defects and repairs, or replace any part that may cause
trouble at our cost.
With the pamphlet, you will find a card. Please fill it and mail
it. We shall send our technician at your office to advise you about the
You can also avail a special discount of 10% if the order is
placed before Jan. 20, 2007. All transportation charges will be borne
Q.32. What are Dunning Letters ? What points should be
kept in mind while writing these letters ? Give a
specimen of Dunning Letter.
Ans. MEANING OF DUNNING LETTER OR
When any trader or person does not make the payment of the
price of goods purchased at the appointed time or within the period
fixed for payment, then letters which are written for demanding
payment is termed as dunning or collection letter. These letters are
written with a view to collect the dues promptly.
In the moderns age, main part of business is depend on credit,
therefore trade without credit transactions can not be imagined. In
such a case, if a trader does not pay his dues timely, then these let-
ters are written to collect the dues. These letters are drawn in such a
manner that amount should be collected without distorting the rela-
tions with customers. The firms which do not follow the appropriate
policy for collecting dues, they can loss their customers. It also in-
creases the collection cost and fear of bad debts. Therefore, positive
attitude should be adopted while collecting dues from the cus-
PRECAUTIONS To BE TAKEN WHILE WRITING
Special care is needed while writing a dunning letter. These let-
ters should be written peacefully and courageously. Generally, the
following points are kept in mind while writing a dunning letter :
(1) Dunning letter should be written in such a style that it may
not damage the prestige of the customer. Language and
tone ofthese letters should be positive and optimistic.
(2) While writing first dunning letter, a copy of the ‘Statement
of Account’ should be attached with it. It should be hoped
that the customer will make payment definitely on receipt
(3) Style and tone of the letter should be neither offensive nor
(4) Avoid using harsh or threatening language and expressing
doubts about customer’s intention.
(5) Follow ‘You attitude’ and make cleår to the debtor that it is
for his own benefit to pay the dues.
(6) When reminders fail to bring the desired response from the
customer even after the reminder, then dunning letter
should be written in somewhat harsh and serious language.
(7) The dunning letter should never be written on post card.
They should always be sent in inland cards or envelopes.
(8) It should also be remembered that an undue haste in collec-
tion may drive away the customer.
SERIES OF COLLECTION LETTERS
Negligence in collection of dues cause loss due to bad debts and
additional expenses. Similarly a wrong approach and undue haste
in collection may lose the customer. Therefore, the collection depart-
ment has to follow a step-by-step approach. A number of letters m ay
have to be written in the chain of collection of debts and are sent at
(1) First Dunning Letter or A Mild Reminder : First of all,
a mild reminder is sent. This reminder is usually short and sweet. In
this letter, it has been assumed that the customer has failed to pay
his dues due to forgetfulness.
D-17, Kamla Nagar
Ref. No. : 124/NC/06
Ws. Shyam Traders,
15, Gandhi Nagar,
Subject : Non-receipt of Payment
Feb. 7, 2006
We just want to remind you about the outstanding Bill No. 452
dated Feb. 2, 2006 shows the amount owingto bé Rs. 24,597.
Most probably it is just an oversight on your part. We know that
it is a small amount and could easily escape your attention. We have
enclosed herewith the duplicate copy of the bill to facilitate your
Please remit the amount due at your earliest.
Encl. : One
The Second Reminder :
D-17, Kamla Nagar,
Ref. No. : 128/A/C/06
M/S. Shyam Traders,
15, Gandhi Nagar,
Feb. 20, 2006
We very much appreciate your dealing in the past and would
like to supply you goods in future. However despite our previous
reminder requesting for payment of Rs. 24,597 you have neither
paid the dues nor have explained the causes for delay.
We value our customers and make every effort to accomodate
them but you must be well aware that we have also our own limita-
tions and commitments. We are not in a position to allow further
time for payment. You are therefore, requested to release the pay-
ment by return post.
The Third Reminder can be as follows :
D-17, Kamia Nagar,
Ref.N0. : 136WC/06
M/S. Shyam Traders
15, Gandhi Nagar
March 5, 2006
We have received no reply of our two previous requests of 7th
Feb. and 20th Feb. for payment of the sum of Rs. 24,597 still owing
on your account.
You must be aware that non-payment made by debtors lock up
working capital and increase financial burden. Delay in the settle-
ment of long standing dues bring business to a virtual stand still and
all of us suffer. We are here to serve you but only if you are there to
honour ydur promise and make regular payments. We earnestly
wish to offer you our Credit facilities if you please pay the dues at
Hope you will take quick action in payment of dues.
Specimen of Final Collection Letter :
D-17, Kamia Nagar,
Ref. No. : 142/NC/06
March 15, 2006
M/S. Shyam Traders
15, Gandhi Nagar,
We are surprised and very much regret that you have not
replied to our letters of 7th Feb., 20th Feb and 5th March about non-
clearance of your account. The amount ofRs. 24,597 is due to us.
We are left with no choice, except to cancel your credit facilities
immediately and serve legal notice for the payment ofRs. 24,597.
However, we still give you the chance to contact us immediately
within 7 days with cheque ofRs. 24,597. If any unfortunate legal ac-
tion is initiated by us, you will bé solely responsible.
Short Answer Questions
Q.l. Distinguish between official letters and business let-
OFFICIAL LETTERS AND BUSINESS LETTERS
Government letters are
government Officers or
employees in connection
with govermental work.
written in straight
These are written
in connection with
written in flowery or
(3) Knowledge of
(4) Size of the letter
(8) Closeness of
Knowledge of laws and
regulations is necessary
while writing these
These letters are writ-
ten in a brief way.
In official letters corres-
pondence is done not in
the name of writer or
receiver but by their
Service stamps are used
on official letters.
completely formal and
are ofserious nature.
Emotions and personal
relationship has no
place in official letters.
Writing these letters do
not require the know-
These letters can also be
written in brief or long
Business letters may be
written by names or by
designations of writer
and the receiver.
Ordinary postage sta-
mps are used on
These letters are less
formal and are more
In some business letters
there may be touch of
Q.2. Write a Business letter with imaginary particulars.
SANTOSH PLAYWOOD LTD.
M/S Sinha Contractors
for supply of 600
We are thankful to you for order dated
Plywood Doors. We regret that we are unable to accept any order
direct from the consumers or a contractor, as we have appointed M/S
Naveen Brothers as our sole selling agents for your state.
We have, however, forwarded your order to M/S Naveen
•Brqthers, for consideration, from whom you will hear very soon. Fur-
ther communication may please be addressed to the said firm.
We are thankful to you for the interest shown by you in our
quality products. We assure you of the best quality of our products
which you may get from our agents.
Santosh Plywood Ltd:
Q.3. Explain the credit letter with an example.
-MEANING OF CREDIT LETTER
Generally, in a business both type of transactions : cash and
credit take place simultaneously. When a trader purchase goods
from the other trader on cash basis then their is no need of worry,
but when a’trader demand goods on credit then before granting
credit, seller want to kncw about the financial position and goodwill
of the customer.
In order to judge whether a potential buyer has a good credit
condition or not, the seller has to collect information about various
aspects of the buyer and his business. Thus, the letter written for
getting the information regarding the financial position of a cus-
tomer, is termed as Credit Letter.
The usual sources of credit information are the credit
applicant’s bank, and suppliers. There are institutions like Credit
Agencies, Merchants Chambers and Trade Associations which help
traders to ascertain the credit standing of their potential customers.
A somewhat intangible but useful source is market gossip from
which the institutions gather information.
These letters can be classifed in four parts as follows :
(1) Letter for asking references : When a customer requests
for suppling goods on credit then seller has to ask the customer to
supply credit references without implying lack of faith, tactfully
pointing out that credit inquiries are a routing matter in the case Of
all credit applicants.
(2) Letter of sending the references : On demand of refer-
ence by the seller, buyer gives the name of his bank or other reputed
persons which he had good relations. The bank is generally, the
most reliable source ofcredit information.
(3) Status Enquiry Letters : After finding the references
given by the credit applicant, the seller make enquiry about the
financial position and goodwill ofthe buyer.
Status inquiries are a delicate matter and the writer must as-
sure the informers that whaterver information they give will be kept
in strict confidence. These letters are marked “Private and
confidential” and are addressed to an individual official and not to
the company in general.
(4) Reply to Enquiry : When the referred persons received the
letters, they give their reply on basis of their terms, experience and
behaviour with the customer. There are many degress offavourable
and unfavourable replies to status inquiries.
When inquirer gets the favourhble reply, he decides to provide
the credit to the customer. In case of unfavourable or unsatisfactory
reply, he refuse to grant credit.
SPECIMEN LETTER FOR DEMANDING REFERENCES
Subhash & Co.
Ref. No. : g06/06
M/S Sarvesh Electronics.
25 August, 2006
It is a pleasure to welcome you to our large circle of customers.
Your order for 500 tons ofcement is being attended to in our dispatch
Meanwhile, we need some information on which our credit
manager can base his records. The names of two of your suppliers
with whom you have already established credit and the name ofyour
bank will be suitable.
We expect to be able td complete the inquiries within a week’s
time. If your need is urgent, please let us know if we should send a
part of your order on C.O.D. terms immediately.
SPECIMEN LETTER FOR STATUS INQUIRIES
Subhash & Co.
Ref. No. : 400/06
M/S Krishna Brothers
5 Sep., 2006
We have received a request for credit of Rs. 25,000/- for 3
months from the firm of M/S Sarvesh Electronics, Gaziabad. They
have given us your name as reference.
We would be grateful if you would tell us your experience with
the firm as credit customer. It would be helpful if you would let us
know for how many years they have been your credit customers, to
what extent you grant them credit, and whether there has been any
difficulty in collecting dues from them. Whatever other information
you may have about the firm’s reputation in the business world
would also be appreciated.
The information you give will be used with the utmost discre-
tion and in strict confidence.
0.4. Give a specimen of unfavourable reference reply let*
Ans. Unfavourable reply regarding the Financial position :
Date : 12 sep 0 2006
Ref. No.: 412/06
Subhagh & Co,
Sub. : Unfavourable reply regarding the financial position.
The party about whom you inquired in your letter dated
and whose name is on the enclosed slip, have been in this business
for the last 4 years. The business goodwill of this party is not satis-
factory and reliable. They have always make delay in paying their
bills. We also hesitate to grant credit forthem.
This is our•personal opinion of the firm and we are not respon-
Sible in any way for any decision you may take in this matter.
Please treat this letter as strictly confidential.
Q.5. What is meant by circular letter ? Give a specimen of
Ans. MEANING OF CIRCULARLETTER
When the same information and message is to be conveyed to
large number of people, customers, share holders etc. then the writ-
ten letter in such a case is known as circular letter. These letters are
circulated to the selected readers who have same and common inter-
est in the information.
CIRCUMSTANCES OF WRITING CIRCULAR LETTERS
Usually circular letters are written in case of :
(1) Change in address ofbusiness premises.
(2) Openingofnew branch.
(3) Admission, retirement or death ofapartner.
(4) Introduction ofnew product line.
(5) Reduction in sale price.
(6) Seasonal discounts and other informations.
CIRCULAR ABOUT OPENING A NEW BRANCH
(Publishers and Book-sellers)
Court Road, Meerut
Telephone No. 234677
Dated : March 26, 2007
Ref. No. 13/26/07
We are pleased to inform you that for the convenience of our
customers of eastern area, we are going to open our new branch in
Gorakhpur with effect from 1st June, 2007 as per the address given
16, Station Road,
We are sure that on opening of the branch we shall be in a posi-
tion to provide better services to our customers of eastern area. You
ere invited to visit our branch and give us a chance of service at your
end. A discount often percent is being allowed on all purchases made
from this branch upto 91st August, 2007.
For Swati Prakashan
Q.5. Give a specimen of Dunning Letter.
Ans. See page 114.
Q.6. Distinguish among • enquiry letter, quotation letter
(Meerut, 2005 Back)
and order letter.
Ans. DIFFERENCE AMONG ENQUIRY LETTER,
QUOTATION LETTER AND ORDER LETTER
This type of letter Written by the Written by the
is written by the person who want purchaser of the
person who want goods.
to purchase goa
The purpose of These letters pro- The purpose of
these vide information writing these
letters is to place
letters is to get regarding the
prices, discount, an order for re-
about the price, delivery etc.
goods to be pur-
chased or about
the terms of sale
It is the form of It is a persuasive It comes under
the good news
(4) Language There letters are These are written These are written
written in VE’Y_ in in
polite language. guage—
Q.7. Distinguish between Good and Bad News Letters.
Ans. DIFFERENCE BETWEEN GOODAND
BAD NEWS LETTERS
(2) Affect on
Good News Letters
These letters are written
information to the readei.
These letters provide a
Language is kept simple
request, claim acceptance
Bad News Letters
These letters are written
to impart unplease»tis
information to th€ieader.
Language may be rude or
Refusal of adjustments,
credit, claim etc. are the
subject matter of these
are the main subject of letters.
(5) Writing skill Writing these type of Writing these type of
letters is the easiest. It not letters is difficult.
require special writing require special writing
is Indirect approach is
considered better for suitable for writing such
writing good news letters.
Generally, language of Language of these letter
may be polite or hard an
these letters is polite.