Home Trade: Procedures, Terms and Documents of Home Trade
Arjun EP
Home Trade
Home trade means trading within same country.
It is internal trade.
Home trade is very necessary for the growth or development of the country.
Goods are traded from one place to another place within one country.
Services are rendered also in the same country.
The traders involves in home country is known buyers and sellers.
Procedures or Methods of Home Trade
Every business or trade starts with enquiry.
There are some certain steps for trading.
Out of them, some important steps are given below:
Enquiry
Enquiry is the first procedure for trade.
Buyer makes enquiries with several suppliers about goods.
Enquiry may be on quality, quantity, price, discount, carriage, insurance, terms of payment etc.
The objectives of enquiry are to find out the best quality goods at the least price and most favourable payment mode.
Quotation or tender
The supplier gives written reply to buyer about enquiry.
This reply is known quotation or estimate.
It is information about brand, quality and price of goods.
Sometimes supplier has to fulfill tender for the supply of goods.
Purchase order
After receiving different quotations, buyer compares the quality, price, discount, terms of payment etc.
After comparing, buyer selects best suppliers on the basis of best quality goods at cheapest price and suitable mode of payment.
Then buyer gives order to supplier.
On order, quality, price, discount, delivery time and place etc are mentioned.
Collection of goods
The supplier collects goods from different sources to fulfill the order of buyer.
If supplier does not have sufficient stock, he collects goods from local market also.
After collecting goods, he makes ready for packaging.
Packaging of goods
There are different types of goods.
They are perishable goods, non-perishable goods, fragile goods, breakable goods, evaporable goods, dust goods etc.
Different goods require different packaging.
Goods are packaged according to their required.
Handle with care, breakable, no hooks, poison etc should be written on packaging according to their nature.
Transportation of goods
Modes of transportation are selected according to quantity and value of goods.
Generally, high valued goods are in small quantity but low valued in large quantity.
There are different types of transportation like road transport, railway, sea transport, air transport etc.
We should choose transport according to requirement.
Invoice
Invoice is a list of sold goods in detail like types, size, quantity, rate, trade discount, tax or VAT, mode of payment etc.
This invoice is sent to buyer with goods.
It is important document therefore it is sent in believable source.
Payment
Payment is the last procedure of trading.
Buyer verifies invoice with goods received.
If there is not any accounting error, he pays the value of goods purchased.
Generally, organization pays due amount by cheque.
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Terms and Conditions of Home Trade
Home trade is done within the country.
In Nepal, it is Mechi to Mahakali (In India Kashmir to Kanyakumari).
Buyer and seller may be in different places.
Sometimes, they do not meet with each other.
Being human, there may be dispute between them.
To avoid dispute, terms and conditions are necessary.
Discount, carriage, insurance, terms of payment etc are mentioned in terms and conditions.
It has following points:
Quality
Different goods have different quality. The buyer should be sure about the quality the goods. Quality can be checked through sample, types, standard, description, mark (NS* or ISI mark) etc.
Quantity
The buyer should be clear about quantity of goods.
He must check his order with invoice.
If there are goods less than his orders, he must inform it immediately.
Price
Price of goods is depended on quality of goods.
Buyer specifies price on quotation.
Seller also specifies price on invoice.
Some expenses may be added on goods.
Buyer should pay due amount on due date.
Delivery
Buyer and seller fix the delivery place.
Generally, buyer specifies the time and delivery place.
Seller should deliver goods on proper place.
It is responsibility of seller.
Discount
There are two types of discounts.
They are trade discount and cash discount.
Trade discount is allowed for huge purchase.
Cash discount is allowed to receive cash immediately.
Discount is allowed to buyer by seller.
Rate of discount should prefix.
Insurance
Insurance policy is taken for risk secure due to fire, accident, damage and theft.
It should be decided whether goods are insured or not.
If goods are to be insured, insurance company and who will pay insurance premium should be prefixed.
Transportation
Buyer should give clear instruction about carriage.
It should be cleared who would pay the carriage charge.
It also should be cleared about modes of transport like road, sea, rail or air.
Keep in Mind (KIM)
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NS* is stand for Nepal Standard. NS mark goods are in good quality in Nepal. |
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ISI is standard for Indian Standard Institution. |
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ISI mark goods are good quality in India. |
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ISO is stand for International Organization for Standardization. |
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ISO mark is for organization, not for quality. |
Documents of Home Trade
Trade documents are evidence or proof between buyer and seller.
These documents help to avoid misunderstanding between them.
These documents are kept safe for future purpose.
Main documents of home trade are as follows:
Enquiry letter
When buyer asks information about goods with seller, it is known enquiry letter.
Enquiry may be on quality, quantity, price, discount, carriage, insurance, terms of payment etc.
The objectives of enquiry are to find out the best quality goods at the least price and most favourable payment mode.
Price list
The supplier gives list price to buyer about enquiry.
This list is known as quotation or estimate.
It is information about brand, quality and price of goods.
Price list or catalogue contains rate of goods, policy, terms and condition of the organization.
Purchase order
After receiving price list, buyer compares the quality, price, discount, terms of payment etc.
After comparing, buyer orders to the seller on the basis of best quality goods at cheapest price and suitable mode of payment.
Confirmation letter
When buyer satisfies with the seller, buyer confirms that he is ready to purchase goods.
It is the written response of purchase order.
While writing the confirmation letter, seller should state that ordered goods will be delivered as soon as possible.
Invoice
Invoice is a list of sold goods in detail like types, size, quantity, rate, trade discount, tax or VAT, mode of payment etc.
This invoice is sent to buyer with goods.
It is important document therefore it is sent in believable source.
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