Procedures of Trade

There are certain steps which are followed while conducting trade. The step begins with making inquiry and ends with paying for the number of goods purchased. These steps are followed one after another in sequential order. These are also known as methods of trade. They are as follows: -

1. 

   Enquiry

   The buyer/ importer makes an enquiry with several suppliers about the goods to be purchased by writing an enquiry letter. The enquiry is done for obtaining information regarding the quality, quantity, price, discount offered terms of payments and other terms and conditions of trade. The main aim of making an enquiry is to find out the best supplier from whom the goods can be purchased at the least price and the most favorable terms and conditions.
   
   

2. Reply

   

   The seller/ exporter give a written reply against the enquiry made by the buyer/ importer. The written reply given by the seller/ exporter quoting the price of the goods is called the letter of quotation. The seller/ exporter should reply to the enquiry including all the information as requested by the buyer/ importer honestly and correctly. In fact, quality of the reply letter enables the seller/ exporter to get an opportunity to supply the goods.
   
   

3. Order

   The buyer/ importer compare the quality, price, discount and other terms and conditions of trade as indicated by seller/ exporters in their reply letters. After comparison, the buyer/ importer enable to select the best supplier. He places an order to such selected supplier for the goods through an order letter.
   
   

4. Acknowledgement

   

   It is given by the seller/ exporter in response to the order placed by the buyer/ importer. As soon as the seller/ exporter get an order from the buyer/ importer, he acknowledges the order through a letter known as acknowledgement letter.
   
   

5. Collection

   The seller/ exporter collect the goods to meet the order of the buyer/ importer either from his own good or from other suppliers. If the seller/ exporter has no required quantity of the goods in stock, he immediately collects the needed quantity from the local market and makes the goods ready for packing.
   
   

6. Packing

   

   Usually in a large business organization, a packing department is set up in order to pack the goods carefully. If the buyer/ importer has given any particular instruction regarding packing, it should be followed by the seller/ exporter strictly. In the absence of any such instructions, the seller/ exporter should pack the goods as per his own intelligence so as to protect them from being damaged and to make their own goods look attractive.
   
   

7. Invoicing

   

   Once the goods are ready for dispatch, the seller/ exporter prepares an invoice. The invoice states particulars of goods sold like types, quantity price, and trade discount allowed, expenses incurred and net payable amount. The invoice represents the sale transaction and sent to buyer/ importer along with the goods.
   
   

8. Carriage

   The seller/ exporter dispatches the goods through a particular means of transportation as instructed by the buyer/ importer. Hence, the carriage means the act of transporting goods from the place of seller/ exporter to the place of buyer/ importer. While transporting the goods, the cheapest, the safest and the fastest means of transportation that suits as per the nature of goods should be selected.
   
   

9. Payment

   

   The last step of home trade is payment of the goods purchased. However, before making a payment, the buyer/ importer verifies the invoice to confirm that the invoice is free from all numerical errors. Finally, he pays for the value of goods purchased according to the terms of payment through appropriate means of payment.