Letter Proposing Payments in Installments
Updated on: Jun 20th, 2024
|
2 min read
Payment is a crucial aspect of any business. It holds the business together. Imagine, without payments, a business would toil day and night and deliver the product but does not receive payments! That would be a nightmare for any dealer. Payments bring in bread and butter to the table.
To understand the role of payments in business, let us look at this example: When a dealer delivers a consignment in large quantity to a buyer, the buyer usually has an option of paying payments in parts. This might not be the case always, but hypothetically, considering the consignment is large and needs a lot of work by the dealer to manufacture the product in bulk. For this to happen the dealer must need funds to manufacture the products, before selling it for a said amount. This requires liquidity. So the dealer directly demands an advance payment at the beginning and the rest of the payment at the time of delivery of the consignment.
The initial payment or the advance money is used by the dealer to manufacture product/s, that he will eventually sell to the buyer. Although this is a standard practice, the dealer needs to write a formal communication requesting the same with the buyer. This letter is called a ‘proposing payments in installments letter.’ This is a valid document, kept for future references by both the dealer and the buyer. This document must contain:
- Basic details of the dealer (such as name, address, phone and account number)
- Basic details of the buyer (such as name, address, phone and account number)
- Date of the request
- Details of request (proposing to pay (or get paid in parts every month)
- The actual purpose of the request (it is advisable, to be honest about the situation)
- This letter must also have communication of whether the buyer suggest any other options
- The letter should also address future plan of action and the agenda
Quick Summary
Payments are crucial for businesses to function smoothly. Dealers often request advance payments from buyers for large consignments to fund manufacturing. They formalize this with a 'proposing payments in installments letter' containing details of both parties, request date, purpose, options, and future plans. This important document ensures transparency in financial transactions.
Was this summary helpful?
Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.
Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.
CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.
Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.
Cleartax is a product by Defmacro Software Pvt. Ltd.
Company PolicyTerms of use
ISO 27001
Data Center
SSL Certified Site
128-bit encryption