Request Letter For Payment And Rate Revision

These Days the crises is all over the world due to rates are increases day by day of different products. So that Companies are suffering to escape from big loss and to fulfill the requirement to suffer expenses you need to increase rates of your products so that you can also get maximum profit margin from your business. I write this letter to help you make necessary changes and send it to you clients to increase rates and get payment early.

Company Name (Where you Write a Letter)

Dated:May 12, 2015

REQUEST FOR PAYMENT AND RATE REVISION

Respected Sir,

We are writing to you in deep compulsion about the non smoothness of payment history procedure as well as request for rates revision.

When you have a look about our business history with your esteemed organization, you will really admire our services rendered to you. At all the times, we have been providing special much discounted rates to your organization; it was because of the reason that we had build heavy paper & board inventory solely for your products. We invested huge amount of funds for building of said raw material inventory for your organization. We are proud to provide you in time best quality products at low cost.

But when we have a look about payment history on part of the Mega, you will see that payments were not made at due dates. Normally we are working on advance payment as well as on credit period of 15-30 days maximum with other clients but we have given reasonable credit period of 60 days to you for making payments. Despite of long credit period, the payment were made after 4-5 months late which badly affected our cash flow. At any time during the period, we had total average outstanding balance of about Rs.1.00 (M). You enjoyed heavy undue credit from us and on the other side, in addition to crunch in cash flow; we paid heavy mark up to our bank. In this way Mega also took support from us by availing interest free & collateral free credit amount. We have paid almost Rs.165,000 per annum mark up to the bank due to your delayed payments.

We always feel pleasure to work with your esteemed organization. Due to our low cost supply as well as long long outstanding unclear balance, we are pleased that you may have saved almost a reasonable handsome amount. For enhancement of mutual beneficial relationship and we look forward towards you to resolve our following grievances:

• Clear our long long outstanding balance of Rs.774,000.
• For all the new Purchase orders onward, the credit period will be 30 days and it will be assured that payment will be cleared on due that.

The cash flow is like blood for every organization, you know. We have to build inventory for smooth supply and it is about two months procedure to reach imported material in our godown and all this import cost is paid in advance by us. We have to pay other allied material and factory overheads for production of your products for which the credit period is 60 days and when we don’t receive payment in time but 4-5 months late, how we will survive; please consider.

It will be in your notice that the paper market conditions have become very volatile. The earthquake in Chile has drastically affected the international paper market. The Chile is the largest pulp supplier to China, whereas the China is a one of the biggest paper & board supplier to International Market. Another bigger exporter of paper & board is Finland where despite of pulp crisis, the workers are also on strike and the suppliers are not sure about in time delivery of material as well.

Due to lack of pulp supply, our Chinese supplier has cancelled our order which was @US $780/ton, afterwards the price was settled at US $1,030 but he has denied giving shipment in May. The shipment will be made in June (about which he is still not sure) and it will reach our factory in July. Our local paper market is also badly affected in this crisis. Today we have tried to buy the paper & board from local market in Lahore but we were disappointed that no stock of required material was available. After a desperate search, we found a supplier in Karachi who had only 20 tons of stock and at much higher rates; moreover, this stock is still not sufficient for one month production. To fulfill our other respected clients demand, we have immediately purchased the said stock even at a price at which we will suffer loss on our sales. It was the case regarding material required for our other clients.

We are sure that you will also come forward to help us to face the crisis. Keeping in view the above said situation, we humbly request you to clear all of our outstanding balances for the purpose of purchasing of paper & board as well as to avoid the delay in supply of your orders.

Apart from paper & board prices, the other allied material prices like Inks, Chemicals, electricity, diesel for generators and overhead cost have also increased from last two years. In current scenario of harsh load shedding of electricity as well as despite of high rise in diesel prices, which has affected the industry tremendously , we are running our generators  about 12- 15 hours per day continuously in order to make in time supply to our esteemed clients.

Following is a short review of price hike:

            ITEM                                    RATE                               % INCREASE

                                    JULY 2007        APRIL 2010

–          PAPER                  Rs.65/kg                  125/kg                               92%

–          Box Board              Rs.60/kg                   85/kg                                42%

–          Bleach Board          Rs.80/kg                  156/kg                               95%

(The above sharp increase in price of paper & board in international market is due to increase in $  rate, duties structure change effecting  increase in Excise & Sales tax rate, Income tax rate, imposition of 15% G.D.duty, 1% RD duty) plus other allied freight, clearing & forwarding expenses.

–          INKS SET                           Rs.1,390/-         Rs.1995/Kg.                  44%

–          UV Varnish                         Rs.410/-            Rs.480/-                        17%

–          Electricity Unit (Avg)           Rs.6.54             Rs.18.19                      178%

–          USD RATE                         RS.60/-             Rs.85/-                          42%

We have no built in cushion for price calculations for your products to offset such cost difference.

Based on above mentioned facts and figures, we request you to consider revision in price as mentioned   below to save us from loss due to horrendous cost difference. Hope you will consider this request sympathetically based on our past co-operation and cordial relations.

Following is the quotation for printing on different types of Board. Please select the board and inform us so that we may be able to build inventory for you.

Following is the quotation of leaflet.

Hoping for a favourable & sympathetic consideration and we look forward for your kind co operation.

Thanking you in anticipation.

Chief Executive of your Company.