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To. (B) -
"We were pleased to receive your order of 15th April for a further supply of transistor sets, [ but as the balance of your account now stands at over USD400,000, we hope you will be able to reduce it before we grant credit for further supplies.]

We should therefore be grateful if you could send us your check for, say, half the amount you owe us. We could then arrange to supply the goods you now ask for and charge them to your account."- From. (A)

Q :

It's just an example text from a book. Why does A ask for B to 'reduce' B's account balance ?! The only thing I can guess is that B has unpaid some amount of money in the past trade with A and now that the A's company checked the credit of B, B has enough money to pay... so A asks for B to reduce the balance by paying what B has owed to A. Is that what "we hope ~ reduce it" means?

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but as the balance of your account now stands at over USD400,000, we hope you will be able to reduce it before we grant credit for further supplies.

So B owes A money: $400,000

Before A can supply B with more goods in credit, A needs B to pay half of the money B owes them.

Why does A ask for B to 'reduce' B's account balance?!

That is because B owes a lot of money. If A sells the goods to B (without B paying the half now) the balance owed will increase (say to $600,000). This will increase the credit balance and the risk of default on B's part.

If B is unable to pay the $600,000 (previously owed $400,000 + new $200,000) to A for some reason, A will incur a heavy loss.

To cut down the size of this loss, just in case B was to default on the payment, A wants B to pay half of the money owed.

This is also how credit works in business. You have to pay your dues to get more credit.

From Collins

The balance of an amount of money is what remains to be paid for something or what remains when part of the amount has been spent.

When we pay some of the money we owe (or all of it), we can say we "reduce the balance owed". If B pays A half of the money owed, then the balance will be reduced to $200,000. If B pays in full, the balance will be reduced to $0.00.

  • I don't see how this answer is wrong or not useful. But It would be great if someone told me what is wrong with the answer, so I can fix it and improve the answer. – AIQ Nov 23 '19 at 0:06
  • I want to upvote this answer but don't have enough points(?) this site requires to do just so... Anyhow, thank you for clarifying the context as I now understand perfectly the meaning of that particular sentence! I guess I failed to search what exactly the balance of money part means in the first place ; – longne Nov 23 '19 at 5:27
  • @longne That's very nice of you, thanks! I am glad it helped. Is this related accounting? – AIQ Nov 23 '19 at 5:29
  • It comes from a book for 'Business English for International Trade' test which I am not familiar with at all. So many professional terminologies out there for me to understand, haha :,) – longne Nov 23 '19 at 6:13
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"The balance of your account stands at $400,000" It isn't stated but it is implied that this is the amount of money that B owes to A. It is unusual to give money to a company in advance and build up lots of credit with a company. It is quite common to receive a product but not pay the invoice immediately.

"We hope you will be able to reduce it" Here "it" means the balance on the account. B can reduce the balance by paying money to A. The language is polite and tactful. But the next paragraph makes it clear that, unless B pays $200,000 of their debt, then A will refuse to provide them with any more transistor sets.

  • Thank you for the clarifying and sharing your knowledge in Business~! – longne Nov 23 '19 at 6:21

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