What is business status inquiry letter? Objectives of business status inquiry letter

The letter that is written for obtaining information about a business enterprise is termed as business status inquiry letter. Generally, one business enterprise writes this letter to another business enterprise for collecting information about a prospective customer.

When a business firm wants to buy goods on credit, it gives one or more references to which the seller can ask for some information about the credit seekers. Usually, banks, trade associations or competing business firms are mentioned as references. The seller then writes the inquiry letter to the referees requesting them to provide some information about the customer.

The purpose of writing this letter is to obtain information related to:

  • Financial capability or creditworthiness
  • Goodwill
  • Nature of business dealings
  • Honesty
  • Relationship with business association, etc

In light of the above discussion, we can conclude that when a business enterprise writes an inquiry letter to another business enterprise, financial institution or trade association to obtain information about creditworthiness or financial capability of a customer who has applied for credit purchase, it is called business status inquiry letter. Basing on the information supplied by the referees, the seller decides whether to establish business transactions with the firm.

Objectives or importance of business status inquiry letter

Business status inquiry letter plays an important role in modern business. The following are the major objectives of writing this letter:

  • Obtaining information about the financial capability of prospective customers.
  • Determining the risk of credit sales.
  • Deciding whether to enter into credit transactions.
  • Getting information about honesty, goodwill and business morality of the probable buyer.
  • Knowing about the relationship of the prospective buyers with other business community and associations.
  • Enhancing sales with various parties by evaluating their financial and business viability.


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