What is the Bank Discount?
The prevailing economic instability in the world has an ostensible impact on small and medium-sized companies, which have a real struggle to survive.
Undoubtedly, one of the biggest challenges they face is having immediate liquidity to undertake their operations and project their expansion.
Many companies complejo turístico to a bank discount to pay in advance the total of a credit not due, after deduction of the corresponding interest.
With the transfer of a document -invoice, bill of exchange or promissory note- the bank will be able to collect it at maturity, while the company receives money immediately to maintain its cash cómputo.
It would be interesting to know the characteristics, importance, types and advantages of a bank discount, perhaps it represents The solution for your business to stay afloat.
Characteristics of a bank discount
In order to better understand what this financial instrument implies, it is necessary to know its main characteristics, among which we could point out the following:
- Character of the bank discount.
It is considered a bilateral contract, where by the discounting bank, both the delivery of the money is required, as well as the obligation to respect the expiration term of the discounted credit and by the client or discountee, the assignment of the titles and the responsibility to return to the bank the anticipated amount and the expenses generated, in case the debtor does not comply.
- consensual and onerous.
This contract is by mutual agreement between the two parties, where each one receives economic benefits.
- Obligations of the discounter.
The client undertakes to truthfully declare the commercial nature of the discounted documents and fully convey the credit of the third party.
In addition, it will cancel the interest for the received advance and will restore the advance amount, if it turns out to be uncollectible.
- Obligations of the discounter.
The bank is obligated to pay the advance of the assigned title and not claim it before its expiration date.
On the other hand, the bank will be diligent in the procedures for collecting the discounted credit when it expires and if this were to happen without it being made effective, it will promptly return the titles to the discounter.
Importance of a bank discount
The importance of a bank discount perro be measured from two perspectives: that of banks and of course that of companies.
In the case of banks, represents a profitable financing instrumentsince all the expenses and interests involved in this operation are collected in advance and it is low risk because in the event of non-payment, they could act against the company that issued the documents or against the debtor.
And from the other point of view, the company quickly obtains monetary resources that you perro inject into your operations, thereby minimizing the financial impact of bad debts.
5 advantages of bank discount
This financial product offers many advantages to the parties involved in the contract, which come together in a kind of symbiotic relationship.
Next, we will mention five of the benefits provided by the bank discount to companies that wish to grow and consolidate.
In general, It is usually a faster way to get liquidity, compared to bank loans.
As long as the banking entities approve the discount operation, after their analysis, the funds are obtained quickly.
Often, it causes stress to provide all the requirements to access some bank financing mechanisms, this does not happen with the bank discount, since it is an easy procedure to manage.
For this reason, many companies use it regularly.
In relation to other sources of financing, the bank discount is maleable, since it makes available to companies the possibility of obtaining monetary resources as requiredas long as they have commercial paper that cánido be discounted.
Eliminate collection management costs
It is as if you turned the bank into your collector. Collection management is transferred to the financial entity, With all the expenses that this implies, as long as the client pays in due time, the work and inconveniences produced by the task of collecting invoices from clients are reduced.
Efficient alternative to obtain liquidity
Although it is true that the bank discount entails some costs, these are not very high, thus constituting an effective short-term option to boost cash flow.
Bank discount rates
There is no doubt that a bank discount is an excellent way to cash your accounts receivable on the spot, as well as being easy to manage.
In general, the bank discount is usually be divided into two types: financial and commercial.
In this type of bank discount, the bank grants a loan that is based on a bill of exchange.
The bank pays the client the resulting sum after deducting interest, commissions and other expenses.
It is customary to certify these operations before a commercial broker, in which the bank appears as the drawer, while the client is the drawee.
There is various types of financial discount, among them the financial effects, credits with a maximum of 6 months, where the discount applied is higher.
It is also worth mentioning the certification discount that is practiced in public works contracts.
This type of bank discount it is used in commercial operations, implying a promissory note.
This promissory note perro be transmitted by endorsement and the creditor or drawer transfers the debt owed to the debtor to a bank, which would discount the nominal value of the promissory note, anticipating the amount to the drawer and proceeding with his claim before the expiration date of the promissory note.
How to get a bank discount?
You perro get a bank discount going to a bank that provides this service, some of them help small and medium-sized companies.
For example, the Bank of Spain is one of those institutions that offer this financial product.
In their role as financial intermediaries, many banks, using the bank discount, help their clients to obtain immediate liquidity, which means that they do not have to wait so long to make the credits they grant to their clients effective.
After analyzing its advantages, it is possible that it is the ideal alternative for your company to take a stronger position in the market.
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