The most common form of payment between enterprises is a loan. And this is understandable - because it is much more profitable to attract third-party funds for the development of the company than to withdraw your own from the turnover.
This form of work is especially acceptable for small organizations whose solvency is not too great. For them, commercial credit is almost the only opportunity for business development. There are several types and methods of providing such a loan - we will consider them in more detail.
Commercial loan: the essence of the matter
Regardless of its name, such a loan is not classic, because for its provision banking institutions, credit organizations are not involved, a license is not required. Also, it is not an independent transaction, but is negotiated as an addition to the main contract.
Commercial loans are provided to each other by enterprises and organizations themselves, in addition, such an agreement can also be concluded between individuals and individual entrepreneurs. Since such a loan is provided in commodity rather than cash equivalents, almost any lease, purchase, sale, service, etc. agreement may contain a loan supplement expressed in simple written form.
Bill loan
The most common type of commercial lending is bill of credit. The settlement form in this case is a written debt obligation for a certain amount, which the buyer transfers to the supplier. Different conditions of a commercial loan imply different bills of exchange:
- Solo bill (or simple) - involves the participation in the transaction of only two parties. After a certain period of time, the borrower (drawer) agrees to pay the creditor (drawer) cash in the amount prescribed in the contract. The simple form of bills is the most common in Russia and is used for domestic payments.
- Draft (bill of exchange) - such a loan agreement requires a third party. According to it, the drawee (lender) gives a direct instruction to the drawee (borrower) to make payment under the agreement in favor of a third party - the remitter within the specified time. In Russia, a draft bill is used only for interstate (international) settlements, where the exporter's bank acts as a reminder.
The settlement process for a bill of exchange assumes that the seller sends the goods and a package of documents for payment to the buyer. One such document is draft. What is its essence? Having received the paper, the drawer (buyer) accepts the draft - that is, it confirms its consent to pay in favor of a third party, accepts the terms and amount of the payment. Without such a signature, a bill of exchange does not have legal force and is not a means of payment.
Factoring and Forfeiting
Another form that a commercial loan can take is factoring. The essence of this phenomenon is the collection by a bank or a specialized factor company of a customer's receivables. This means that the factor company buys your debt from the creditor, while not only the entire amount is transferred to him, but 70–80%.
The rest will be paid to the seller after the factoring company receives money from the debtor, while the income of the factor company itself will be deducted from the amount of the residual payment. This allows the seller to quickly return their money under the contract and put them back into circulation.If such re-lending takes place in foreign trade relations with the participation of a bill of exchange, then such a commercial loan is called forfeiting.
In this case, a partial or full payment of the foreign trade contract occurs, and the importer is notified by the exporter that the calculation should be made with the forfeiter company. After the entire amount under the agreement is transferred by the importer to the forfeiter's accounts, the exporter is required to be notified of the completion of the transaction.
Leasing
This is another form of commercial lending. It involves long-term lease of movable and immovable property with the possibility of its redemption at residual value after the expiration of the contract. Most often it can be a rental of vehicles, equipment, production facilities or a loan for commercial real estate.
According to this scheme, registration is made for a leasing company, the creditor of which, in turn, is the bank. A person acquiring such property becomes a lessee. At the same time, a contract is concluded in which the procedure and terms for the full repurchase of property are prescribed.
Open account and consignment
Among Russian entrepreneurs, a special type of transaction is quite common - consignment or, as they say, “goods for sale”. Such a commercial loan means that the exporter (owner) transfers to the consignor (intermediary) certain goods for subsequent sale to the final consumer.
The intermediary does not pay for the products received immediately, but only upon the fact of its final sale. If the goods cannot be sold, the consignee returns it to the manufacturer in full, and the transaction is considered failed. This type of commercial lending is very convenient in cases when a new product is delivered to the market, and there are doubts about the possibility of its quick sale.
If there is a long relationship between the partner companies, the seller can issue an open account on his partner-buyer. This means that the buyer systematically receives goods with deferred payment without documenting each specific transaction. Usually, only the maximum possible amount of debt is negotiated, and the buyer from time to time pays bills for previously delivered products or provides other goods in return, if this is due to the contract.
Amount of payment for a commercial loan
The amount of payment for the use of such a loan is not regulated by law, however, it is worth noting that the commercial loan rate is often much lower than the bank, as it is beneficial to both parties to the contractual relationship. Although the amount of payment is determined solely by the agreement between enterprises, it is nevertheless necessary to correlate it with the main criteria specific to the lending market:
- the rate must necessarily be lower than that provided by credit companies or banks, otherwise the attractiveness of this method of lending is lost;
- the rate should cover the costs of the lender and the fact that his money is "sprayed" in time;
- the size of the fee for using the loan should not reduce the competitiveness of the purchased goods.
Dates, fines
In some cases, interest on the loan may not be charged at all or accrued only in case of violation of contractual obligations - as a kind of penalty for the unfair fulfillment of the terms of the contract.
A commercial loan agreement most often does not imply strict deadlines, that is, this process is not regulated at the legislative level. Everything is determined only by agreement of the parties. Most often, this period is determined until the actual receipt of funds, which is justified in case of delay in payment made by the counterparty.
Advantages
Commercial loans are mainly provided by enterprises that need to quickly expand their customer base, as this is the easiest way to achieve this goal. The enterprise, however, the borrower, in turn, receives at the disposal of the right amount of goods, work or services, even if he does not have the means to fully pay them.
At the same time, both the lender and the borrower achieve their main goal - accelerating the turnover of their funds. For the buyer, there is one more significant advantage - all interest for using a loan can be laid down in advance in the price of the goods. Other advantages can also be noted: the ability to support each other by enterprises, the simplicity of clearance, the speed of receipt of goods, the ability to freely maneuver capital, reducing the need for direct bank lending, etc.
disadvantages
But, in addition to the advantages, commercial credit has its drawbacks. One of the negative aspects of such a loan is that it is limited by the size of the supplier’s inventory and the consumer’s solvency, that is, the lender is not able to provide installments for more goods than he is able to produce, and the borrower will not order more services than he needs . Other shortcomings include possible changes in market needs, fluctuations in product prices, the probable bankruptcy of the borrower, as well as ignoring payment terms. Negatives can also include the short-term nature of such relationships.
