Today we can note that the settlement in most modern countries with promissory notes is gaining momentum. Changes in the country's economy have a direct impact on the spread of this process. Is it good or bad?
Increase financial literacy of the population
Let's start with the fact that just a few decades ago, the majority of citizens only from print publications or at professional conferences learned what a bill of exchange was. Today, due to the rapidly increasing rates of economic development and the improvement of financial literacy of the population, most people come across this concept quite often. Therefore, many of the modern inhabitants of the planet have at least a superficial idea of what a bill of exchange is.
We clarify the concept
If we delve into history, we learn that a bill has long been one of the first types of securities, which was used in the conditions of market trade for several generations of many nations.
Let's clarify what a bill is. It is a special security that confirms a person’s monetary obligation to pay a certain amount stated in it at a given place and within a specified period. In other words, it can be said that a bill is a kind of slightly modified and more formally issued debt receipt.
The bill has such basic features as:
- abstractness (on the document you will not find a specific type of the operation being carried out, as well as the reasons for the existing obligation of the bill);
- indisputability (strict payment of debt for this type of document);
- negotiability (bill of exchange is quite capable, when used as a means of payment, to replace cash in the event of transfer to third parties, while on the reverse side of the form issued by hand, there must be a transfer letter approved by official bodies).
The promissory note is a debt official document. The form of the bill is strictly regulated by applicable law. And without the mandatory details, it will be recognized as absolutely invalid. Therefore, registration should be carried out only in the presence of third parties and with the obligatory assistance of specialists authorized to approve such transactions.
These details must be on a properly drawn up bill:
- the name “bill” directly;
- indication of the period of partial payments and final payment;
- a simple and unconditional obligation or offer to pay a certain amount;
- the name of the person to whom or by order of whom the payment must be made at a specified time (name of the first payee);
- exact name of the payer;
- obligatory indication of the place where the payment will be made, and who should be present;
- indication of the date and place of drawing up the bill;
- signature of the maker.
These are obligatory clauses, but in addition to them, at the discretion of the parties involved in the transaction, additional conditions may be stated regarding any important transaction issues.
The current bill legislation of our country states that a simple and transfer bill of exchange can be drawn up only on paper. A number of documents must be prepared for such a design. Forms of bills do not have to be a single sample, but it is worth adhering to the approved form.
It is worth noting that there are several types of bills. In the stock market you can meet in the first place a simple and transfer bill. The essence of the first lies in the fact that the amount of the debt must pay off the drawer to the holder before the specified period. At the same time, a bill of exchange implies that the drawer instructs the payer to pay the marked amount to the payee within the specified period.
Distinguish by type of commitment
Upon the occurrence of obligations there is a financial bill and commercial. The essence of the first is that it is accepted in the case of lending money. One of the varieties of financial bills of exchange is considered to be treasury, which is issued by the state to compensate for budget expenditures. A commercial bill is based on actual trade transactions. It is a fundamental value in commercial lending.
Promissory notes that are not tied to the current legal movements of monetary or commodity values are called fictitious. These are bronze, counter, and friendly bills. Each of them has its own advantages and scope.
A bank bill is a security issued by a bank, the basis for which was a certain amount of cash investment (deposit). It gives an indisputable right to the owner to receive, when the time comes, the specified funds.
With it, you can not only save money safely, but also dispose of it if necessary at the time convenient for you and without fear of suffering financial losses.
The company can settle with the existing counterparty for services rendered or goods provided by bank bill, which will take very little time.
Also, a bank's bill of exchange may be offered to secure a loan or as a guarantee of the return of received funds. Bills of large banks have high liquidity, they are accepted for payment in all branches.
Not the last place is occupied by the accounting operations of the securities under consideration. These procedures can be represented as the transfer of bills of exchange to a banking institution. When the client takes into account the bill, it receives liquidity. In order for a bank to carry out a transaction on accounting a bill, it must be completely sure that it will be paid on time. This means that the bank must necessarily check the creditworthiness of the client and meticulously check the correctness of filling out the document. Note that the bank is not obliged to give explanations in case of refusal to accept the bill.
If the document was purchased from a client by the bank before the expiration of the period for presentation for payment, then this is an accounting bill. To distinguish it is quite simple. Then the seller receives an amount that can be calculated as the amount of money on the document minus the discount rate of the bill.
What makes bills attractive today and what can a company win by working with them?
In fact, this document has an indisputable advantage, since it represents a loan without collateral, which in some circumstances is of considerable importance. In this case, lending is provided only by personal turnover and assets of the company. Also, this tool can use the company for investment.
There is no need to register a bill in government. Also it is worth considering that transactions with bills are not subject to taxation.
Another interesting factor is that companies that issue bills will not depend on only one lender. When a large amount of money is needed, a firm can split it up and issue several promissory notes at once, and they, in turn, can get to several investors.
But more attractive for the company can be considered the opportunity in the stock market to declare itself. This will positively affect its image, as well as provide an opportunity in the future for banks to receive low-cost loans and be credited on the security of personal bills.
A wonderful way to advertise
Note that in the case of issuance of bills of exchange your company makes an excellent advertisement. When it is transferred to the owner, the bill of exchange is filled in, where it should be fixed that the owner of this type of security has changed.
The content of the act must include the reason for the transfer, the absence of claims. The most important thing is that it should be indicated that the transfer of a bill is a voluntary decision. The act is certified by two parties with mandatory witnesses.
Ensure correct filling
It is necessary that such columns as the date of transfer, details, type of bill of exchange, cost, number, terms of payments, place and date of signing be filled.
The investor is also interested in bills. Even if the debtor refuses to pay on them, it will be easier to get your money back than in the case of non-repayment of the loan. If we assume that the bill will not be repaid on time, then the investor can safely at the notary’s appeal and appeal to the court. The court of arbitration does not even consider the case, the decision is issued automatically. The simplified money collection system significantly improves the discipline of the maker and minimizes the risks of the investor.
The protest of a bill of exchange is a notarized factual refusal to pay the bill, which gives rise to joint and several liability of legal entities and individuals connected with the circulation of this type of security.
What does the law say
The bill legislation provides for the presentation of a bill of exchange to a notary to protest against payment on the next day after the due date (no later than 12 noon).
The bill that is not paid on time is provided to the notary with an inventory listing the following data: address and name of the drawer, whose bill is subject to protest, date of payment, amount, reason for protest, name of the bank on whose behalf the protest originates and addresses.
A notary on the same day requires the debtor to make a payment. If it is made within the specified period, the security returns to it with a note that the payment has been received.
If the debtor refuses to pay the required amount, the notary draws up an act of protest of the bill and non-payment. And immediately all the data on this promissory note is entered in the register, and on the front side, the notary writes that the document has been protested, puts the signature, stamp and date.
Now to the question of what a bill is, you can give an exhaustive answer. And, noting the importance of this security, you can safely resort to using this type of securities to address issues related to insufficient investment in new projects.