Banking Operations and Financial Instruments for Business

Banking Operations and Resource Management

Credit: This is a contract whereby the bank provides the customer an amount of money up to a certain limit for an agreed period of time.

Operation ADCT: This involves the right to charge the duty. The company acts as a passive operation regarding the requested credit.

Financing Instruments

• Loans
• Credit Accounts
• Discounts of letters, receipts, and bank bills
• Leasing and Factoring

The Nature of Loans

A loan is a financial transaction through which a person or financial institution (lender) delivers an amount of money to another party (borrower) who promises to return it with interest.

Personal Loans and Solvency

Personal loans are formed based on the client who guarantees solvency, contracting the obligation to repay if the borrower fails to do so.

Solvency: This is the ability of a person or legal entity to meet its financial commitments with all of its assets or wealth.

Aval (Guarantee): A written statement by which a person or entity meets the specific payment of a debt or obligation on behalf of the borrower of the loan.

Demanded Guarantees for Loan Requests

• Personal guarantees: Based on the confidence of compliance with obligations.
• Real guarantees: Based on the existence of a heritage free of charges or fines.

Trade Corridor: An agent mediator involved in the certification of contracts for commercial operations. Life insurance: A contract with an insurance company that covers risks such as accidents or death.

Mortgage Loans

Borrowers are required to guarantee the loan with their property. Public Deed: The legal document that formalizes the sale and requires a signature. Grace period: Sets the time period for total capital deficiency where no interest is paid.

Credit Accounts and Fees

Fees associated with credit accounts include: study commissions, opening commissions, and brokerage fees (Correatge).

Commercial Discounts and Liquidity

Commercial Discounts: These are used when cash is not available, as companies finance their daily activities through payments. Bank bills and promissory notes have an expiration date indicating when payment is due.

Collection Management: This occurs when the company has no immediate need for liquidity and waits for the agreed maturity date.

Discount Shopping: A process where a financial institution advances the amount of a letter or receipt.

Cash Formula: Cash = Cn - Co - Interests - Expenditure - Commissions

Leasing and Factoring

Leasing: An external financing instrument involving the rental of certain goods for business use.

Factoring (Facturatge): A contract whereby a company cedes invoices that are pending payment from their customers.

• Factoring with recourse: If at maturity the debtor does not pay, the factoring company returns the bill to the company, which then handles the collection management.
• Factoring without recourse: A sale of invoices in which the factoring company assumes the risk of debtor insolvency.