Financial Products and Services for Businesses
C. Bank Account Credit – An account credit is a contract whereby a bank offers an individual or company, the borrower, an amount of money that need not exceed a pre-established limit. The borrower can withdraw or deposit funds as if it were a bank account. They are also paid by the party interested in ready money and money from the unwilling. D. Confirming – The confirming guarantees the provider and business providers receiving funds, sometimes even before the due date. Confirming is a service by which financial institutions provide their customers with the administration of payments. E. Bank Discount: Before maturity, debt securities may be transferred to a financial institution, which advances the amount by deducting certain amounts in fees and interest. The rate or interest rate charged by the bank to advance the amount of documented debt securities or bills of exchange before maturity is called bank discount, which names the whole operation. F. Credit Cards: Bank cards can use funds from the associated accounts, but not all have the same benefits. Basically, we can identify two ways in response to how the funds are deducted:
- Debit: The inference of funds is immediate from the moment it is used.
- Credit: The inference is deferred in the manner and terms agreed.
As a form of financing, credit card purchases allow the bank to deduct the funds immediately, but the deduction will be held in the manner and time agreed. The usual conditions for this type of loan allow the customer to be deducted without interest at month-end, for payments made over the two days immediately preceding the 20th. If at the end of the month the customer wanted to defer the payment, then interest would be paid.
G. Factoring: An operation where the default risk is not supported by the vendor, but by a firm specializing in this type of transactions. It is called factoring the sale of rights to payment in exchange for interest and commissions. The factoring cost is higher because the company that factors is supporting the cost of deferral, the impact hazard, and also profits with this type of activity. H. Forfaiting: Forfaiting is selling the document for payment for goods and services exported. Leasing – Leasing is a financing company that, in exchange for shares of the lease, gives the ability to use an asset for a price below its value in the market. A leasing acquisition is a rental property with the same purchase option at the end of the contract. J. Renting: Renting is a bilateral commercial contract where one party, the leasing company, is obliged to give to another, the undertaking, the temporary use of a computer on payment of an annuity contract for a periodic renting period. Renting is in practice a lease without an option to purchase. Although public financing of private financing is the most common, there is never a rule to rule out public funding because it is very cumbersome in terms of paperwork or slowness in granting it. PREFERRED FINANCING The lines of preferential financing focus on the financing of investment projects highly relevant stages of the life of an SME, such as: the initiation, consolidation, business growth, and internationalization.