Payment Methods and Financial Documents in Business
Documents Related to Collection and Payment
1. The Primary Obligation of the Buyer
The primary obligation of the buyer is the payment of the price, as agreed upon in the contract, at the specified time and place. If payment is delayed, the term is still deferred.
2. Means of Payment
Payment for goods or services can be made in two ways: at once or over time. The receipt and payment involve a series of documents.
3. Check
A check includes:
- a) The phrase “Pay by this check to”.
- b) The mandate to pay a certain amount in euros.
- c) The name of the one who has to pay the check, delivered to your benefit, called the drawee.
- d) Place of payment.
- e) Date and place of issuance of the check.
- f) Signature of the issuer of the check, called the drawer.
Checking account checks in the checkbook facilitate credit institutions to people who have a checking account at their bank to have available funds in it.
3.1 Kinds of Checks
- Bearer: These checks have the words “Pay to the bearer” and are payable only to the person presenting them for payment.
- Nominative: These are made out to a specific person and must be paid to the person stated on them.
3.2 Payment of the Check
The check is payable at the place shown next to the name of the drawee. If there is no indication of where it should be paid, it is considered payable at the place of issuance. The check is payable at the time when it is presented for collection (within 15 days). If the drawee’s account lacks sufficient funds to meet the full payment, the remaining balance on the account must be paid, and this payment cannot be rejected. The drawee can demand that the partial payment be noted on the check and sign a receipt for the amount charged. A total lack of funds constitutes deception to the policyholder. Issuing a bad check allows the policyholder to exercise two types of actions: civil and criminal. The civil action seeks indemnification. The criminal action involves the crime of fraud and deceit.
4. The Justification for Payment: Receipt
It is the document that the person who charges a nominal fee gives and delivers to the payer as proof that they have received a certain amount of money. Receipts should be issued on special forms that consist of a receipt and a stub. The signed receipt is handed to the person who pays, and the stub remains with the person who makes the charge as evidence.
Information that must appear on the receipt:
- Receipt number
- Name of the person delivering the money
- Amount of money in words and numbers
- Concept
- Location and date of issuance
- Name and signature of the person who receives the money
5. Credit Cards
A credit card is a document that allows the holder to buy goods and services without making immediate payment. The holder of a credit card applies to a bank and accepts the conditions of the issuer (bank). It is a special contract between the issuer and the merchant, where the bank agrees to pay the bills and the merchant agrees to accept card payments. Merchants pay a commission to the bank on what they have sold. The cardholder pays an annual fee. Besides financial services, issuers generally offer additional services at no charge, including traffic accident insurance. To hold a credit card, one must be of legal age and the holder of a bank deposit. There is usually a high credit limit (e.g., 6000 EUR limit). Purchases made by credit card are usually settled every fortnight or month. With credit cards, one can get cash at any bank, either directly or at an ATM.
6. Debit Cards
Unlike credit cards, a debit card is a document that allows the holder to purchase goods and services by paying immediately. You can only buy goods and services according to the availability of money in the account. As with credit cards, you can get cash from ATMs or at the institution. If the card is used on a different network, a commission will be charged to withdraw money. Banks are obliged to inform customers of the fees charged for operating ATMs.
7. Business Cards
These are cards issued by commercial entities (e.g., El Corte Inglés, Carrefour). They are usually free in terms of issuance and maintenance. With these cards, you can defer payment. The only drawback is that they can only be used at that specific store.
8. Bank Transfers
A bank transfer is an operation through which a transfer of funds is made between two bank accounts belonging to two different owners or the same owner but with two different accounts.
9. The Bill of Exchange
A bill of exchange is a payment instrument whose main feature is that payment can be deferred in time, serving credit operations. It is a document that is strictly regulated by law. It can be defined as a document issued by a person named the drawer, ordering another person named the drawee to pay a certain amount of money on the indicated date to the person named, called the payee.
- The Maker: The person who is responsible for paying the bill at maturity (a buyer).
- The Payee or Holder: The person to whom the drawer transmits the bill (a bank) to be paid by the drawee.
A) Official Printed Bills of Exchange
Place of Issuance: The place where the bill is issued. If necessary, it will be considered the domicile of the maker. “Place” refers to the location or town, while “address” refers to the specific address.
B) Currency
The amount in euros or foreign currency.
C) Amount
Always in numbers.
D) Date of Issuance
Day, month, and year that the bill is being drawn or made.
E) Deadline
Indicates the date on which the payment must be made.
F) Name of the Holder
Name of the person to whose order the bill must be paid.
G) Amount of the Bill
The law does not require the amount to appear once in figures and once in words, so the bill will be valid even if only one of the two is completed. If there is a difference between the number and the words, the amount written in words will be valid.
H) Name and Address of the Drawee
The person who must pay the bill through acceptance agrees to pay it. A trade name may not appear as the drawee.
I) Signature of the Drawer, Name, and Address
The signature is a prerequisite, but the name and address are not.
J) Acceptance
Space to express the acceptance of the bill by signature. It is not a prerequisite but enhances the confidence that it will be paid.
Reverse
A) Endorsement
Endorsement is the usual mode of circulation of the bill unless a clause prohibiting it is established.