Payment Methods: Cash, Credit, Checks, and More

Posted on Apr 2, 2025 in Law & Jurisprudence

Payment Methods

Cash Payment

With cash payment, obligations under the contract “delivery of the thing and the price” are met simultaneously. The seller can dispose of their money from the moment of collection.

Deferred Payment

Deferred payment means the seller delivers the goods, but the buyer’s obligation is not met immediately. Payment takes place within a period set by the contractors. The deferral can be short-term or long-term, with or without interest:

Short-Term Payments

  • The debt is split evenly or periodically, with terms not exceeding one year.
  • These terms are most common among companies and are often agreed upon without interest, as both sides benefit from the operation.

Long-Term Payments

  • The buyer has longer than a year to enforce the debt.
  • The advantage for the buyer is acquiring the property without waiting to raise the money.
  • In return, the buyer bears the cost of interest, which should be included in the total cost of the product, along with labor and general costs.

Charging by check does not become effective until the conversion of paper into cash.

The bank transfer charge causes similar consequences to a check.

Credit Cards

  • Debit Card: Payment is processed at the time of the transaction.
  • Credit Card: Allows the customer to defer payment of the purchase through monthly settlement.

Payment by Bill of Exchange or Promissory Note

As agreed upon in the conditions of sale, the seller will typically not grant discounts or charge interest to the buyer to compensate for the time lag between the supply of goods and the delivery price.

Checks

A check is a document whereby the drawer directs the drawee to pay the policyholder the amount of money contained in the title.

Requirements for a Valid Check

  • The term “check” inserted in the text and expressed in the language used for writing.
  • The mandate payment pure and simple “pay for this check…”
  • The amount to be paid by the drawee, expressed in local or foreign currency admitted to official listing.
  • The name of the bank that will make the payment, which must be a bank or credit institution with funds available to the drawer.
  • The place of payment.
  • The place and date of issue.
  • The signature of the person issuing the check.

Forms of Writing a Check

  • Cashier’s Check: Shall be paid to any person who presents the bill. The expressions used in the title are:
    • Pay bearer
    • Pay to… a person’s name followed by the word bearer.
    • Pay to… the space reserved for the holder appears in the bank.
  • Crossed Check: The front of the check is crossed by two parallel diagonal bars. These lines indicate that the check may be charged only by joining a bank account. There are two types:
    • General cross: between two bars is the expression Bco. y Cia.
    • Special cross: between the bars is inserted the name of the bank which you can cash the check.
  • Check to be Credited: On the front of the document appears across the expression “to be credited.” The payment of this check cannot be made in cash but by a bookkeeping entry credited to the account holder.
  • Banker’s Check: The issuing bank or savings bank, at the request of the client with the funds you have in checking or savings account, but can also deliver the amount in cash. A bank check is guaranteed to always be paid.