Securing liquidity is one of the biggest concerns for small and medium-sized businesses (SMEs) and the self-employed; immediate liquidity through the discounting of promissory notes may be the solution for you.
Here, we explain what this instrument is all about and how it can help you obtain liquidity quickly and securely.
A promissory note is a document that represents the obligation of a person or company to pay a second party a sum of money within a specified period of time.
Promissory notes are a common method of payment among businesses. When the payee cannot wait until the maturity date stated on the promissory note—because they need the money immediately due to various circumstances—that is when they turn to the discounting of promissory notes.
Advantages of Obtaining Liquidity Through Promissory Note Discounting
Promissory note discounting is a financial method that allows the beneficiary to obtain liquidity through promissory notes issued by a third party (their client).
This method has a number of unique advantages and characteristics that have made it a favorite among self-employed individuals and small and medium-sized businesses (SMEs) for obtaining liquidity.
How does this liquidity process work for promissory note discounting?
The company that receives a promissory note forwards it to a company such as Workcapital SA, which specializes in promissory note discounting. Workcapital SA reviews the transaction and then pays the amount of the promissory note to the company in advance, deducting interest.
- The holder of the promissory note receives payment in advance, thereby gaining liquidity in a short period of time.
- A quick and simple method.
- It allows you to advance your company’s payments if necessary.
- Avoids unpaid invoices: the financial institution will assume responsibility for any potential collection issues.
- No CIRBE (Bank of Spain Risk Information Center) reporting: it does not increase the company’s banking risk or the debt recorded on its balance sheet.
- Individualized transactions: Each promissory note discount is associated with a specific transaction, so the company only needs to use this option when necessary and is not restricted by other processes or transactions.
When discounting a bank promissory note, we assess whether the company issuing the note is creditworthy.
At WorkCapital, we help you stay well-informed and gain a thorough understanding of your clients so you can discount promissory notes and avoid problems down the road.
Contact us today. With no obligation whatsoever, we can immediately review your promissory notes for discounting.
