The promissory note is an accounting document in which one person agrees to pay another a specified amount on a previously agreed date. This title is similar to the bill of exchange and they are usually used by companies to obtain financial resources without having to go to other figures, such as a loan.
That is, a company that does not have financial availability, can issue a promissory note to its supplier that ensures the collection with the only exception that it is postponed to be collected as soon as that company has funds available.
What figures are involved in it?
We have three figures in the promissory note:
- We have the drawee that he agrees to pay all the money on a fixed date or that can be determined (for example 90 days). The drawer and the drawee coincide in the promissory note.
- The beneficiary who is the one who receives the money.
- And finally we have the guarantor who is the person who guarantees the payment.
What information should be included in a promissory note?
A promissory note must include the following information:
- It should be reflected that it is a promissory note .
- The amount to be paid.
- The place where the payment should be made.
- The expiration date on which it must be paid.
- The name of the beneficiary.
- The place and the date.
- The signature .
All these data are necessary except the place and the date in this case will be considered as a payment at sight or presentation of the same.
The maximum term to execute the promissory note will be three years and the actions that can be filed are the same as for the bill of exchange, also with an exchange judgment up to six months after it cannot be collected.
What are the consequences of non-payment of a promissory note?
We can incur in the following cases:
- The judgment of exchange actions of the document is planned.
- RAI entry in case of being a legal person and if the debt exceeds 300 euros.
- No more credit actions can be taken against the entity.
- No more credit actions can be taken against the provider, which will surely require future actions in cash.
- Return expenses such as bank commissions, and there may also be expenses for the lifting of the equivalent declaration and even the notarial protest.
What can the person who suffers the unpaid claim?
The unpaid person may claim from any of the signatories, endorsers or guarantors the amount of the promissory note that has not been paid and also the interest accrued from its signature.
A promissory note may contain an interest clause for non-payment, they are calculated from the day of maturity on the unpaid amount and at a money market interest rate increased by two separate points, the cost of returning the promissory note, those of the protest and all those communications that have been made to try to collect it.
There is a possibility that one of the obligors, for example, the guarantor, pays the promissory note before the drawer to avoid problems. In this case, you will have the same rights as the holder and may proceed to any legal action that is necessary.
What is the promissory note discount?
This is a service offered by banks in order to obtain a necessary amount of money before the due date of the promissory note. It also allows you to secure the collection.
The bank that anticipates an amount up to the total of the promissory note less the commission that is established, stopping the entity, for the performance of the service.
Normally these commissions are usually high and it is always more beneficial to expect growth to collect it since, otherwise, it implies losses. The discount normally applies with small businesses that need working capital.
If you need to know more about the subject, we have a complete guide on promissory notes discounts where we explain how to get them and the keys to avoid making a mistake when requesting them.
What types of promissory notes are there?
Although there are many types of promissory note, they all have the same purpose, which is to give the right to collect to another person on a certain date or term. The differences between the types that exist are based on who the issuer is, how it is issued, the moment, form of payment, ...
- Bank notes. These promissory notes are issued by a credit institution, printed on a check book, and are the best known.
- Business notes. Issued by the company, they can carry direct debit. They are in disuse or that they allowed to dispose of the money more easily.
- Promissory notes to order. These promissory notes can be transferred to a third party.
- Nominative promissory notes. Like the previous ones, but without that clause, and it can be endorsed.
- Promissory notes not to order. These promissory notes cannot be endorsed. They can be discounted, but if the bank performs the service, it cannot claim anything except the beneficiary and this has to be the original if there are several endorsements.
- Notes at sight. These promissory notes separated at the time they are filed.
- Fixed day promissory notes. They are paid on the prescribed date.
- Variable term notes from the issue date. The expiration date is calculable.
- I will pay without maturity. Like the promissory note, but it is completed at the same time it is charged.
- Promissory notes to pay into account. It can only be charged to the beneficiary's account.
- Cross notes. Similar to the previous ones and can only be charged if the beneficiary is a bank user.
Investment note. This type of promissory note is issued when a person invests a company and the entrepreneur undertakes to return the amount in a specified time.
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