What is the commercial discount

When we speak of commercial discount we are referring to a type of financing of assets short-term by means of which a client presents a title of credit to a financial company so that the amount of the credit that has not yet expired can be anticipated.

In this case, the financial institution must be in charge of collecting the credit from the debtor. The company will receive the amount of the commercial discount, less the interest that will be generated from this operation and the expenses that may be caused as a result of the management.

The commercial discount can be carried out with different forms of short-term commercial credits, these being 30, 60, 90 and 120 days. Among the forms of commercial credits we can highlight the promissory note, bills of exchange, receipts, etc.

Parties involved in a trade discount

It should be noted that this type of operation involves 3 parties:

  • The client: what is the company that hires the services and the one that seeks to advance the credit (or several, if it has more)
  • The financial entity: the company that is in charge of anticipating the collection of its client
  • El debtor: the person or company that issues the commercial credit to the customer for having received products or services from him

Commercial discount rates

Regarding the types of commercial discount that we can find, we highlight:

  • Depending on the frequency of use: there is a permanent discount line (the customer uses the discount service on a recurring basis with the financial company); or circumstantial discount (makes use of the service in a timely manner).
  • Depending on the commissions: the ordinary discount (both commissions and interest are discounted from the nominal value); the discount to ski pass (the commissions and the interest rate are fixed).
  • Depending on the type of commercial paper that is discounted: bills of exchange, of exchange promissory notes, of negotiable receipts, etc.

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