Use of bills of exchange in settlements under a loan agreement

maturity date

The maturity date is the date on which the note must be paid. It is either directly indicated in the promissory note or determined in some other way. The most common ways to indicate the maturity date are:

1. A specific date, for example: “November 14, 20xx.”
2. A certain number of months from the date of execution of the bill, for example: “3 months from the date of execution.”
3. A certain number of days from the date of execution of the bill, for example: “60 days from the date of execution.”

If you directly indicate the maturity date of the bill of exchange, no difficulties arise. If the repayment date is determined by the number of months from the date of execution of the bill, the same date of the corresponding next month is taken. For example, a bill dated January 20 with a maturity date of 2 months from the date of execution must be paid on March 20.

If the maturity date occurs after a certain number of days from the date of execution of the bill, then it can be calculated by adding the exact number of days. It is important to exclude the date of execution of the bill and include the date of its repayment. For example, a bill dated May 20 with a maturity date of 90 days, in accordance with the above calculation, must be paid on August 18:

Accounting records of the beneficiary organization "Omega"

Term of the bill

The duration of the bill in days or the term of the bill can be determined in the opposite way to how we determine the maturity date. Its calculation is important because interest income is calculated based on the exact number of days. If the maturity date of the bill is determined by the number of days from the date of execution of the bill, problems with calculation do not arise. If a specific repayment date is established or it is determined by the number of months from the date of issue of the bill, then the exact number of days should be calculated.

Let's assume that the bill is issued for the period from May 10 to August 10. Having carried out the following calculations, we can establish that its validity period is 92 days:

The difference between a promissory note and a transfer bill

There is often a misconception that a transferable debt can be transferred from one holder to another, but a simple one cannot. It is legal to sell, buy, or use debt of any form as collateral for a loan, but for this purpose an endorsement is issued. A promissory note and a bill of exchange differ from each other in the number of sides. There are three parties to a transfer obligation:

• drawer;
• payer;
• recipient (bill holder).

Simultaneously with the draft, an acceptance is drawn up - a paper that serves as confirmation of the payer’s consent to pay the debt. A simple type of document is a special case of a transferable one, since the drawer and the payer are one person. Acceptance is not required when drawing up a promissory note; the payer confirms his consent to payment by signing the main document.

Interest and interest rate

Depending on whether a person is a borrower or a lender, interest represents either the cost of borrowing or the income received for the loan provided. The amount of interest depends on three factors: the principal amount (the amount borrowed or lent), the interest rate, and the period for which the funds are lent. The following formula is used to calculate interest:

Principal amount of the bill * interest rate * time = interest

Interest rates are usually fixed for a year. For example, interest on a note with a principal amount of 1,000 due in one year at an interest rate of 8% would be 80 (1,000 * 8/100 * 1 = 80). If the bill was issued not for a year, but for 3 months, the interest would be 20 (1,000 * 8/100 * 3/12 = 20).

If the term of a bill is specified in days, the exact number of days must be used when calculating interest. To simplify the calculations, we will take a year consisting of 360 days as the basis for calculating interest. So, if the bill specifies a period of 45 days, the interest will be: 1,000 * 8/100 * 45/360 = 10.

The essence of market and nominal interest rates is described here: CFA - How to interpret interest rates?

What is a bill of exchange and why is it needed?

Lawyers highlight the dual nature:

• security
• obligation.

Scientific interpretation is more informative. This is an unconditional obligation of the debtor to pay the holder a specified amount within a certain period after presentation.

In our state, a document of a clearly established form, recording the transition of one obligation to another, giving the holder of the bill the right to demand a specified amount of money from the debtor. By debtor we primarily mean the drawer. However, if the bill is transferable, the debtor will be any named person.

Issue to bearer is possible - where the drawer is the person presenting the security to the debtor. In Russia, the issuance of bearer obligations is prohibited.

Repayment amount

The total amount paid on the note on the maturity date is called the maturity amount. It consists of the principal amount of the bill and interest. The repayment amount of a 1,000 note issued for 90 days at an interest rate of 8% is calculated as follows:

Sometimes an interest-free promissory note is issued. In this case, the redemption amount is the same as the face value or principal amount of the note, which includes implied interest costs.

Accounting records from the paying organization "Alpha"

Market return

International Financial Reporting Standards require debt securities, whether owned or acquired, to be accounted for in a company's accounting and financial statements using the effective interest rate method, taking into account market yields. The fact is that the real yield of a bill, as a rule, differs from the amount of interest income indicated on it.

Suppose that on March 1, 20 × 6, the buyer K. Isaac paid for goods worth 910 with an interest-free bill, on which in a year he undertakes to pay 1,000. This means that, despite the indicated interest income on the bill of 0%, in a year K Isaac will pay 90 or 10% more than the cost of the goods he purchased. Thus, the real market yield of such a bill is 10% per annum; and it was purchased by the company at a discount (or discount).

If the market yield is greater than the interest income on the bill, then it is purchased at a discount, i.e. cheaper than face value. Conversely, when the market yield is less than the interest income, the bill is purchased at a premium (or premium), i.e. more than face value. Cases of issuing debt securities at a discount or premium are discussed in the “Liabilities” section. When issuing securities, the mechanism for recognizing a discount or premium is similar. The market yield equals the interest yield stated on the security, which means it was purchased at face value.

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TOPIC 10. CURRENT FORMS OF NON-CASH PAYMENTS

10.5. Bill of exchange form of payment

The bill of exchange form of payment is a settlement between the supplier and the payer for goods and services with deferred payment (commercial loan) on the basis of a special document - a bill of exchange.

A bill of exchange is an unconditional written promissory note of a form strictly established by law, giving its owner (the drawer of the bill) the indisputable right, upon maturity, to demand from the debtor payment of the amount indicated in the bill of exchange. The law distinguishes between two main types of bills: simple and transferable (federal law dated February 21, 1997 No. 48-FZ)

Rice. 10.5. Schemes of document flow of a bill of exchange

There are four ways to set the due date for a bill of exchange:

1) a period for a certain day. Expressed as the entry “I undertake to pay (number)”; 2) deadline upon presentation - payable on the day of presentation for payment. The maximum period established for presenting a bill of exchange for payment is one year from the date of issue; 3) in so much time from drawing up the bill. There are several options here: a) after a certain number of days. The payment due date is considered to have occurred on the last of these days. The day the bill is issued is not taken into account; b) after a certain number of months. In this case, the payment deadline falls on the day of the last month that corresponds to the date the bill was written, and if there is no such date in this last month, then on the last day of this month; c) at the beginning of the month, the middle of the month, the end of the month; 4) at such and such a time upon presentation of the bill. Setting payment deadlines is the same as in the previous method. At the same time, this payment method is more convenient for the payer, as it gives him the opportunity to prepare for payment. The countdown of the payment period begins from the day the bill is presented for payment.

The bill of exchange form of payment presupposes mandatory participation in the organization of banking institutions. In particular, bill legislation provides for the collection of bills by banks, i.e., their execution of orders by bill holders after receiving payments on bills on time. Bills of exchange transferred to the bank for collection are provided by the holder with a guarantee inscription in the name of this bank with the words: “to receive payment” or “for collection.” By collecting a bill of exchange, the bank assumes responsibility for presenting the bill of exchange to the payer on time and for receiving the payment due on it. Having accepted a bill for collection, the bank is obliged to promptly send it to the bank institution at the place of payment and notify the payer with a summons about the receipt of the document for collection. Upon receipt of the payment, the bank credits it to the client's account and informs him about the execution of the order.

For executing the order to collect bills of exchange, the bank receives from the client a commission in the form of a percentage of the received payment amount. In addition, the bank charges the client all costs associated with sending and receiving documents, as well as costs associated with contesting a bill of exchange in the event of the payer’s refusal to pay on this bill or in the event of his insolvency.

Commission and other remuneration of the bank for servicing bill turnover is reflected in bank accounting in the credit of the “Operating and miscellaneous income” account.

Operations for collection of bills by banks are beneficial both for clients and for the bank itself. This way, the client is freed from the need to monitor the deadlines for presenting bills for payment, and the process of receiving payment becomes faster, cheaper, and more reliable for him.

For the bank, this is one of the sources of profit. In addition, in the process of carrying out collection operations, significant funds are concentrated in the correspondent account of a commercial bank, which it can put into circulation.

The economic crisis, which has affected the lion's share of Russian enterprises, makes us recall the seemingly sunk into oblivion of non-monetary forms of payment. Bills of exchange can be a worthy response to the crisis, especially since any enterprise can issue them. What are the main advantages of using a bill of exchange in settlements and the scheme for its use?

There are several forms of non-monetary payments between enterprises: trade credit, offsets (counter-offsets, mutual offset of counter payment claims), commodity bill, etc. Let us dwell in more detail on the bill of exchange, which is used to formalize a deferred payment.

Crisis Interest

The greatest interest in the use of non-monetary forms in settlements between enterprises arises during periods of liquidity crisis, that is, a lack of real money. The buyer, not being able to pay here and now, can use a bill of exchange (among its names are commodity, settlement, commercial). Compared to other forms of non-cash payments, a bill of exchange has a number of advantages. The main ones are accessibility, since any enterprise can issue its own bill, and ease of circulation - the corresponding infrastructure has developed in the market. The more famous the enterprise, the greater the chances of the bill issued by it to begin its journey.

Settlement bills enjoyed quite wide popularity in the 1990s. At the time, cash flow problems were a consequence of the government's tight monetary policy aimed at curbing inflation. Moreover, the state itself set an example: in 1994–1995 it issued treasury bonds, and in 1995–1997 it guaranteed bill loans from banks. According to experts, in the mid-1990s, from 45 to 60% of all payments within the country took place in non-monetary form - pseudo-money in the form of settlement bills became an integral part of trade turnover.

Debt obligations of oil holdings and metallurgical plants were especially popular. This interest was largely explained by the fact that debt obligations were repaid with commodity deliveries, in contrast to, say, Gazprom’s obligations, for which the issuer always (albeit sometimes with a delay) paid in cash.

Among issuers of a more modest scale, I recall the experience of using non-monetary forms of payment by the JFC group (fruit importer), the Middle Volga Interregional Association of Radio Telecommunication Systems (SMARTS), the Russian Meal group, etc. Moreover, the SMARTS group used settlement bills to finance import supplies. In 2003, when the telecom operator entered into a contract with the Israeli company Comverce Ltd for the supply of billing solutions, the manufacturer received not real money, but promissory notes with a total face value of almost $3 million. Their repayment was carried out from September 2003 to August 2005.

Banks are involved in one way or another in the circulation of settlement bills (we will talk more about the market infrastructure a little later). In recent months, they have begun to pay more attention to various “anti-crisis” (non-cash) products aimed at corporate clients.

Thus, bill loans, that is, the execution of the same settlement bills, are offered today by Baltinvestbank. At the same time, the bank agrees with all parties on the possibility of circulating the debt securities of the drawer. Such a loan will cost the borrower 3–5% per annum. Zenit Bank works with bill loans in a similar range - 4-6% per annum (term - from 1 to 6 months). “Issuing bill loans allows enterprises to save working capital and speed up settlements with counterparties,” the bank emphasizes.

Settlement bill against receivables

The main advantages of using a settlement bill compared to having a receivable are:

• deferment of payment for a longer period;
• formation of a public credit history when purchasing bills of exchange by investors and the opportunity in the future to raise capital on the public market at more favorable rates;
• the opportunity to receive additional income by early redemption of your own bills;
• the supplier receives a liquid cash requirement, which, if necessary, he can use to replenish his own working capital.

Amount and terms of cancellation

The scheme for financing deferred payments with a bill of exchange is generally as follows. The supplier ships the goods, in payment for which he receives a bill of exchange from the buyer. Payment of a bill is made “on sight, but not earlier than a certain date.” The supplier who received the bill is free to sell the paper on the secondary market or obtain other financing for it.

Features of organizing accounting and document flow

Operations with bills of exchange at OJSC Steklonit are quite diverse. First of all, the company accepts bank bills as payment for delivered products. Received bills of exchange can be presented to the issuing bank for payment or transferred to a supplier or contractor for raw materials received or work performed. In addition, the plant issues its own bills of exchange, which are transferred to suppliers and contractors, which allows for a certain deferment of obligations and increases working capital. When presented by the bill holders, the plant's bills are paid in cash or products.