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| Promissory notes are a common financial instrument in many jurisdictions, employed as [[commercial paper]] principally for the short time financing of companies. Often, the seller or provider of a service is not paid upfront by the buyer (usually, another company), but within a period of time, the length of which has been agreed upon by both the seller and the buyer. The reasons for this may vary; historically, many companies used to balance their books and execute payments and debts at the end of each week or tax month; any product bought before that time would be paid only then. Depending on the jurisdiction, this [[Standard of deferred payment|deferred payment period]] can be regulated by law; in countries like [[France]], [[Italy]] or [[Spain]], it usually ranges between 30 and 90 days after the purchase.<ref>{{cite web|url=http://www.lesclesdelabanque.com/We...DocumentsByIDWeb/7PUHXY?OpenDocument|title=La lettre de change et la LCR|first=Les clés de la banque-|last=FBF|website=Les clés de la banque Entrepreneurs|access-date=30 March 2018|archive-date=31 March 2018|archive-url=https://web.archive.org/web/2018033...tsByIDWeb/7PUHXY?OpenDocument|url-status=live}}</ref> | Promissory notes are a common financial instrument in many jurisdictions, employed as [[commercial paper]] principally for the short time financing of companies. Often, the seller or provider of a service is not paid upfront by the buyer (usually, another company), but within a period of time, the length of which has been agreed upon by both the seller and the buyer. The reasons for this may vary; historically, many companies used to balance their books and execute payments and debts at the end of each week or tax month; any product bought before that time would be paid only then. Depending on the jurisdiction, this [[Standard of deferred payment|deferred payment period]] can be regulated by law; in countries like [[France]], [[Italy]] or [[Spain]], it usually ranges between 30 and 90 days after the purchase.<ref>{{cite web|url=http://www.lesclesdelabanque.com/We...DocumentsByIDWeb/7PUHXY?OpenDocument|title=La lettre de change et la LCR|first=Les clés de la banque-|last=FBF|website=Les clés de la banque Entrepreneurs|access-date=30 March 2018|archive-date=31 March 2018|archive-url=https://web.archive.org/web/2018033...tsByIDWeb/7PUHXY?OpenDocument|url-status=live}}</ref> |
| When a company engages in many of such transactions, for instance by having provided services to many customers all of whom then deferred their payment, it is possible that the company may be owed enough money that its own liquidity position (i.e., the amount of cash it holds) is hampered, and finds itself unable to honour their own debts, despite the fact that by the books, the company remains solvent. In those cases, the company has the option of asking the bank for a short-term loan, or using any other such short-term financial arrangements to avoid [[insolvency]]. However, in jurisdictions where promissory notes are commonplace, the company (called the ''payee'' or ''lender'') can ask one of its debtors (called the ''maker'', ''borrower'' or ''payor'') to ''accept'' a promissory note, whereby the maker signs a legally binding agreement to honour the amount established in the promissory note (usually, part or all its debt) within the agreed period of time.<ref>{{cite book|last1=Hinkel|first1=Daniel F.|title=Essentials of Practical Real Estate Law|date=2012|publisher=Cengage Learning|isbn=978-1133421498|pages=174–175|url=https://books.google.com/books?id=9XoJAAAAQBAJ|access-date=11 May 2018|archive-date=1 July 2023|archive-url=https://web.archive.org/web/2023070...gle.com/books?id=9XoJAAAAQBAJ|url-status=live}}</ref> The lender can then take the promissory note to a financial institution (usually a bank, albeit this could also be a private person, or another company), that will exchange the promissory note for cash; usually, the promissory note is cashed in for the amount established in the promissory note, less a small discount.<ref>This transaction requires legal paperwork and negotiation on terms, primarily focusing on deciding how much this series of future payments is worth right now.</ref>==References==<ref name="DICARO" group="DICARO & ASSOCIATES">{{cite web |last1=Dan |first1=Fyre |title=How much can you sell a promissory note for |url=https://www.dicaronotebuyers.com/blog/how-much-can-you-sell-a-promissory-note-for/ |website=https://www.dicaronotebuyers.com/blog/how-much-can-you-sell-a-promissory-note-for/ |publisher=Dan Fyre |access-date=May 5 2024 |ref=Dicaro}}</ref> | When a company engages in many of such transactions, for instance by having provided services to many customers all of whom then deferred their payment, it is possible that the company may be owed enough money that its own liquidity position (i.e., the amount of cash it holds) is hampered, and finds itself unable to honour their own debts, despite the fact that by the books, the company remains solvent. In those cases, the company has the option of asking the bank for a short-term loan, or using any other such short-term financial arrangements to avoid [[insolvency]]. However, in jurisdictions where promissory notes are commonplace, the company (called the ''payee'' or ''lender'') can ask one of its debtors (called the ''maker'', ''borrower'' or ''payor'') to ''accept'' a promissory note, whereby the maker signs a legally binding agreement to honour the amount established in the promissory note (usually, part or all its debt) within the agreed period of time.<ref>{{cite book|last1=Hinkel|first1=Daniel F.|title=Essentials of Practical Real Estate Law|date=2012|publisher=Cengage Learning|isbn=978-1133421498|pages=174–175|url=https://books.google.com/books?id=9XoJAAAAQBAJ|access-date=11 May 2018|archive-date=1 July 2023|archive-url=https://web.archive.org/web/2023070...gle.com/books?id=9XoJAAAAQBAJ|url-status=live}}</ref> The lender can then take the promissory note to a financial institution (usually a bank, albeit this could also be a private person, or another company), that will exchange the promissory note for cash; usually, the promissory note is cashed in for the amount established in the promissory note, less a small discount.<ref>This transaction requires legal paperwork and negotiation on terms, primarily focusing on deciding how much this series of future payments is worth right now. |
| Once the promissory note reaches its ''maturity date'', its current holder (the bank) can execute it over the emitter of the note (the debtor), who would have to pay the bank the amount ''promised'' in the note. If the maker fails to pay, however, the bank retains the right to go to the company that cashed the promissory note in, and demand payment. In the case of unsecured promissory notes, the lender accepts the promissory note based solely on the maker's ability to repay; if the maker fails to pay, the lender must honour the debt to the bank. In the case of a secured promissory note, the lender accepts the promissory note based on the maker's ability to repay, but the note is secured by a thing of value; if the maker fails to pay and the bank reclaims payment, the lender has the right to execute the security.<ref>{{cite web|url=https://www.sec.gov/investor/pubs/promise.htm|title=SEC.gov - Broken Promises: Promissory Note Fraud|website=www.sec.gov|access-date=30 March 2018|archive-date=19 September 2018|archive-url=https://web.archive.org/web/2018091...gov/investor/pubs/promise.htm|url-status=live}}</ref> | Once the promissory note reaches its ''maturity date'', its current holder (the bank) can execute it over the emitter of the note (the debtor), who would have to pay the bank the amount ''promised'' in the note. If the maker fails to pay, however, the bank retains the right to go to the company that cashed the promissory note in, and demand payment. In the case of unsecured promissory notes, the lender accepts the promissory note based solely on the maker's ability to repay; if the maker fails to pay, the lender must honour the debt to the bank. In the case of a secured promissory note, the lender accepts the promissory note based on the maker's ability to repay, but the note is secured by a thing of value; if the maker fails to pay and the bank reclaims payment, the lender has the right to execute the security.<ref>{{cite web|url=https://www.sec.gov/investor/pubs/promise.htm|title=SEC.gov - Broken Promises: Promissory Note Fraud|website=www.sec.gov|access-date=30 March 2018|archive-date=19 September 2018|archive-url=https://web.archive.org/web/2018091...gov/investor/pubs/promise.htm|url-status=live}}</ref> |
Okumaya devam et...