Commercial Transactions and Financial Instruments
Order
A request that a customer makes to a supplier to purchase goods or services. It is managed by the purchasing department. It is conditional (subject to compliance with a specified condition) and requires a signature (the order is made, establishing the conditions, and the other party accepts). It involves a buyer and seller, typically communicated through a business letter or fax.
Delivery Note (Albaran)
Four copies are created: original and copy for the customer’s sales department, and a copy for the warehouse. It can be valued or unvalued.
Invoice
A document required to justify a purchase. Businesses and professionals, including those in subsistence, are obligated to issue invoices.
- Gross Amount (Importe Bruto): Calculated by multiplying the quantities by the unit price and summing the results.
- Commercial Discount (Dto. Comercial): Given to promote an item; it is deducted from the gross amount.
- Volume Discount (Dto. Rappel): Applies to large quantities; it is deducted from the gross amount.
Payment Methods
- Cash (Al Contado): Receipt, check, cash, credit, or debit card.
- Deferred Payment (Aplazado): Bill of exchange or promissory note.
Check
A document that contains a payment order to a bank or financial institution.
- Drawer (Librador): Issues the check.
- Drawee (Librado): The bank.
- Payee (Tenedor): The person possessing the check.
- Endorser (Endosante): A person other than the drawer who transmits the check to a third party through endorsement.
- Guarantor (Avalista): A person who guarantees payment.
Types of Checks
- Bearer Check (Emisión Cheques Portador): Paid to the person presenting the check.
- Order Check (A la Orden): Paid to the designee or a third person.
- Nominal Check (Nominativo): Can only be charged by the person named on the check.
- Certified Check (Cheque Conformado): The bank certifies that there are sufficient funds.
- Crossed Check (Cruzado): Can only be collected by a bank or a bank customer.
- Payable to Account Check (Para Abonar En Cuenta): Cannot be cashed; it must be deposited into a bank account.
- Banking Check (Bancario): The bank charges a commission.
Endorsement
The drawer gives a payment order to the bank, and the policyholder receives payment. It can also be endorsed to a second holder (payee) and, in turn, to a third holder (payee). Time limits for presentation: 15 days (Spain), 20 days (Europe), 60 days (Outside Europe).
Bank Transfer
An order from a client to transfer funds from their account to another.
Debit Card
Requires funds to be available in the account.
Credit Card
Can be used without having money in the account; interest is charged later.
Bill of Exchange (Letra de Cambio)
A document in which a person orders another to pay a sum of money at the time of maturity. The person who has the letter in their possession may keep it in a bank. The drawer (issues and orders payment), the drawee (receives the payment order), and the taker (who has the letter). It includes a stamp whose value is a function of the nominal amount. The bill of exchange is a tax stamp.
- Front (Recto): Designation of the bill of exchange, mandate to pay a sum of money, the currency of the bill, drawee’s name, maturity date, place of payment, borrower’s name, date and place of issuance, and the maker’s signature.
- Back (Reverso): Place for endorsement of the bill, inclusion of the guarantee, and any explanations from the parties.
Endorsement (of a Bill of Exchange)
Normal circular mode unless the bill of exchange includes a prohibition of endorsement.
Payment (of a Bill of Exchange)
Compliance with the bill of exchange. The order established by the point has to be paid on the specified date. When the drawee fails to pay, the holder takes action against them. It is necessary to prove that the bill had been submitted for payment. If it is not paid, it is called a Protest Title (Título Protesto).
Promissory Note (Pagaré)
A document that includes a promise to pay a certain amount of money by the issuing company to a holder. It is a formal title. It contains: Designation of the promissory note, promise to pay an amount, maturity date, place of payment, name of the person to whom payment must be made, and the signature of the person who issued the promissory note.
Capitalization
Projecting an amount to the future. It determines the final capital over time with an initial capital at a given interest rate.
Cn (Final Capital), Co (Initial Capital), N (Time), I (Interest, % per unit)
Discounting (Actualizar)
Transforming a future value into a present amount.
Warehouse (Almacén)
A physical location where merchandise is kept. The stock in the warehouse can be valued at acquisition price or production cost.
- Acquisition Price: Invoice amount, expenses to the store, and indirect taxes.
- Production Cost: Purchase price of raw materials plus direct and indirect costs.
Weighted Average Cost Method (PMP)
The arithmetic average of the prices associated with different numbers of units.
FIFO (First-In, First-Out)
This method values the inventory leaving the warehouse at the price of the items that have been stored the longest. It is necessary to know the order of entry and the price of the stock. Examples: 20 @ €6 = €180 and 360 @ €0.96 = €3,000 to €6,000; €16.83 from €24,000 to €48,000; €134; €96,000; €538.