What is and why use the bank's acceptance?

Most people who have used the services of banks at least once are aware of the bank's credit, deposit programs, the possibility of making various payments and the like. But in fact, there are many more banking services that these financial institutions provide, for example, operations with securities, various guarantees. We will understand what acceptance in a bank is and what it has application in financial transactions, as the bank sets a rate.

The concept of acceptance

First of all, let's start with a concept, having familiarized with which, it will be possible to move on. The acceptance of a bank is a kind of document that is used in some international settlement transactions. It allows any company to use not only its business reputation, but also the rating of the bank due to the fact that the bank undertakes to pay a certain amount to the acceptor of the acceptance.

Accordingly, if the bank is at everyone's ears, has the confidence of people and various organizations, its services in international operations will even be useful to companies that do not have such a reputation. That is, it is profitable for companies to conclude deals with external partners, and it is good for the bank that it earns its reputation.

An acceptance in a bank is an opportunity for a buyer to make a deal with partners more quickly. But in order to be able to use such a security, the buyer himself must meet certain requirements that are set by the bank.

This can be not only the individual requests that the bank develops for its clients based on the experience of such operations, but also the statutory requirements determined by state regulators.

Acceptance of the bank is a kind of credit guarantee - the buyer, as it were, takes a certain amount of money from the bank with an acceptance, undertaking to pay it off before the expiry of a certain date. He can buy anything at a specified amount, using an acceptance. At the same time, the bank undertakes to pay cash on this paper to the bearer already.

Preliminary and subsequent acceptance

Acceptance can be preliminary and subsequent.

When presenting a preliminary acceptance to the payer, it is necessary within three days to resolve the issue on out-of-town accounts and for one day - for intra-city bills.

The payment requirement for subsequent acceptance is paid immediately, but the payer has in stock 3 days in order to verify the correctness of the money transfer. If necessary, there is an opportunity to refuse acceptance.

How does the bank determine the rate for its acceptance?

Calculating the rate for one or another of the acceptances, the bank, in the first place, determines the value at which it can sell it in the free market. For example, for acceptances that are questionable, the banking institution must establish a rate that will compensate for possible losses.

That is, the bank must guarantee a certain amount of reservation, so as not to damage its solvency and liquidity of assets.

Advantages of financial services

Due to the fact that it is issued by a serious financial institution, which is the bank, fulfillment of obligations by the parties-participants of such relations is guaranteed. This gives confidence to all contracting parties, which is especially important for creditors.

In addition, that the bank's acceptance helps to conclude transactions at the international level, such operations are mainly carried out by banks that have international status. And everyone understands that the bank is simply not accepting anybody's acceptance, but will do it only if it is 100% sure that the buyer has fulfilled its obligations.

For the buyer, the bank's acceptance is not less beneficial than to the other parties to the relationship. First, thanks to the bank guarantees received , the scope of such a security for performing settlement operations is quite wide. Secondly, given the timeframe during which the buyer will have to pay off the debt, he can have time to buy goods, earn on their sale and then pay out money on the obligations undertaken to the bank. That is, literally, you can make money with this security.

Another application

In addition to the above methods of use, the acceptance of the bank can bring profit in another way. There are cases when a banking institution sells its own acceptances, forming them into independent assets. In this case, using a small discount, the bank can quickly find a buyer, since the latter will earn on the difference between the amount of purchase and the nominal value of the acceptance.

This result is profitable both for a bank that was able to quickly realize an asset, and for a buyer who has the opportunity to get additional profit.