Commercial credit. Commodity credit. Differences and advantages.

The basis of financial relationships between enterprises and organizations is the commodity and commercial form of lending. Sometimes it is much more profitable to attract a business loan than to withdraw money from your own turnover. Especially for small commercial enterprises with low solvency this form Doing business is the most acceptable. Very often confuse two such concepts: commodity and commercial credit. But the difference between them exists.

Commodity credit

According to Article 822 of the Civil Code of the Russian Federation, such a form of lending is a loan obligation under terms of provision by one party for another Goods, determined by generic characteristics. The opposite party guarantees the return of the goods in the agreed period of the same kind and in the same amount. Such a contract is reimbursable, which implies the ability to establish interest for the use of the goods. The form of interest can be arbitrary: both monetary and natural. Such a loan agreement is acceptable in situations where the enterprise particularly needs production raw materials or materials and thus occupies them.

Commercial loan

The commercial form of lending is the possibility of postponement, payment by installments for goods or for works and services performed. This concept also includes various advances, advance payment for goods, work, service. And provides for interest for the use of borrowed funds. Contract for Commercial credit is regulated by Article 823 of the Civil Code of the Russian Federation.

If we compare commercial and bank credit, the advantages of the former are obvious. Such a transaction is beneficial for both parties. The seller expands the client base of consumption of his goods, and the buyer acquires the required goods, for which he does not have cash. At the same time, the turnover of both enterprises is increasing. Which is the ultimate goal of such a loan program.

But commercial credit has a minus. First, it is short-lived. Secondly, it is limited to the seller by the quantity of commodity stock, and from the buyer's side - by its creditworthiness. Therefore, to increase the capacity of enterprises are put into circulation to provide credit to a bill and checks. Thirdly, with such a commodity-money circulation, there is a risk for both parties. Due to various situations, the seller may suffer, as the buyer can become bankrupt, and repaying the debt will be a problem for him. There is also a risk for the buyer, in case of untimely deliveries of goods from the seller, a change in the price of the goods is possible, which may become an unprofitable transaction.

The interest for each contract is set individually. Sometimes they can not be charged at all, since the contract implies the transfer of money or things. Also, under certain circumstances, interest may be applied as a penalty for failure to fulfill contractual obligations.

It can be concluded that commercial credit and commodity credit are concluded under different conditions, and one should be careful about the wording. Since the reclassification of one contract into another can result in a fine and a penalty for non-payment of tax.