The promissory note is a document or commercial paper through which the issuer, who may be a natural or legal person undertakes or obliges to make the payment of the amount set in the promissory note to another person / company within the agreed period.
Promissory notes are often used due to the trust that many companies show in them, currently they are one of the safest ways to pay, perform and streamline commercial operations also, by discounting promissory notes, it is possible to obtain convenient and strategic financing for the progress of the deal.
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There are several ways to classify promissory notes, for example, when considering the way in which they are issued, they can be of two types: promissory notes to order and promissory notes not to order; This time we are going to know what are the main characteristics that each one presents, as well as each of the aspects in which they differ from one another.
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- I will pay to the order
This type of commercial effect is characterized by being:
- A business document.
- A payment obligation for the issuer with respect to the legitimate beneficiary.
- A right of the beneficiary on the amount of money indicated.
- Indicator of the term in which the issuer has agreed to make the payment to the natural or legal person who is the beneficiary of the promissory note.
- A promissory note that allows you to assign your right to a third party through its endorsement.
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- I will pay not to order
The promissory notes not to order are characterized by being:
- A business document.
- A payment obligation for the issuer with respect to the legitimate beneficiary.
- A right of the beneficiary on the amount of money indicated.
- Indicator of the term in which the issuer has agreed to make the payment to the natural or legal person who is the beneficiary of the promissory note.
- A promissory note that does not allow you to assign your right to a third party through your endorsement.
- A promissory note in which its issuer does not allow the assignment of the right to another beneficiary, since it only allows the assignment or transmission of the right through of an assignment of credit by contract, this case occurs when a company has a loan in its favor and transfers or assigns it in favor of another institution.
- Generally more complicated and more expensive than a simple endorsement.
Differences between I will pay to the order and I will pay not to the order
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Between both types of promissory notes there are some similarities and some differences, among the aspects in which they differ, we can mention:
The main difference is the possibility or not of being endorsed; while the promissory note allows its endorsement, in the non-order promissory note the only way in which the Issuer transfers its right to third parties is through the assignment of credit, it does not allow assignment through the endorsement.
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In the first case, it is much simpler and more flexible, and the savings it entails in time and money is also evident. especially when using it to obtain some type of financing prior to the term stipulated for your payment. On the other hand, promissory notes of the first type do not require a notification to the issuer, however, in order to assign the promissory note not made to order must be expressly communicated to the signer, this process also has an impact on costs.
This clearly is a difficulty when trying to discount these documents looking for immediate financing, its cumbersome and slow process prevents obtaining financial resources in the short term.
With regard to promissory notes that are unpaid or returned, they can be collected amicably or through executive channels, a right that The receiver loses, however, the financing institutions have methods to verify that the issuer receives the corresponding notification of assignment.
