Bad credit: what is it?
Let’s first define what we are talking about. In the financial sphere, a credit is defined as bad debt when it is highly unlikely that it will be paid by the debtor.
The current account overdraft is one of the most used short-term loans and consists in the possibility of using the sums made available by the bank at any time and is clearly a very convenient line of credit for businesses.
The commercial portfolio discount is one of the short term loans and consists in the conversion into cash, or in the disinvestment of the credits linked to the performance of the activity which must however be incorporated in a document of a foreign currency nature. This means that with the discount on the commercial portfolio, the banks advance to the customer the amount of a receivable from third parties that has not yet expired. The customer must then transfer the credit to the bank with the obligation, however, to repay the advance sum in the event of the debtor’s insolvency.
The advances on invoices and bank receipts are a type of payday loans alternative or short-term loan that is granted upon presentation of the related documents. However, bank receipts and invoices are not like bills of credit, but documents that certify the existence of a credit and therefore the right to collect a specific sum.
Provided that the customer is considered reliable, the bank will then decide whether to grant the advance subject to collection on commercial invoices or bank receipts.