Currency Exchange and Similar Services

Maybe this was already covered, but I can't find anything and things are getting pretty urgent, so I'd really appreciate some clarity here.

So, here's the deal: Company A has a product they're selling to B. Company B doesn't want to cough up the cash right away, but since they're a massive client and having them on the books would boost Company A's credit rating, Company A is looking at other ways to get paid.

I'm guessing there might be a way for Company A to grab a bank loan using some kind of guarantee, a Contract Corp, a promissory note, a bond, or something else entirely, where the bank eventually collects from Company B.

How does that actually work? What's the deal with promissory notes or other paperwork? And what kind of interest rates are we talking about when dealing with the bank? How do you even bake those costs into the price for Company B?

Thanks for the help!

Heh, I think we need more info here.

Has the shipment actually gone out and was the invoice sent?

When does B. Company B actually want to pay? What’s the net term on the goods?

If it’s only 10 days, I guess you'll have a hard time finding any bank willing to finance a client on such a short leash.

Anyway, it's possible for Company A to get a short-term loan from a bank, provided that B. Company B is actually legit (ideally they use the same bank) and agrees to sign an assignment or a cession agreement. It all just depends on how the bank sees things. Interest rates are steep, though—probably hovering around ten percent annually.

A promissory note is a bit more complicated, and I doubt a massive corporation would just hand one over to a "small" outfit like yours. Then again, if you do have a note and they miss the deadline, you’ve got other options... 😉

Best,
Chris Ruiz10

The goods aren't ready yet, but they'll ship out and an invoice will follow. Basically, we need to get a Contract Corp signed first.

Payment terms are 90-120 days, so I probably wouldn't even bother pushing for 10.

Maybe just run down to Chase and see what they can actually do for you 🙂

From what I gather, you can't really deal with assignments or factoring until you actually have a receivable on the books. But, I guess you could head to the bank right now to see what your loan options look like and if they’re going to demand extra collateral besides just an assignment and a promissory note

Also, check if Company B is even willing to sign off on an assignment. If they do, they aren't paying you anymore—they're sending that money straight to the bank to cover the loan. Just a heads up: with an assignment, you’re still the one on the hook. If Company B flakes after 120 days, the bank is going to come after them, but if that fails, they'll just come for you instead 🙂
There's definitely risk involved. Though, since the bank is part of the equation, companies usually pay up because they don't want to get on a major lender's bad side.

Fingers crossed.

Best,
Chris Ruiz10 👋

Look, here’s the deal: If Company B issues a Bill of Exchange because they need to push back a payment, that document goes straight to Company A. Now, Company A isn't obligated to accept it—it's entirely their call. There are legitimate ways to collect on such an instrument. Once Company A holds that Bill of Exchange, they can simply sit on it until the maturity date and then collect the funds. In a gaming context, this means Company A eventually gets the full amount they are owed.

If Company A needs liquidity before that date hits, they can sell the Bill of Exchange or take it to a bank for discounting. Naturally, a bank isn't running a charity. Company A won't see the face value of the note; instead, they'll receive an amount reduced by the discount and processing fees that Bank of America will charge them. That’s just basic lending principles. Essentially, the bank provides the cash to Company A in lieu of waiting for Company B, which functions as a form of credit. Since Company A is the one seeking immediate cash and effectively deviating from the original terms, they shoulder the interest costs. Eventually, the bank settles the claim with Company B.

Using a Bill of Exchange is a conscious risk taken by both parties. But honestly, any extended delay in payment carries that same level of risk. These instruments have expiration dates, and the specific type of note dictates the legal framework for collection.

This is a very simplified version of how it works. For the granular details, you’ll need to dig into some textbooks, ask around in real life... or just head down to your local JPMorgan Chase and ask them for the specifics.