What is the purchase of money to secure money?
Interesting of money purchase is a type of loan agreement between two parties that allows the seller to be protected by the buyer from credit failure. It will do so by allowing the seller to have a legal right to basically repossisse any future goods that will sell to the buyer if future payments are not immediately made. This is particularly useful when the buyer holds the goods as supplies. Interesting money for purchase allows the seller to have the rights to inventory before other creditors who could have claims for the buyer's assets.
Credit arrangements are the way in which a large number of business are carried out in the modern world. This is especially true in terms of negotiations between two companies, where one company provides goods of another company, which then holds the goods as an inventory until it can sell them. If the buyer has financial problems, the initial seller of the goods could feel the consequences of these problems. For this reason, the security of the purchase of money is used to othe seller's protection before the buyer's loan.
As an example, imagine a situation where the company has an existing agreement on the sale of goods to a distributor, which then sells the goods to the public. Unfortunately, the distributor was consistently late for recent payments, causing some horror by the sales company. The distributor contacts the seller and promises to be able to recover, and the seller decides not to give up a profitable relationship. Instead, he agrees to ensure the purchase of money with the distributor.
Interesting of money purchasing allows the sales company to be protected against other problems with a distributor loan. Part of the agreement requires the seller to contact any other creditors with security demands on the distributor operations. In this case, the seller gives these other creditors to know that the seller's own claims on the inventory that sells to the distributorslots other demands.
If the distributor makes future payments on time, the credit relation may continue. On the other hand, if the distributor continues to fight payments, the seller can then overturn the goods that the distributor holds as an inventory. In addition, if the items have been sold and the distributor is still failing, the seller can claim profits from the goods sold. It is important to realize that the interest of securing the purchase of money only covers future goods sold and not any outstanding debts that arose before agreement.