Practical dictionary of financial instruments

Practical dictionary of financial instruments

Not only loans and credits live the entrepreneur. Also, there is a broad range of financial instruments that you can use to get the most out of your business. In we have developed a full dictionary with the options that you can not miss.

Loans, promissory notes, leasing, renting … do you know what each thing is? Do you know what the Forward or Swap consists of? Check out our dictionary and discover new options that you might never have heard of.

Loan and credit

In fact, loan contract is one in which the financial institution delivers to the customer an amount of money, the latter being obliged to repay such amount, plus accrued interest. Current account credit agreement is one in which the financial institution is required to make available to the client funds up to a specified limit and a predetermined period, with interest being collected periodically on the amounts arranged, movements that will be reflected in a current account.

Company Promissory Notes

The private document, legally extended, by which a person (issuer or subscriber) agrees to pay another (taker or beneficiary) a certain amount of money on a specified date in the document.

Credit transfers

In fact, they are loans with contractual forms by which the lender can assign a posteriori, participations in them. The assignment may be through promissory notes or assignment contracts, with custom clauses according to the convenience of the parties.


It is a bilateral commercial agreement whereby one party, the company leasing, is obliged to give to another, the lease, the use of a property for a particular time, in exchange for payment of a regular income. Indeed, the amount of the rent includes the right to use the equipment. The maintenance of the same and insurance that covers the possible losses of the material.

Furthermore, the renting company opens a space between manufacturer or supplier. And the end customer thanks to the discounts and economies of scale that it achieves through its intermediation.


It is a contract whereby a debtor or third party effects, in particular, immovable property or real rights over them to guarantee compliance with a principal obligation. So that, overdue and unsatisfied, can be produced on the selling price of that asset. In preference to the rights of any other creditor.


Contract by which a debtor or a third party mainly affect a free thing to the payment of debt, with the same consequences as in the mortgage in case of expired and not satisfied.


It is a figure that involves the purchase of bills of exchange accepted, documentary credits or any other form of the promise of payment, instrumented in foreign exchange. The acquirer of the effects expressly waives its legal right to claim against the previous debt suppliers the “no recourse” clause.

It can be a straightforward and cheap solution to other alternatives. To penetrate markets such as Eastern Europe, Morocco, India, Vietnam or any other market considered as a “country of risk.”


It is an operation that consists of the transfer of the “collection portfolio to customers” (invoices, receipts, bills … without pocketing) from a Holder to a firm specializing in this type of transactions (Factor company), making short-term sales In cash sales, assuming the risk of insolvency of the owner and taking charge of its accounting and collection.

Warranties Rebindings

An enterprise financing instrument that facilitates the SME’s access to credit, through the provision of guarantees by guarantee and re-invigoration.


Discount is the fact of paying in money the amount of a bond (generally bills of exchange) of credit not due, after deducting interest and legal losses for the time between the advance and the maturity of the credit.

Venture capital

It is a long-term minority and temporary investment in small and medium-sized enterprises with excellent prospects of profitability and/or growth. This activity is carried out by specialized companies of capital investment, which add value to the purely financial.


It is a lease (lease) of property “movable or immovable” with the particularity that you can opt for its purchase. Its primary use is the obtaining of long-term financing by the SME.


Furthermore, it is a contract between two parties that obliges the holder to purchase an asset for a certain price on a predetermined date (six months). In fact, the concept of forwarding exists in the form of various instruments. It is traded primarily through the treasury departments and/or international trade and currencies of some financial institutions: the over-the-counter ( OTC ) market.

Financial Futures

A future can be defined as a binding contract or agreement between two parties to which they commit to exchange an asset, financially physically, at a certain price and at a pre-established future date. Financial futures function mainly in the same way as a future of physical assets. Unlike these futures, the asset base of the contract is not a physical asset.  However a fixed interest instrument or a currency exchange rate between two currencies.

Financial options

The options are similar to futures contracts in which only a small part of the value of the underlying security needs to be paid initially. In fact, this type of transaction can lead to large gains or losses with small investments.


It consists of a financial transaction between two parties that agree to exchange monetary flows during a determined period following accepted rules. Its objective is to mitigate the fluctuations of the currencies and of the interest rates.

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