- Confirming is a financial product, which begins to spread with a certain familiarity among the financial users of companies. A common problem is the lack of criteria and annotation in the corresponding accounting records, both in the buyer and in the corresponding supplier. an exercise to approach said problems.
CONFIRMING
- It consists in that the Financial Entity, assumes the payment management of a specific client.
That is to say:
- It assumes the management of payments for purchases and expenses of its client It communicates to the beneficiary said future payment It sometimes offers the anticipation of this payment to the beneficiary of the same, discounted from the agreed interest rate.
CONFIRMING - Advantages
1. It supposes a good image before third parties,
2. It reduces its administrative costs and the possible errors and incidences for the management of the payments avoided,
3. It avoids stamps in exchange theories to extend,
4. It avoids costs of emission in checks and promissory notes,
5. It homogenizes the system of payments to third parties,
6. It systematizes the possibility of financing its creditors
7. It improves in general its position before the bank.
8. You can distribute the float of the paychecks, between the Bank and the payer
9. It helps the providers to finance
10. You can obtain additional financial income
As inconveniences,
- highlight the "immobility" of the modality of future payment, administratively adapt to the process started, the necessary link to a specific entity. z In addition, CIRBE, (only for Confirming and not for Direct Payment) grows by advances
ACCOUNTING APPROACH:
1 - Moment of the formalization of the confirming line with the Bank
2 - Remittance of confirming to the Bank for its payment and simultaneous communication by the Bank to the Supplier
3 - Supplier decides to anticipate the confirming
4 - The due date of the payment of the unanticipated confirming arrives
5 - The due date of the advance confirming payment arrives
6 - The Bank pays us commission on the business assigned by the advances used by the suppliers, under the enabled confirming line
