The LIXI Data Standards cater for a range of products that are used by businesses to manage their capital and cash flow, detailed below.
The financial institution allows a business owner to overdraw existing business accounts up to an approved limit. The lender charges interest on the amount overdrawn. Businesses often use overdrafts as small loans and usually to cover cash flow gaps.
In LIXI2, this is represented with a LoanType attribute value of "Overdraft".
Line of Credit
A revolving credit facility. This loan offers accessibility and flexibility because the business may access the funds in their entirety or in part at any time. Interest is calculated only on funds drawn down and principal repayments are not required until the end of the term.
In LIXI2, this is represented with a LoanType attribute value of "Line of Credit".
A loan between a business and a lender that is repaid in set amounts over a set period. This type of loan is perfect for businesses that prefer predictable payments.
In LIXI2, this is represented with a LoanType attribute value of "Term Loan".
Cash Flow Finance
Many businesses provide services to their clients upfront, invoice the client and then wait for payment, often up to 30 days. A lender who offers a business cash flow finance makes a payment to the business calculated on outstanding debtors which means the business can better manage cash flow gaps. There are two common cash flow finance methods used by businesses:
Invoice Financing or Invoice Discounting – a lender pays a business a percentage of the business’ unpaid debtor invoices, and the lender uses the debtors as security.
In LIXI2, this is represented with a LoanType attribute value of "Invoice Financing Loan".
Trade Finance Loan
A trade finance loan for financing domestic and international trade, typically used to protect against international trade's unique inherent risks, such as currency fluctuations, political instability, issues of non-payment, or the creditworthiness of one of the parties involved.
In LIXI2, this is represented with a LoanType attribute value of "Trade Finance Loan".
A Commercial Bill Facility is an arrangement between a client and the bank under which one or more Bills may be drawn down (up to a maximum credit limit). A Borrowing Bill is a promise made by a client to pay the bank a specified amount (the Face Value of the Bill) on a specified future date (the Maturity Date).
When the Bill is Drawn Down, the bank pays to the client the Settlement Price (an amount less than the Face Value). At maturity, the client will pay to the bank the Face Value, which amounts to the Settlement price plus the discount (interest).
In LIXI2, this is represented with a LoanType attribute value of "Commercial Bill".
First Published: October 21, 2020