Payout: Everything you need to know about value dates


Disbursement (value date) is the process of transferring money from one person to another. This can be in the form of transfer to the recipient's account, checks or cash. In credit, disbursement occurs when a consumer has applied for credit and submitted all required documentation to the bank. These documents may include, but are not limited to, pay stubs, bank statements, or business evaluations. Disbursement is usually made to the borrower's account or to a separate loan account. However, cash disbursement may also occur. From the day of disbursement, interest is charged on the loan amount. The method of disbursement depends on the particular loan agreement.

Wikpedia defines value date as follows:

"The disbursement (or value date) is the most important contractual obligation of the bank under banking law and the actual start of the credit risk in banking terms, so that the credit conditions provided for in the credit agreement must have been fulfilled by that time. Disbursement can be a physical act, when the credit funds are made available by cash disbursement or crediting of book money (such as in the case of a loan), or an immaterial act by releasing a credit line (such as in the case of an overdraft). Moreover, from the bank's point of view, the disbursement is the most significant leverage that can induce the borrower to fulfill the requirements. As a rule, the lender is not prepared to disburse the loan amount until and unless certain elementary conditions are met on the part of the borrower."

What is meant by value date?

Value date refers to the payment of sums of money. In this process, the cash balance of the payer is reduced in favor of the payee. It is the technical term for disbursement, which can take the form of transfer to the beneficiary's account, checks or cash. In the credit sector, value date occurs when a consumer has applied for a loan and submitted all the necessary documents to the bank.

What is a value assignment?

A value order is an instruction to the bank to pay out a certain amount of money to a specific person or institution. This instruction can be given in writing or electronically. A value date order can be used, for example, to make a payment for an invoice or a purchase. In this case, the ordering party must prove his identity and ensure that he has the necessary funds for the payment.

What does the value date of a land charge?

The value date of a land charge refers to the payment of the agreed loan amount to the borrower. A land charge is a type of security that a bank places on a property in return for a loan. This means that the bank has the right to sell the property if the borrower fails to repay the loan. The value date is usually in tranches, i.e. in installments, to ensure that the loan is not misappropriated.

What are value-dated debts?

Value-dated debts are debts where the payment is tied to a specific point in time. This means that the debtor does not have to pay back the money until a certain date, e.g. in the form of repayment installments. From the date of disbursement, interest is charged on the loan amount.

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