The long term note (ltn) is a credit instrument that implies a future Payment commitment on a specific date and place and is also one of the most common forms of payment in commercial transactions, especially between companies. In addition, it allows you to obtain circulating financing through your advance both in the banking and non-banking circuits.

The Promissory note is regulated by the Exchange and Check Law, which equates the promissory note to the exchange bill in almost all its characteristics, including the executive force. Since then, the promissory note began to gain ground to the bill of exchange in commercial transactions due to its simplicity and its better adaptation to computer advances.

Being regulated, it is a widely accepted form of payment that is easy to finance, both in financial facilitators like the banking circuit and outside of it, making it a powerful financing tool for companies.

Long term note (ltn) requirements

The Exchange and Check Law establishes some minimum requirements that must appear in the Document so that it can be considered as a promissory note:

• It must be in writing that it is a promissory note, and in the same language as the rest of the document. It must contain the unconditional commitment to pay in a fixed amount.
• Typically, this amount appears in numbers and letters, although the letter always prevails in case of inconsistency.
• You must indicate the due date and the place to make the payment. It must contain the name of the beneficiary of the financial facilitators.
• The date and place of issuance of the document must appear. It must include the personal signature of the natural or legal person who agrees to pay.

I will pay to order and I will pay not to order

A promissory note will be considered “not to order” when there is express mention of this clause in the document:

• I will pay not to order: when the document includes this mention, it cannot be transmitted to third parties by endorsement but must be transmitted by assignment of credit. This small change is very important, since, formally, a credit assignment must be reliably communicated to the issuer of the promissory note, and the latter can oppose its transmission.
• Promissory note: if a promissory note does not expressly contain the clause “not to order”, it is considered to be made to order. This means that it can be transmitted to a third party without consent or communication to its issuer. The endorsement is carried out in a very simple way by signing the document by the endorser and the endorsee on its back and without the need for communication to the issuer, who cannot oppose the transmission of the document.

Advantages and disadvantages of the promissory note by financial facilitators

Advantages of the promissory note

• For the recipient, it is a firm payment promise, with enforceability in the event of non-payment.
• There are many ways to finance the collection, both at the bank and non-bank levels, due to their wide acceptance and regulation.
• The creditor has control over the issuance of the document, which is an advantage for him.
• Long term note (ltn) is a very flexible document, it allows its transmission in a simple way and it can be guaranteed by the endorsement of third parties.