Financial Considerations

• Banks have an important influence in Spain, and many companies lean heavily on the services they provide. Working relationships between banks and their clients are important, and a bank will be more prepared to offer finance to a client they know well rather than a new customer.
• However with the advent of the recent economic crisis, the days of “easy finance” are over, and it is becoming more and more difficult for companies to find the facilities they need to set up and continue their businesses. The banking sector has also undergone a major overhaul, with all but the most solid of the traditional savings banks (Cajas de Ahorro) undergoing financial difficulties and being absorbed in to other entities, and smaller and medium sized companies in particular have seen their credit lines cut dramatically over the last few years.
• The Spanish banking system is similar to those of France, Italy and other Latin countries. The most commonly used method for customer collection is by bank draft (recibos, letras or efectos), and collections are made through the buyer and seller’s local banks. Probably the cheapest and most usual form of finance in Spain is through the discount with recourse of these drafts, lines being established with the banks for this purpose. Where a seller does not know his customer well, he may ask for the draft to be accepted by the customer, which gives greater legal standing to the debt.
• Other forms of payment are promissory notes (pagarés), cheques, bank transfers and plain old cash. Credit cards are being used more, although commissions are still high. Forms of finance include bank loans (préstamos) and overdraft facilities (pólizas). As mentioned elsewhere, these are usually notarized.
• Import and export finance is traditionally arranged through the local banks, many companies relying on their own bank to set up the necessary documentation and other arrangements. Deals are often insured through the official export credit insurance agency CESCE, although other large international institutions are also present in Spain.