Business development and management solutions in Spain

Financial considerations

Banks have an important influence in Spain, and many companies lean heavily on the services they provide. At the same time costs are high, although the advent of foreign competition is improving the situation. Working relationships between banks and their clients are important, and many finance directors prefer to go to the devil they know rather than try something new.
Banking laws and regulations are onerous, with a jargon that takes time to get used to, and many differences from the rest of Europe. For example, cheques must be signed on the back when being paid in to an account. Stamp duty is payable on drafts and banking documents, although many banks have devised theoretical ways of avoiding this. Regulations covering bad debts are also complicated, and advice should be sought before embarking on a new venture.
The most commonly used method for customer collection in Spain is by bank draft (letras or efectos), and collection is 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 earlier, these are usually notarized.
Export and import finance is traditionally arranged through the local banks, many companies relying on their bown ank 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 starting to make their mark.