Promissory Note

Overview

A promissory note is a financial document in which one person (the maker) promises to pay a specified sum to another person (the payee) on a specified future date. It constitutes an unconditional promise to pay.

Common Use Cases

• Facilitating commercial transactions.
• Securing a deferred payment.
• Improving cash-flow management.
• Guaranteeing trade credit.

Examples in Small Businesses

• Purchasing supplies from vendors on deferred terms.
• Arranging deferred payments for long-term projects.
• Negotiating payment terms with customers.