Posted in Finance, Accounting and Economics Terms, Total Reads: 247
There are several meanings of the term “Usance”
A) It refers to the allowable time, given by custom, between the date of bill and its payment. The usance of a bill varies significantly between different countries. It could range from two weeks to two months.
B) It also refers to the interest charged on borrowed funds. This meaning derives from the action of usury.
C) It refers to the use of goods for economic purposes.
Let us look at these contexts in detail:
A) Usance is applicable to items purchased on credit.
For instance, a firm which has purchased goods from its supplier will receive the goods today. However, the firm could have up to 30 days to pay it. The 30 days in this case, is what we can call as the usance for the sale.
B) When a person lends money, he will charge a usance in exchange for the service he is providing. In this situation, usance can be understood to be the profits made by lending of the principal amount.
C) Usance is the process of using goods to satisfy certain economic needs.