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What Is Usance?
Let me explain usance to you directly: in international trade, usance—sometimes referred to as tenor—is the allowable period of time, as permitted by custom, between the date of the bill and its payment. You'll find that the usance of a bill varies between countries, often ranging from two weeks to two months. It also covers the interest charged on borrowed funds. Usance comes from the action of usury, as well as the use of goods for economic purposes.
Understanding Usance
You should know that usance applies to many items purchased on credit. For instance, if a company buys materials from a supplier, they receive the goods today, the bill arrives today, but they might have up to 30 days to pay it. That 30 days is the usance for the sale.
When someone lends money, they charge a usance in exchange for the service. Here, usance relates to the profits made from lending the principal.
Usance is also the process of using goods to fulfill economic needs. This includes refining materials into finished goods or consuming goods to satisfy those needs.
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