Commercial Paper Accounting Terms
They are better suited for large enterprise groups that implement financial management.
Currently, the qualified issuers of super & short-term commercial paper include AAA central enterprises and their core subsidiaries with assets and revenues accounting for over half of their respective groups’ total size.
A basic limitation of the commercial-paper market is that its resources are limited to the excess liquidity that corporations, the main suppliers of funds, may have at any particular time.
Another disadvantage is the impersonality of the dealings; a bank is much more likely to help a good customer weather a storm than is a commercial-paper dealer.
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Commercial paper is an unsecured, short-term loan issued by a corporation, typically for financing accounts receivable and inventories.
Maturities on commercial paper are usually no longer than 9 months, with maturities of 1-2 months being the average.