Facilitating Payment

DEFINITION of 'Facilitating Payment'

A financial payment that may constitute a bribe and that is made with the intention of expediting an administrative process. A facilitating payment is a payment made to a public or government official that acts as incentive for the official to complete some action or process expeditiously, to the benefit of the party making the payment.

In general, a facilitating payment is made to smooth the progress of a service to which the payer is legally entitled, without making such a payment. In some countries, these payments are considered normal, whereas in other countries, facilitating payments are prohibited by law and considered bribes. Also called facilitation payments.

BREAKING DOWN 'Facilitating Payment'

Generally, facilitating payments are demanded by low-level, low-income officials in exchange for providing a service to which the payer is entitled even without the payment. Certain countries do not consider facilitating payments bribes as long as such payment is not made to earn or maintain business, or to create an unfair or improper advantage over another business. Such countries may believe these payments are simply a part of the cost of doing business. In other countries, including the United Kingdom and Germany, facilitating payments made abroad are considered bribes and are prohibited.

An example of a facilitating payment may be illustrated in the following scenario. Assume a business required a particular license or permit in order to operate. The company is entitled to the license or permit because it has met all the requirements. The business is otherwise poised to open its doors for business, but is legally bound to wait until the license or permit has been issued. The company may make a facilitating payment to an official who can help expedite the licensing or permitting process. In many countries, this payment would be acceptable as long as it does not involve a payment made to a foreign entity. In other countries, this would still be considered a bribe (and thus illegal).

The United Nations Convention against Corruption (UNCAC) prohibits facilitation payments. The legal status of facilitating payments varies by country. The Business Anti-Corruption Portal maintains information regarding different countries' profiles regarding corruption, bribes and facilitating payments.
 

RELATED TERMS
  1. Bribe

    An illegal payment from one party to another, usually in return ...
  2. Payment Option ARM Minimum Payment

    An option to make minimum payments on an payment option ARM, ...
  3. Graduated Payment Mortgage

    A type of fixed-rate mortgage in which the payment increases ...
  4. Payment Option ARM

    A monthly adjusting adjustable-rate mortgage (ARM) which allows ...
  5. Advance Payment

    Any type of payment that is made ahead of its normal schedule, ...
  6. Balance Of Payments (BOP)

    A record of all transactions made between one particular country ...
Related Articles
  1. Economics

    The Balance Of Payments

    The "Balance of Payments" is a record of all payments or monetary transactions between a particular country and other nations during a specific time period. It provides a useful glimpse into ...
  2. Investing

    How Digital Payments Will Change Commerce in 2016

    The way we transfer and spend money is constantly evolving, and 2016 is poised to expand digital payments like we've never seen before.
  3. Credit & Loans

    Understanding The Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  4. Credit & Loans

    Mortgage Basics: The Amortization Schedule

    By Lisa SmithThe amortization schedule for a residential mortgage is a table that provides a breakdown of the schedule of payments from the loan's first required payment to the loan's final payment. ...
  5. Retirement

    What is a Lump-Sum Payment?

    A lump-sum payment is a one-time payment for the total or partial value of an asset.
  6. Home & Auto

    Is Making Biweekly Mortgage Payments A Good Idea?

    Some people believe making mortgage payments every two weeks, as opposed to once a month, can chop years off of a home loan. But is it really a good idea?
  7. Home & Auto

    Understanding The Mortgage Payment Structure

    While a mortgage’s size and term set the baseline, the interest, taxes and insurance all influence the amount of the monthly payment.
  8. Economics

    Inside National Payment Systems

    Investopedia explains: The global interconnection of U.S. payment systems makes commerical and financial transfers possible.
  9. Credit & Loans

    Student Loans: Paying Off Your Debt Faster

    Paying off your student loans won't happen overnight, but you can shorten your repayment period by a few months or even a year or two. How? By using one or a mixture of the methods outlined ...
  10. Credit & Loans

    Mortgage Basics: Costs

    By Lisa SmithPeople generally think about a mortgage in terms of the monthly payment. While that payment represents the amount of money needed each month to cover the debt on the property, the ...
RELATED FAQS
  1. Is a deficit in the balance of payments a bad thing?

    Discover how it might be possible to run a balance of payments deficit, what that means in terms of international trade and ... Read Answer >>
  2. What's the difference between cash-on-delivery differ and delivery against payment?

    Find out more about cash on delivery and delivery versus payment transactions and the difference between these two types ... Read Answer >>
  3. What is the difference between a bond's yield rate and its coupon rate?

    Learn why bond coupon payments, which are a series of fixed payments made to a bondholder throughout the life of the bond, ... Read Answer >>
  4. How soon do I need to start my application for Social Security retirement benefits?

    Understand when to apply for Social Security benefits and when you can expect to receive monthly payments based on age and ... Read Answer >>
  5. What are the differences between installment sales and credit sales?

    Determine the differences between credit sales and installment sales, which businesses often offer their customers for deferred ... Read Answer >>
  6. How does the balance of payments impact currency exchange rates?

    Take a brief look at the relationship between a nation's balance of payments and the exchange rate value of its currency ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center