Financial & Loan Documents

The paperwork behind money owed and money paid

Money moves between people constantly on nothing more than a conversation and a bank transfer. It works fine until it does not, and by then the only record of what was agreed is a chat thread and two different memories. 

These documents exist to prevent that. Most take a minute to produce.

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Lending money

Loan Agreement The full document for a loan between two parties. Covers the principal, interest rate, repayment schedule, security or collateral, default consequences and governing law. Use this where the arrangement has any complexity — instalments, interest, security, or a business borrower.

Promissory Note A simpler instrument: a written promise to pay a specified sum, either on demand or by a set date. Shorter and less negotiated than a loan agreement, and commonly used for straightforward personal lending. Generate via the AI generator under Financial & Loan.

Which one do you need? If the terms are “I’ll pay you back ₹2,00,000 by December”, a promissory note is proportionate. If there is interest, a repayment schedule, or collateral, use a loan agreement. Note that interest rate caps and lending regulations apply in many jurisdictions, particularly for anything resembling a commercial lending business.

Personal guarantee Where a third party stands behind a borrower’s obligation. Worth understanding fully before signing one — a guarantee typically survives the borrower’s insolvency, which is precisely when it gets called.

Billing and buying

Payment Invoice The standard billing document. Needs the parties, an invoice number, dates, itemised description, amounts, applicable tax and payment terms. In many jurisdictions there are specific content requirements for tax purposes — a compliant invoice is not just a nicely formatted one.

Purchase Order Issued by the buyer to the seller, authorising a purchase at agreed terms before goods or services are supplied. It runs in the opposite direction to an invoice, and the two should reconcile — PO number on the invoice, matching quantities and prices. Generate under Financial & Loan or Business & Corporate.

Purchase Agreement For a sale of goods or assets, which is a different and heavier document than a purchase order.

Rent Receipt Proof of a rent payment, frequently needed for tax relief.

When payment does not arrive

Late Rent Notice The tenancy-specific version of a payment reminder.

Demand Letter for Payment The formal step before escalation. It states the amount owed, the basis of the debt, a deadline and the consequence of non-payment. In many jurisdictions a documented demand is expected — sometimes required — before a claim can proceed, and a clear letter resolves a meaningful proportion of disputes without going further.

Send it properly: in writing, to the correct legal entity, with a record of delivery.

Supporting documents

Affidavit of Ownership — evidencing title to an asset, often needed where an asset is used as security.

Financial Power of Attorney — authorising someone to act on financial matters on your behalf.

Salary Slip — the standard proof of income for loan applications, requested for the last three to six months alongside bank statements.

What every money document should contain

Both parties named correctly. Legal entity names, not trading names. Enforcement against the wrong entity is a real and avoidable problem.

The amount, in figures and words. Still expected by many institutions and it prevents alteration.

Dates. When the obligation arose, when payment is due, and when the document was made.

What happens on default. Interest on overdue amounts, a cure period, and the consequence. A document with no default provision gives you nothing to point at.

Governing law. Which country’s law applies and where disputes are heard.

Signatures from both sides, with witness lines where your jurisdiction expects them.

FAQs

Q: What is the difference between a promissory note and a loan agreement?

A: A promissory note is a one-sided written promise to pay a sum, usually short and used for simple arrangements. A loan agreement is a two-sided contract covering interest, repayment schedule, security and default in detail. Use a note for simple personal lending and an agreement for anything with structure.

Q: Is a loan agreement legally binding? 

A: It becomes binding on proper execution by both parties, subject to local requirements. Lending regulations, interest rate caps and registration requirements apply in many jurisdictions, so have anything substantial reviewed.

Q: What is the difference between a purchase order and an invoice? 

A: A purchase order is issued by the buyer before supply, authorising the purchase. An invoice is issued by the seller after supply, requesting payment. They should reconcile to each other.

Q: Do I need to charge interest on a personal loan? 

A: No, but state clearly whether interest applies. Interest-free loans between individuals are common; some jurisdictions have tax or regulatory implications for interest-free or below-market lending, so check if the amount is significant.

Q: What should an invoice include?

A:  Both parties, a unique invoice number, issue and due dates, an itemised description, amounts, applicable tax and payment terms. Many jurisdictions specify required content for tax purposes — confirm what applies to you.

Q: Does a demand letter have to come from a lawyer? 

A: No. A clear, factual demand letter from you is a valid formal step and often resolves the matter. If it does not, having sent one strengthens your position.

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IndigoEDocs produces AI-assisted drafts. Lending, interest and tax rules vary by jurisdiction and carry penalties — have loan and security documents confirmed by a qualified professional before signing.