Payment in kind
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It has been suggested that this article or section be merged into PIK loan. (Discuss) Proposed since November 2010. |
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Payment in kind refers to payment for goods or services with a medium other than legal tender (anything can be used as money, but legal tender is what the State accepts for all debts).
One example of payment in kind is food and board. This is a form of payment often offered to people like ranch hands and live-in staff. Typically the staff member receives a small wage as well, with the room and board being provided as part of the overall compensation package. When payment in kind is offered, it must be of comparable value to the cash which someone would have received. Sometimes there are advantages to accepting payment in this way. For example, people who take shares in a company may find that those shares appreciate in value and later become worth much more. If someone will be compensated for goods or services in the form of payment in kind, this must be disclosed at the start of the transaction, offering an opportunity to decline. [1]
[edit] Finance
In modern finance, when a bond pays in kind (PIK), it means that the interest on the bond is paid other than in cash, most commonly by increasing the principal.
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