Ask a question about 'Payment in kind'
Start a new discussion about 'Payment in kind'
Answer questions from other users
Payment in kind
refers to payment for goods or services with a medium other than legal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....
(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. http://www.wisegeek.com/what-is-payment-in-kind.htm
In modern finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
, when a bond
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
pays in kind (PIK), it means that the interest on the bond is paid other than in cash, most commonly by increasing the principal.