Startup Terms Glossary
What is Payment In-Kind?
Any form of payment that does not involve the exchange of actual cash is referred to as payment in-kind. In reference to stocks, payment in-kind consists of shareholders being paid with other financial instruments such as equity, dividends, or other non-cash securities. These types of securities are attractive to startups who want to avoid dealing in cash.
Payment In-Kind Examples
Some concepts of payment in-kind include:
- Example 1. Considered bartering income by the IRS
- Example 2. Falls under mezzanine financing
- Example 3. Commonly used in leveraged buyouts
- Example 4. Allows startups to pay traditional debts more quickly
Here’s another web page about the concept of payment in-kind.
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