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Murabaha to the purchase orderer

In one sentenceAn arrangement in which the client asks the bank to buy specific goods; the bank buys and takes ownership of them first, then sells them to the client on Murabaha at a deferred price.

Simply put

This is the form banks usually apply: the client specifies the goods and the supplier and gives a promise to purchase, then the bank buys the goods for itself, and once they are in its ownership it sells them to the client at cost plus a known profit.

For the accountant: the transaction has several documents (the purchase request, the supplier's invoice in the bank's name, the sale contract to the client). Keep them all, because the date of the sale contract is the date the liability arises for your business.

Example

A contracting establishment needs a lifting machine, so it chooses one from the dealer and asks the bank to buy it. The bank buys it from the dealer and then sells it to the establishment on Murabaha over 24 installments; the establishment records the machine as a fixed asset at its cost, the amount owed to the bank as a liability, and spreads the bank's profit over the installment period as a finance cost.

Don't confuse it with

MurabahaMurabaha is the name of the contract in general; the purchase-orderer form is one variant, preceded by the client's request and promise, in which the seller does not own the goods before the request.