Updated on: Feb 9th, 2022
3 min read
Bill discounting is a simple process of selling the bill of exchange to the bank or a financial institution before its maturity at a price less than its actual price. The discount charges will depend on how much time remains for its maturity and the risk factor involved.
Bill discounting is a type of invoice financing in which funds are issued against unpaid sale invoices. The financial institutions issue an advance to the seller at discounted rates. The business is not required to pledge any asset as collateral. The loan is advanced based on unpaid sale invoices. At the time of maturity of the invoice, the business will collect the payment from its customer and make the repayment to the financial institution. It is an easy way to improve cash flow in the organisation.
Thus, we can conclude that by availing bill discounting facilities, one can make utmost use of its resources and grow its business.
I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more
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