Key Differences Between Bill Discounting and Factoring
This bill is then presented to seller's customer and full amount is collected. Bill Discounting is mostly applicable in scenarios when a buyer buys goods from the seller and the payment is to be made through letter of credit. When a buyer buys goods from the seller, the payment is usually made through letter of credit.
The credit period may vary from 30 days to days. Depending upon the credit worthiness of the buyer, the bank discounts the amount that needs to be paid at the end of credit period.
Bill Discounting is also known as Invoice Discounting. After that, the bill amount is paid as per the end of the time span with respect to the agreed upon document between the buyer and seller.
1 (Financial Instrument) What is Bill's Discounting
Bill Discounting is a major trade activity. It helps the seller's get funds earlier on a small fees or discount.
It also helps the bank earn some revenue. The borrower or seller's customer can pay money on the due date of the credit period. Hence, this concludes the definition of Bill Discounting along with its overview.
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