Bill Discounting

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Devendra

Devendra (Querist)
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03 September 2010 What is Bill Discounting? Give me an example.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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03 September 2010 Bill discounting is one type of finance arrangement,

Suppose A supplied goods to B and raise the invoice but B is having credit period of 3 months, but A wants money immdediatly, so A can drawn a Bill of exchange on B for 3 Months and ask B to accept the same, once the Bill of exchange accpted, A can discount the same bill with bankers or other financiers for a interest of 3 months

So A will get money immediatley and financer will get interest income and B can also enjoy credit period of 3 months

After 3 month B can pay the money to A or financier based on their arrangements

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