Packing credit & bill discounting

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Neeti (Querist)
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16 July 2012

Respected Experts,

Bill discounting and packing credit have same function & application.

Tell me the difference between the two.

Thank you.

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
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17 July 2012 As per my understanding:

Packing credit and Bill discounting are both linked to sales.

Packing credit is a loan received before the goods are delivered / invoiced. Ie it is received aganst an order for exports. Thus the money can be used for purchasing raw material and payment of other cost for producing the goods for delivery.

Bill discounting on the other hand is nothing but encashing the debtor before its due date. Ie one the goods are delivered and the invoice is accepted, debtor essentially promises to pay you after certainc credit period. If you want to received money today, you may go and encash (discount) the receivable at present value.

Thus Packing credit is pre shipment and bill discounting is post shipment.

Refards,
Sanjay Chauhan

Message likes : 2 times

Neeti

Neeti (Querist)
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17 July 2012 thank you sanjayji.

I asked someone about it & got the same reply.

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