In a bill discounting facility, a business leverages its invoices with a third-party – generally, a financial institution – to avail cash advance at a discounted rate.

1. What is ?
Bill Discounting
Types
Process
Advantages

2. Bill discounting
Whenever you sell or supply products on credit to a
customer, you draw up a corresponding invoice,
mentioning the payable amount and date of
repayment.
Let’s say, you have issued an invoice to customer A,
which is payable within 90 days from the date of
receipt.
However, you’re cash strapped by the 50th day, and all
your funds are tied up for another 40 days.

3. Types Bill discounting
Bill discounting is applied on bills of exchange and hence,
It would be whole lot better if we focused on the bills of
exchange. There are 4 types of bill discounting;
On the basis of period
On the basis of object
inland bills
foreign bills

4. Process Of Bill Discounting
Lender: Select a lender with whom you want to discount the invoices.
Submit bills: If you are applying for this facility online, you need to provide the
scanned copies of original invoices, along with necessary documents about you and
your business.
Verification: The financier checks the veracity of every document and invoice.
Approval and disbursal: Once verified, the invoices will be purchased at a
discounted rate.
Collection: Following that, you need to collect the outstanding amount from the
clients and subsequently forward the loan quantum plus a service fee to such
financier.

5. Advantages Of Bill Discounting
Customer Relationship
With bill discounting, you undertake the responsibility of outstanding
payment collection from your customers. Since it is confidential, your
customer relationship remains unaffected.
Payment Collection
Your business may benefit from the expertise of a lending institution in
terms of payment collection, but that may not always be the case. Thus,
you may opt to go with bill purchases if you think their payment collection
process can be more effective than otherwise.