Bills/LC discounting

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Bill Discounting is short-term finance for traders wherein they can sell unpaid invoices, due on a future date, to financial institutions in lieu of a commission. The Bank purchases the bill (Promissory Note) before its due date and credits the bill’s value after a discount charge to the customer’s account. The Bank will realise the bill amount on the bill’s due date directly from the debtor.

Bill discounting helps the traders optimise their cash flows and business (payment) cycles without disturbing their balance sheets. Lenders usually offer tenors of up to 180 days while offering bill discounting facilities.