what is meaning of Bill Discounting & how it done please
explaiin me in detail
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Answer Posted / h.r. sreepada bhagi
One of the methods of getting working capital is discounting
Bills of Exchange with Banks or Financial Institutions.
Goods can be sold against advance receipt of money, against
payment on delivery or against deferred payment or Credit
Sales. In case of credit sales, the seller & buyer can have
an agreement/understanding wherein, the seller will draw a
bill of exchange and the buyer will accept it.
The sale documents & the Bill of Exchange will generally be
exchanged between the parties through their respective
banks. In case the seller is in need of money and has credit
limits & sub-limits with his/their bank, he/they can get the
bill discounted with his bank and take money. The
seller/borrower should pay interest on the amount availed
against the bill in the name of Bill discounting Charges.
Bills will be fora specific period and the bank will extend
bill discounting credit for a period not exceeding the due
date of the bill. When the customer/buyer pays the money,
the same will be adjusted the credit extended to the seller.
Bill facility will be given against domestic as well as
export transactions and is a common method of working
capital finance. For more knowledge and practical input in
the methodology and specifics, approach your bank.
| Is This Answer Correct ? | 67 Yes | 21 No |
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