What are the features of bill discounting

Bill discounting is a type of short-term financing in which a bank or financial institution purchases a bill of exchange or a promissory note from a seller at a discount, providing immediate cash to the seller. Here are some features of bill discounting:

1. Short-term financing: Bill discounting is a form of short-term financing, typically ranging from 30 to 180 days.
2. Cash flow improvement: Bill discounting provides immediate cash to the seller, helping to improve their cash flow.
3. Discounted value: The bank or financial institution buys the bill of exchange or promissory note from the seller at a discounted value, which means the seller receives less than the face value of the bill.
4. Risk reduction: Bill discounting reduces the risk of non-payment for the seller as the bank or financial institution assumes the risk of non-payment from the buyer.
5. Interest charges: The bank or financial institution charges interest on the amount advanced to the seller, which is calculated on the discounted value of the bill.
6. Creditworthiness: The bank or financial institution considers the creditworthiness of the seller and the buyer before agreeing to discount the bill.
7. Invoice verification: The bank or financial institution verifies the authenticity of the invoice and the creditworthiness of the buyer before agreeing to discount the bill.
8. Simple process: The process of bill discounting is relatively simple and straightforward, requiring minimal paperwork.
9. Confidentiality: The seller can keep the transaction confidential as the bank or financial institution does not disclose the details of the transaction to the buyer.
10. Flexibility: Bill discounting provides flexibility to the seller, allowing them to choose which bills to discount and when to discount them.

Bill Discounting	Its Features
·       Short-term financing	·       Ranging from 30 to 180 days
·       Cash flow improvement	·       Helping to improve their cash flow
·        Discounted value	·       Receives less than the face value of the bill
·        Interest charges	·       Calculated on the discounted value of the bill