Bill Discounting

Bill discounting is a type of invoice financing where businesses use their bills of exchange as collateral for a loan. A bill of exchange is a written order by one party to another to pay a certain amount of money on a specific date. Businesses can use their bills of exchange as collateral for a loan, with the lender advancing a percentage of the bill's value upfront. The lender then collects the payment from the customer when the bill becomes due.

One of the primary advantages of bill discounting is that it provides immediate access to cash without requiring businesses to sell their invoices. It can also be more cost-effective than factoring finance, as businesses retain ownership of their bills of exchange. However, bill discounting may not be suitable for businesses that do not have a strong credit rating or a reliable customer base.